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What to Expect from ConocoPhillips’ Q1 Earnings

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Dec. 4 2020, Updated 10:53 a.m. ET

Oil prices and ConocoPhillips’ earnings

ConocoPhillips’ (COP) adjusted EPS might fall ~24% in the first quarter on a sequential basis based on analysts’ consensus estimate for an adjusted EPS of $0.86. During the same period, Brent crude oil prices fell 6.9% on a sequential basis—an important factor that might drag ConocoPhillips’ earnings. In the first quarter, ConocoPhillips’ total production is expected to fall ~3.5% based on the company’s guidance midpoint compared to the previous quarter due to its reduced production in Qatar and Canada.

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ConocoPhillips operated with a production mix of 65.8% in liquids the previous quarter. Liquids include crude oil, bitumen, and natural gas liquids. ConocoPhillips is scheduled to report its first-quarter earnings on April 30. The following graph shows how oil prices impacted the company’s earnings.

Lower natural gas prices

ConocoPhillips operated with a production mix of 34.2% in natural gas in the fourth quarter of 2018. The company’s net income has a sensitivity of $30 million–$40 million per 25 cents per thousand cubic feet change in Henry Hub natural gas prices. In the first quarter, Henry Hub natural gas prices were ~23.1% lower than the previous quarter, which might drag ConocoPhillips’ earnings.

Peers’ expectations

EOG Resources (EOG), Occidental Petroleum (OXY), Anadarko Petroleum (APC), and Concho Resources (CXO) are the S&P 500 Index’s (SPY) largest holdings in the upstream subsector. The companies might report a downside of 23.4%, 38.5%, 31.6%, and 11.7% in the first-quarter earnings on a sequential basis. ConocoPhillips might report the third-largest fall in earnings among SPY’s top-five holdings in the upstream subsector.

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