ConocoPhillips’ Q2 Earnings Beat Estimates

on Aug 2, 2013
Listen, Friday, August 2nd: Second-quarter earnings at ConocoPhillips (NYSE:COP) and Chesapeake Energy Corp (NYSE:CHK) surpassed market expectations, with both US energy producers reporting a rise in output. ConocoPhillips’ share price closed nearly two percent higher on the NYSE on Thursday, and Chesapeake’s share price soared to close more than seven percent higher.

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**ConocoPhillips Raises Full-Year Production Forecast**
Texas-based ConocoPhillips said yesterday that its second-quarter earnings came in at $2.1 billion (£1.4 billion), or $1.65 per share, compared with $2.3 billion (£1.5 billion) in the second quarter of 2012, or $1.80 per share. The company noted that last year’s earnings included $0.5 billion from downstream operations prior to the separation of the company’s refining division Phillips 66 at the end of April 2012.

Excluding one-time items, ConocoPhillips’ Q2 2013 earnings were $1.41 per share, topping by 12 cents the $1.29 average estimate of analysts polled by Bloomberg.
ConocoPhillips said that combined oil and gas production in the Eagle Ford shale field, the Bakken shale field in North Dakota, and Permian Basin in Texas rose 47 percent during the reported quarter.

“We are delivering on our 3 to 5 percent growth targets for both volumes and margins and have raised our full-year production guidance,” Ryan Lance, ConocoPhillips’ chairman and CEO, said in the company statement. “We also reaffirmed our commitment to shareholders, and confidence in our long-term plans, by increasing the dividend rate in July.” The energy producer raised its quarterly dividend by 4.5 percent.

**Chesapeake Energy’s Asset Review Underway**
Oklahoma-based Chesapeake Energy reported adjusted net income per fully diluted share of $0.51 in the second quarter, with the result beating the $0.41 forecast of analysts surveyed by Bloomberg. The natural gas producer also reported net income available to common stockholders of $457 million (£302 million), or $0.66 per fully diluted share, compared with $929 million, or $1.29 per share.

The company said that its daily oil production rose 44 percent as compared with the prior-year’s quarter and raised its full-year production outlook by one million barrels to 38-40 million barrels, representing a 22 to 28 percent increase year-on-year.
“Chesapeake reported a strong quarter operationally and financially,” Doug Lawler, Chesapeake’s chief executive, noted in the statement. “I am very excited and energised by what I have seen during my first six weeks with the company.” Lawler took the helm at Chesapeake in June, replacing co-founder Aubrey McClendon who stepped down amid investor pressure and board investigations into his use of company-owned wells to secure personal loans.
!m[Chesapeake Energy Also Reporting Better-Than-Expected Profit](/uploads/story/4534/thumbs/pic1_inline.png)
Lawler, a former executive with rival Anadarko Petroleum Corp, noted that a comprehensive review of Chesapeake’s assets was underway. The company said that it was making “significant progress” in selling noncore assets, reporting proceeds of approximately $2.4 billion from asset sales during the first half of 2013. Chesapeake has been trying to repair a balance sheet harmed by low gas prices and heavy spending under McClendon on the acquisition of oil and gas properties in shale formations.
Reuters quoted Mark Hanson, oil analyst with Morningstar, as pointing out that Chesapeake had only spent $100 million on undeveloped land so far in 2013.
“New Chesapeake wouldn’t recognise old Chesapeake if they passed each other on the street,” Hanson added.
**ConocoPhillips’ share price closed 1.90 percent higher at $66.09 in New York on 1 August 2013.**
**Chesapeake’s share price closed 7.08 percent higher at $24.95 on August 1 and was one percent up at $25.20 in pre-market trading as of 09:42 BST on August 2.**


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