COP’s oil and gas revenue mix
In 2Q17, ConocoPhillips’s (COP) operating revenue from crude oil (USO), natural gas (UNG), bitumen, and natural gas liquids sales totaled ~$4.33 billion—a fall of ~10% from its 1Q17 oil and gas revenues of ~$4.81 billion.
The sequential decrease in ConocoPhillips’s 2Q17 oil and gas revenues can be attributed to the steep ~10% decrease in production in 2Q17. The sequential decrease can also be attributed to the lower realized prices for COP’s crude oil, natural gas, and natural gas liquids production in 2Q17 compared with 1Q17.
For 2Q17, 59.75% or ~$2.6 billion of COP’s E&P (exploration and production) revenues came from crude oil (USO) sales, while ~28.2% or ~$1.2 billion of E&P revenues came from natural gas (UNG) sales, and ~6.5% or ~$280 million of E&P revenues came from bitumen sales. Only ~5.6% or ~$243 million of COP’s E&P revenues came from natural gas liquids sales.
Why crude oil prices move COP’s stock price?
Almost ~72% of ConocoPhillips’s operating revenues from product sales came from liquids (crude oil, natural gas liquids, and bitumen) sales alone. Hence, movements in crude oil prices have an immediate impact on COP’s stock price.
By comparison, peers EOG Resources (EOG), Diamondback Energy (FANG), and Marathon Oil (MRO) also have the majority of their operating revenue coming from crude oil sales. For MRO, ~79% of operating revenues comes from crude oil sales.
Notably, the ProShares Ultra Oil & Gas Exploration & Production ETF (UOP) invests in oil and gas exploration and production companies in the US. UOP is a leveraged ETF and provides a 200% return on the movements of the S&P Oil & Gas Exploration & Production Select Industry Index.