Today, ConocoPhillips (COP) reported its Q3 2019 earnings results. The adjusted earnings stood at $ 0.82 per share, outperforming analysts' mean estimates by 12.3%. The strong results came in spite of lower oil prices.
But on a sequential basis, ConocoPhillips's earnings per share contracted by 19 cents. In the third quarter, WTI crude oil prices fell 5.8% from Q2 of 2019, based on average closing prices. COP operates with a production mix of 65.4% in oil prices-linked commodities. The remaining production mix is in natural gas.
On a year-over-year basis, ConocoPhillips’s total production has risen 7%. Also, production from the US shale region — the Eagle Ford, Permian Basin, and Bakken — rose 21% above Q3 of 2018. This rise helped raise COP's overall production.
Moreover, ConocoPhillips management increased the company's quarterly dividend by 38% to 42 cents per share. It also plans for a buy-back worth of $ 3 billion in 2020.
Outlook for ConocoPhillips investors
In Q4 of 2019, COP expects total production between 1,265,000 and 1,305,000 barrels per day. At the mid-point of management's guidance, production in Q4 2019 could decline by 2.8% on a sequential basis.
The fall in ConocoPhillips's production could be because of UK divestitures. See ConocoPhillips: Jim Ratcliffe Eyes Assets in the United Kingdom I learn more.
Analysts' recommendations for ConocoPhillips stock
Out of 21 analysts tracking COP, around 81% recommended a buy or a strong buy The remaining analysts surveyed by Reuters recommended a hold on ConocoPhillips stock.
There were no "sell" recommendations for the stock. Analysts mean price suggests a possible upside of 30.1% in COP's stock price from the last closing level.
COP's 2019 performance
In 2019, COP share prices have fallen 8.4% as of October 29. The S&P 500 Index (SPY), meanwhile, has risen 21.1% in this period.
ConocoPhillips is among the largest holdings of the S&P 500 Index in the upstream sub-sector. Bearish sentiment surrounding oil and natural gas prices could have dragged COP's share price down.
COP's moving averages pass key level after earnings
Today, COP's share price rose 2.9%. Moreover, COP moved above its 100-DMA (day moving average). Earnings optimism pushed ConocoPhillips share prices above this long-term moving average for the first time since September 25. Also, COP share prices were already above their 20- and 50-DMAs.
However, the 200-DMA at $ 61.26 level is an important resistance zone for ConocoPhillips stock. WTI crude oil active futures were also above their 20-, 50-, and 100-DMAs. However, like COP, oil prices are struggling to move above the 200-DMA.
In the last trading session, COP's implied volatility was at 28.9%. Based on this implied volatility, ConocoPhillips is expected to close between $ 55.33 and $ 59.21 between October 30 and November 5. With better earnings, COP share prices could move near the upper limit of our price forecast by next week. The confidence level for this price range is 68%, and this model assumes a normal distribution of prices.