ConocoPhillips (COP.N) on Tuesday posted a quarterly profit that trounced market expectations as supply bottlenecks and a global economic recovery helped drive a rebound in crude prices.
Oil prices have gained nearly 63% since the start of 2021, with global crude benchmark Brent rising above $86 a barrel to its highest level in about three years after the pandemic depressed fuel demand in 2020.
This year’s strong demand offers “some pretty constructive tailwinds for the industry,” Chief Executive Ryan Lance said on a conference call.
ConocoPhillips said it was still evaluating production targets for next year. It plans to keep the number of shale drilling rigs “steady” until the close of its $9.5 billion purchase of Royal Dutch Shell’s (RDSa.L) Permian assets, expected in the current quarter.
The company forecast fourth-quarter production between 1.53 million barrel of oil equivalent (boe) per day and 1.57 million boe per day, excluding Libya and any impact from the Shell deal.
Its production, excluding Libya, rose 41.36% to 1.51 million boe per day in the third quarter, while the total average realized price surged nearly 84%.
Adjusted earnings of $1.77 per share beat expectations of $1.51 per share, according to Refinitiv data.
Senior Vice President Dominic Macklon said ConocoPhillips does not believe in setting emissions reduction targets that include the use of the company’s fuels, as they do not address consumer demand and would shift supply to less accountable producers and jurisdictions.
Unlike their European counterparts, few U.S. producers have set so-called Scope 3 targets that include emissions from customers using the fuel they have purchased. (https://reut.rs/3GKSDWD)
ConocoPhillips has, however, outlined net-zero 2050 goals for Scope 1 emissions that include its own operations and Scope 2 emissions, which account for the power generation to run its facilities.