U.S. oil giants Exxon Mobil Corp. and Chevron Corp. also signaled their intention to use surging cash flow to pay down debt and restore their financial strength last week, following a string of damaging losses caused by the Covid-19 pandemic in 2020. The big question is whether independent shale producers like Conoco will do the same given that they have even more debt to work through, or whether they choose to embark on fresh drilling to take advantage of higher oil and natural gas prices.
So far, all signs point to discipline as the U.S. oil industry attempts to rebuild its reputation with investors after a decade of poor returns despite record production from the country’s booming shale fields.
Conoco rose 2% in pre-market trading in New York, adding to this year’s 32% gain, roughly matching the increase in the S&P 500 Energy Index.
Conoco’s adjusted earnings were 69 cents a share in the first quarter, beating the the 54-cent average of analysts’ estimates in a Bloomberg survey. Previously, Conoco warned its profit would be hit by $300 million of hedging losses in the period, partly due to positions inherited from takeover of Concho. The company has now closed out all those hedges, it said.