Oil and natural gas producer ConocoPhilips (NYSE:COP) reported a slew of negative news that was enough for investors to drag down its stock on Thursday. While capital expenditure reduction is not a surprise considering that its rivals have also done the same, its earnings missed by a wider margin and the slashing of its dividend rate steeply has hurt sentiment.
ConocoPhilips suffered a net loss of $3.5 billion or a loss of $2.78 a share in the fourth quarter, which was wider than a net loss of $39 million or three cents a share last year. On an adjusted basis, the company suffered a loss of $1.1 billion or a loss of 90 cents a share compared with a profit of $700 million or 60 cents a share. The loss was wider than the Capital IQ estimation of 64 cents.
The oil and gas firm said that its production totalled 1,599,000 barrels a day, which was up slightly year over year. The increase was due to the addition of fresh production from several large projects apart from enhanced well performance. However, the increase was partly hurt by normal field decline. The net increase in production was 3%. The company realized a value of $28.54 per barrel in the fourth quarter, sharply down from $52.88 a barrel last year.
CAPEX and Dividend Slashed
ConocoPhilips said that it would slash its capex guidance for the current year 2016 to $6.4 billion from $7.7 billion. The company also indicated that its outlook for operating costs was slashed to $7.0 billion from $7.7 billion. Full year production outlook remains flat.
For the first quarter, ConocoPhilips issued production guidance in the range of 1,540 – 1,580 MBOED. The company also slashed its dividend rate to 25 cents a share from 74 cents a share paid earlier reflecting a drop of 66%. Its Chairman and CEO, Ryan Lance, said that he was not sure how much commodity prices will continue to fall. He said that the company is ready for a long period of lower prices.