ConocoPhillips had its most profitable year since 2013 as oil demand and prices recovered from the pandemic-driven crash.
The Houston independent oil giant on Thursday reported a $8.1 billion profit in 2021, compared with a loss of $2.7 billion in 2020 and a profit of $7.2 billion in 2019. Annual revenue last year fell to $17 billion, from $19.3 billion in 2020 and $36.7 billion in 2019.
CEO Ryan Lance called 2021 a “transformative year” for the company, which acquired Concho Resources and Shell’s Permian assets while still returning $6 billion to shareholders through dividends and share buybacks. The company on Thursday announced plans to increase shareholder returns this year by $1 billion, bringing the 2022 total to $8 billion, up more than 30 percent from last year.
“It has been a remarkable year for the company, and I could not be more proud of our employees,” Lance said.
Big Oil is back to turning big profits, recovering from the worst oil bust in a generation. The rollout of coronavirus vaccines last year lifted restrictions on business and travel, raising demand for crude and petroleum products such as gasoline and jet fuel. West Texas Intermediate, the U.S. crude benchmark, was trading around $87.10 on Thursday morning, down $1.16 from Wednesday but up from around $48 a barrel a year ago.
Conoco has reported four consecutive profitable quarters, reporting earnings of $2.6 billion in the three months ended Dec. 31 compared with a loss of $800 million during the same period a year earlier. Fourth-quarter revenue fell slightly to $5.9 billion from $6 billion a year earlier.
Conoco managed to improve profit margins even as it went on a buying spree during the pandemic, gobbling up rival Concho and acquiring Shell’s vast Permian assets for $20 billion. The deals gave the oil giant the second largest position in the Permian Basin, the nation’s most productive oil field.
Despite the major acquisitions, Conoco generated a 14 percent return on its capital and returned 38 percent of its cash from operations to shareholders through dividends and share repurchases. Even as crude prices approach $90 a barrel, public oil giants remain focused on returning more cash to shareholders to woo Wall Street investment back to the energy sector.
Conoco produced an average of 818,000 barrels of oil and natural gas per day in the lower-48 states during the fourth quarter, including 483,000 barrels per day from the Permian of West Texas and New Mexico and 213,000 barrels per day from the Eagle Ford of south Texas. The company operated 20 drilling rigs and nine hydraulic fracturing crews in the lower-48 states during the fourth quarter, up from 15 rigs and seven frac crews during the third quarter.
Conoco plans to spend $7.2 billion this year on new oil and gas projects, up nearly 36 percent from $5.3 billion last year and exceeding 2019 capital spending of $6.6 billion.
This article first appeared on the Houston Chronicle – an Energy Voice content partner. For more from the Houston Chronicle click here.
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