ConocoPhillips First Quarter Earnings Release Preview

Investors to turn their focus on progress of assets sales and oil price outlook, as industry continues to suffer from low energy prices hitting bottom lines.

It’s no secret that oil exploration companies and oil service companies around the world are still feeling the heat of low prices knocking down their revenues as well as their bottom lines. And in the case of ConocoPhillips’s (NYSE:COP), which is due to submit its earnings today, is no different either.

Consensus for the oil major calls for first quarter 2015 production to be at the range of 1,570−1,610 million barrels of oil equivalent per day (MBOED), higher than 1,540 MBOED in full-year 2014.Talking about the expected revenue or earnings per share is relatively useless, since it’s clear that earnings will be disappointing, though it’s still important to emphasize the scale of the losses.

Instead, many investors will focus on the ongoing asset sales program that the oil and gas company has initiated for the past half a year, as it seeks to sell off its unproductive assets, mostly in North America, and has hired financial advisers in the expedite the process. The proceeds, likely to total around less than $5 billion, if all goes well, will be used to help maintain the CAPEX on current projects, and also to help maintain the dividend yield to its investors. All this so that the company secures lesser debt. The asset sales plan will not affect the company’s trimmed down CAPEX spending program till 2017.

Another area that investors will focus on is the future oil prices outlook. Energy prices have been on a relatively upward trend due to Saudi’s hold policy on its oil production finally bringing down shale producers to its knees, with Baker Hugs reporting less than 735 oil wells under operation, down from the significant 1357 rigs that were in operation for past several months. Currently oil prices are hovering between the range of $55- $65.It May likely increase further as many Americans will likely hit the road ahead of July 4^th celebrations, taking advantage of low oil prices, and summer starting to show its face in the Middle East, driving demand on the upside. Don’t be surprised with more oil price rise on the horizon.

ConocoPhillips stock price ended the day flat at $67.74