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What Is ConocoPhillips’ Production Guidance for 1Q16?

What Analysts Predict for ConocoPhillips’ 1Q16 Earnings

(Continued from Prior Part)

ConocoPhillips’ production guidance

For 1Q16, ConocoPhillips (COP) expects total production in a range of 1,540–1,580 Mboe (thousand barrels of oil equivalent) per day. The midpoint of the 1Q16 production guidance is 1,560 Mboe per day, which is ~ 3% lower when compared with ConocoPhillips’ production volumes in 1Q15. Sequentially, ConocoPhillips’ production guidance is lower by ~3% when compared with 4Q15.

For 2016, COP is expecting total production from continuing operations of 1,525 Mboe per day, which is essentially flat when compared with 2015 production volumes. In 2016, ConocoPhillips is planning a phased exit from deepwater exploration as part of its cost-cutting measures.

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Other S&P 500 (SPY) upstream companies like EQT Corporation (EQT) and Occidental Petroleum (OXY) have reported ~13% and ~10% year-over-year increases in their 4Q15 total production, respectively. On the other hand, Murphy Oil (MUR) reported a ~23% year-over-year decline in its 4Q15 production. The SPDR S&P Oil and Gas Exploration & Production ETF (XOP) generally invests at least 80% of its total assets in oil and gas exploration companies.

COP’s capex and cost guidance

Due to its focus on balance sheet strength and capital discipline, ConocoPhillips reduced its 2016 capex guidance to $6.4 billion from the original guidance of $7.7 billion in February. In 2015, COP spent ~$10.1 billion in capex.

ConocoPhillips also reduced its operating costs guidance to $7 billion from the original guidance of $7.7 billion. In 2015, COP spent ~$9.1 billion in operating expenses. For 2016, COP expects corporate segment expenses of $1 billion, DD&A (depreciation, depletion, and amortization) expenses of $8.5 billion, and exploration, dry hole, and leasehold impairment expenses of $0.8 billion.

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