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Company Break Down

ConocoPhillips

ConocoPhillips is an American oil and gas exploration and production (E&P) company operating out of Houston Texas. ConocoPhillips operates in 17 countries with its main operations taking place in the Asia Pacific  region and Middle East. Its second largest, operation, projected to overtake the aforementioned operates in the lower 48 states predominantly in Eagle Ford, the Bakken, and Delaware shale regions, known as the “Big 3”. ConocoPhillips currently holds $70 billion in assets spread over their operations and reported a 1,242 MBOE average in 2018 (excluding Libya).

Cash Flows & Capex

In 2017 ConocoPhillips increased capex into its lower 48 operations by 77.3% to just over $900 million, an aggressive strategy considering it only increased capex spending 45.6% in its  main operation in the Asia Pacific region. A large sum of this capital went into ConocoPhillips Technology Exploitation group, a division of the company dedicated to investing into tech startups, and innovations to increase efficiency in exploration, production and transportation of crude oil, and natural gas. ConocoPhillips main competitive advantage is its superior technology it employs in its drilling operations. Due to the large increase in capex in the lower 48 operations in 2018, amidst the global oil crisis, ConocoPhillips got hit hard with its net income in the first quarter of 2018 falling to $890 million, a 43.6% decrease from its 4Q 2017 net incoming of $1,582 million additionally free cash flow depreciated by $100 million to $864 million in the same quarter. However, while ConocoPhillips was hit hard in the latter of 2018, it rebounded and surpassed expectations in its fourth quarter earnings report. During its final quarter of 2018 the company reported free cash flows upwards of $2,166 million, a $355 million increase from the third quarter, and a 150% increase from the first quarter of 2018. The increase in cash flows can be attributed to the horizontal drilling and hydraulic fracturing investested in in 2017 that became operational in the Eagle Ford, Bakken, and Delaware shale region and have been deployed to its Canadian oil sands and Australia operations.

Future of Cash Flows & Capex

On the menu in 2019 for Conoco is projected 1300-1350 MBOE, with an unchanged $6.1 billion allocated to capital expenditure with $3 billion shares repurchased, unannounced acquisitions, as well as divestitures into the Willow discovery in Alaska, and exploration drilling in Louisiana Austin Chalk. Conoco has committed to increasing cash flows even further in 2019 and plans to do this by targeting the aforementioned high targeted regions.