By Mrinalika Roy
(Reuters) -Oil and gas producer ConocoPhillips (NYSE:COP) surpassed Wall Street's third-quarter profit expectations on Thursday and elevated its full-year output forecast, crediting the increase to operational efficiencies enhancing production.
Shares of the company rose about 6% in afternoon trading.
Benchmark Brent crude averaged $78.3 a barrel in the reported quarter, nearly 9% lower than last year, but still favorable enough for oil and gas producers to drill profitably.
Production for the quarter stood at 1.92 million barrels of oil equivalent per day, up 6% from 1.8 million boepd in the year-ago quarter, due to higher volumes in the Permian and Eagle Ford basins.
The higher production was down to operational efficiencies, the company said. It also said it expects 5% overall output growth for Lower 48 areas this year, which include the Permian, Eagle Ford and Bakken basins.
"Data suggests the company continues to bring online improved Permian wells that will continue to provide a notable boost," Truist analysts said in a note.
ConocoPhillips forecast its full-year output to be between 1.94 million and 1.95 million boepd, compared with 1.93 million to 1.94 million boepd previously.
The beat comes as it waits to wrap up its $22.5-billion takeover of rival Marathon Oil (NYSE:MRO). The deal, which was approved by Marathon shareholders in August, is still under U.S. Federal Trade Commission review.
Plans to close the deal this quarter remain on track and the company said it expects to significantly exceed its initial synergy forecast.
"We now expect to at least double the initial $500-million target, driven by capital optimization," CEO Ryan Lance said in a post-earnings call. The combined company is expected to grow at a low-single-digit rate in 2025, with capital expenditure of less than $13 billion, he said.
ConocoPhillips also reiterated its target of $2 billion in non-core asset dispositions. "Activities are well underway on multiple disposition candidates at this stage," it said.The company increased its existing share repurchase authorization by up to $20 billion and reiterated its $9 billion minimum shareholder return for 2024.
On an adjusted basis, it reported a profit of $1.78 per share for the reported quarter, compared with analysts' average estimate of $1.64 per share, according to data compiled by LSEG.