ConocoPhillips(COP) - 2024 Q2 - Quarterly Report

Acquisition and Synergies - ConocoPhillips announced the acquisition of Marathon Oil Corporation in an all-stock transaction with an enterprise value of approximately $22.5 billion, including $5.4 billion of Marathon Oil's debt[118] - The company expects annualized cost and capital expenditure synergies of at least $500 million within the first full year following the close of the Marathon Oil acquisition[119] - ConocoPhillips plans to repurchase over $7 billion of shares in the first full year and over $20 billion in total over the first three years following the Marathon Oil acquisition[119] Production and Financial Performance - Second-quarter 2024 production increased by 140 MBOED to 1,945 MBOED, with a 4% increase (76 MBOED) after adjusting for acquisitions and dispositions[124] - The company generated $4.9 billion in cash from operating activities in Q2 2024 and returned $1.9 billion to shareholders through share repurchases and dividends[125] - Full-year 2024 production guidance is updated to 1.93-1.94 MMBOED, reflecting strong Q2 results[131] - Full-year 2024 capital expenditures guidance is updated to approximately $11.5 billion, up from the prior range of $11.0-11.5 billion[131] - Total production in Q2 2024 was 1,945 MBOED, an increase of 140 MBOED or 8% compared to the same period in 2023[135] - Six-month production in 2024 was 1,923 MBOED, an increase of 125 MBOED or 7% compared to the same period in 2023[135] - Sales and other operating revenues increased by $1,269 million in Q2 2024 and $306 million in the six-month period of 2024, driven by higher volumes and realized prices[138] - Production and operating expenses increased by $278 million in Q2 2024 and $514 million in the six-month period of 2024, primarily due to higher lease operating expenses and transportation costs[139] - DD&A expenses increased by $324 million in Q2 2024 and $593 million in the six-month period of 2024, mainly due to higher rates and volumes in the Lower 48 and Alaska segments[140] - Net income for the Lower 48 segment was $1,259 million in Q2 2024 and $2,640 million in the six-month period of 2024, driven by higher realized prices and volumes[149] - Alaska segment net income was $360 million in Q2 2024 and $706 million in the six-month period of 2024, with higher sales revenues offset by increased production and operating expenses[145] - Average production in the Lower 48 increased by 42 MBOED in Q2 2024 and 26 MBOED in the six-month period of 2024, primarily due to new wells online[151] - Purchased commodities increased by $242 million in Q2 2024 but decreased by $562 million in the six-month period of 2024, driven by fluctuating natural gas and power prices[139] - Equity in earnings of affiliates decreased by $87 million in the six-month period of 2024 due to lower LNG prices[138] - Canada segment reported net income of $261 million and $441 million for the three- and six-month periods of 2024, respectively, compared to $32 million and $38 million in the same periods of 2023[153] - Canada segment's total production increased by 91 MBOED and 86 MBOED for the three- and six-month periods of 2024, driven by increased working interest in Surmont and new wells in Montney and Surmont[155] - Europe, Middle East and North Africa segment reported net income of $251 million and $555 million for the three- and six-month periods of 2024, respectively, compared to $264 million and $629 million in the same periods of 2023[158] - Asia Pacific segment reported net income of $444 million and $956 million for the three- and six-month periods of 2024, respectively, compared to $387 million and $909 million in the same periods of 2023[163] - Asia Pacific segment's average crude oil sales price increased to $86.47 per barrel in Q2 2024 from $78.64 per barrel in Q2 2023[162] - Corporate G&A expenses decreased to $78 million and $183 million for the three- and six-month periods of 2024, respectively, due to mark-to-market adjustments in compensation programs[167] - Technology expenses increased to $44 million and $68 million for the three- and six-month periods of 2024, respectively, due to higher costs in low-carbon and new technologies[167] - Other International segment reported a net income of $3 million and $2 million for the three- and six-month periods of 2024, respectively, compared to a net loss of $4 million and $3 million in the same periods of 2023[165] - Net interest expense increased to $89 million and $182 million for the three- and six-month periods of 2024, respectively, compared to $86 million and $176 million in the same periods of 2023[166] - Other income (expense) decreased to a loss of $38 million and a gain of $13 million for the three- and six-month periods of 2024, respectively, due to foreign currency exchange impacts and absence of prior year tax adjustments[168] - Total liquidity at June 30, 2024 was $11.5 billion, including $4.3 billion in cash and cash equivalents, $1.7 billion in short-term investments, and $5.5 billion in available borrowing capacity[171] - Cash provided by operating activities increased to $9.9 billion in the first six months of 2024, up from $9.3 billion in the same period of 2023, driven by higher production and crude prices[172] - Capital expenditures and investments totaled $5.9 billion in the first six months of 2024, with 2024 full-year guidance of approximately $11.5 billion[175][184] - The company repurchased 20.0 million shares for $2.3 billion in the first six months of 2024, bringing total repurchases under the current program to 403.4 million shares and $31.2 billion[182] - Total debt decreased to $18.4 billion at June 30, 2024 from $18.9 billion at December 31, 2023, with debt-to-capital ratio improving to 27% from 28%[170][177] - The company paid ordinary dividends of $1.16 per share and VROC payments of $0.40 per share in the first six months of 2024, with plans to increase the quarterly ordinary dividend by 34% starting in Q4 2024[181] - Investments in LNG projects totaled $0.5 billion in the first six months of 2024, including projects in Port Arthur, QatarEnergy LNG NFE4 and NFS3[175] - The company has a $5.5 billion revolving credit facility expiring in February 2027, with full borrowing capacity available as of June 30, 2024[177] - Revenues and other income for the Obligor Group totaled $18.2 billion in the first six months of 2024, with net income of $4.9 billion[187] - The company maintains strong credit ratings, with Fitch at "A", S&P at "A-", and Moody's at "A2", all with stable outlooks[178] Environmental and Climate Strategy - The company has identified 15 sites in the U.S. as potentially responsible parties under CERCLA and comparable state laws, with a total environmental accrual of $184 million on the consolidated balance sheet as of June 30, 2024[193] - The company expects to incur substantial environmental remediation expenditures within the next 30 years, with no material adverse effect anticipated on operations or financial position from current environmental compliance[194] - The company has adopted a Paris-aligned climate risk framework aiming for net-zero operational (Scope 1 and 2) emissions by 2050, with a focus on managing climate-related risks and optimizing opportunities[196] - The company's Climate Risk Strategy includes a Plan for the Net-Zero Energy Transition, emphasizing strategic flexibility, emissions reduction, and contributions to an orderly energy transition[197] - The company has accelerated its GHG intensity reduction target to 50-60% by 2030 from a 2016 baseline and implemented a near-zero methane emissions intensity target of 1.5 kg CO2e per BOE by 2030[199] - The company does not include a Scope 3 (end-use) emissions target in its Plan, advocating instead for a well-designed, economy-wide carbon price and regulatory action on methane[198] - The company's environmental and climate-related risks are detailed in its 2023 Annual Report on Form 10-K, including potential impacts from future laws and regulations[200] Market and Price Trends - Brent crude oil prices averaged $84.94 per barrel in Q2 2024, an 8% increase from $78.39 per barrel in Q2 2023[127] - Henry Hub natural gas prices averaged $1.89 per MMBTU in Q2 2024, a 10% decrease from $2.09 per MMBTU in Q2 2023[128] LNG Agreements - The company signed long-term LNG agreements for 0.75 MTPA regasification capacity in Belgium and 0.5 MTPA sales into Asia, both commencing in 2027[123] Risks and Uncertainties - The company's forward-looking statements include expectations for production growth, capital expenditures, and dividends, with caution about potential risks and uncertainties[201] - The company faces risks from fluctuations in oil and gas prices, global demand and supply changes, and potential impacts from military conflicts and public health crises[202] - The company's ability to achieve its low-carbon strategy and emissions reduction targets may be impacted by technological, regulatory, and market uncertainties[202]