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HOUSTON (Reuters) – ConocoPhillips (COP.N), the world’s largest independent oil and natural gas exploration and production company, posted a bigger-than-expected quarterly profit on Thursday, helped by rising crude prices CLc1 and cost cuts.
Results at Conoco, like many of its peers, have steadily improved in recent quarters alongside commodity prices and as better technology makes operations more efficient.
Also, Conoco’s stock has risen as it prioritized shareholder returns over production increases, an approach increasingly favored by Wall Street. Rising oil prices are helping the strategy as Conoco generated more cash in the first quarter than its capital budget and shareholder payouts.
Shares are up 17 percent so far this year, outpacing the SP 500 .SPX after the company boosted its buyback and dividend. The stock of the Houston-based company rose 0.7 percent to $65.55 in morning trading.
“We remain focused on creating value for our shareholders by maintaining discipline, following our priorities and staying committed to our returns-focused value proposition,” Chief Executive Ryan Lance said in a statement.
Conoco profit rose to $888 million, or 75 cents per share, in the first quarter, from $586 million, or 47 cents, in the year-ago quarter.
Excluding one-time items, the company earned 96 cents per share, exceeding the 73 cents expected by analysts, according to Thomson Reuters I/B/E/S.
Doug Terreson, an oil industry analyst with Evercore ISI, said the results reflected a “positive surprise” and were an indication that energy companies can generate healthy profits even when prioritizing shareholder returns.
Production fell 23 percent to 1.2 million barrels of oil equivalent per day (boe/d) as a result of recent asset sales.
Profit jumped across all the geographic regions where Conoco operates, especially Alaska, where the company has recently increased exploration activity after writing down the value of some assets in recent years.
Conoco kept its 2018 capital budget at $5.5 billion, but raised its production outlook slightly and now expects to pump 1.2 million to 1.24 million boe/d this year.
Conoco said on Wednesday an international arbitration court ordered Venezuela’s state-run oil company, PDVSA [PDVSA.UL], to pay it $2.04 billion for early dissolution of two joint ventures for producing oil in the OPEC-member country.
Conoco executives plan a conference call with investors to discuss the results later on Thursday.
Rivals Exxon Mobil Corp (XOM.N) and Chevron Corp (CVX.N) are due to report results on Friday.
Reporting by Ernest Scheyder; Editing by Steve Orlofsky and Jeffrey Benkoe