ConocoPhillips misses quarterly profit estimates on lower gas prices

By Sourasis Bose and Sabrina Valle

(Reuters) -U.S. oil producer ConocoPhillips (NYSE:) missed Wall Street bets for first-quarter profit on Thursday, as lower prices and increased costs offset gains from higher oil production.

A milder-than-expected winter hurt demand for the heating fuel in the quarter and pulled down U.S. natural gas prices to a three-and-a-half-year low in February, also affecting earnings of U.S. oil majors Exxon Mobil (NYSE:) and Chevron (NYSE:).

ConocoPhillips CEO Ryan Lance said energy prices have been volatile, but should not prevent the company from increasing cash distribution to shareholders. The company said it will distribute at least $9 billion to stockholders this year.

“We recognize that the price that we are experiencing today is well above our mid-cycle. So our investors should expect well above 30% of our cash flow going back to them.”

Lance said ConocoPhillips was closely following the auction process of Venezuela-owned refiner Citgo, as it awaits compensation related to expropriations of its oil assets in the country.

ConocoPhillips’ total average realized price fell 7% to $56.60 per barrel of oil equivalent (boe) in the first quarter.

Most of the hit came from a 46% drop in realized natural gas prices in the lower 48 states in the quarter. Almost half of the company’s production volumes are of natural gas or natural gas liquids.

Production at ConocoPhillips rose to 1.9 million barrels of oil equivalent per day (boepd) from 1.79 million boepd in the year-ago quarter.

ConocoPhillips maintained its plan to increase production by 2%-4% this year to 1.91 to 1.95 million boepd, a level that should be reached in the second quarter, the company said.

The company’s net profit dropped 10% from a year ago to $2.6 billion in the quarter. Adjusted earnings fell to $2.4 billion, or $2.03 per share, missing analysts’ average estimate of $2.04 per share, according to LSEG data.