U.S. oil and gas producer ConocoPhillips reported better-than-expected quarterly profit on Thursday and boosted its capital budget and production target for 2018 in response to rising crude oil prices.
The new targets are a bullish bet that oil prices, which have surged more than 15 percent since January, aren’t likely to drop in the near future, helping Conoco exploit its lucrative shale acreage around the United States, according to Reuters.
Shares of the company dipped slightly in Thursday morning trading alongside oil prices and parts of the broader market.
Houston-based ConocoPhillips, the world’s largest independent oil and gas producer, now expects to produce between 1.23 million barrels of oil equivalent per day (boe/d) and 1.26 million boe/d in 2018. It had previously forecast production of between 1.2 million boe/d and 1.24 million boe/d.
The company now expects to spend $6 billion this year to reflect a higher $65 per barrel oil price environment. It had initially budgeted $5.5 billion for 2018.
“We’re executing our operating plan and remain committed to our disciplined approach to the business,” Chief Executive Ryan Lance said in a statement, according to Reuters.
The company, one of the first major U.S. oil producers to report earnings for the second quarter, posted net income of $1.6 billion or $1.39 per share, compared with a loss of $3.4 billion or $2.78 per share a year earlier.
Excluding one-time items, ConocoPhillips earned $1.09 per share, edging past analysts’ average estimate of $1.08 per share, according to Thomson Reuters I/B/E/S.
Conoco said it realized an average price of $54.32 per barrel of oil equivalent in the three months ended June 30, up from $36.08 a year earlier.
Its financial results, like those of its peers, have steadily improved in recent quarters, buoyed by higher commodity prices and as better technology makes operations more efficient.
However, ConocoPhillips’ second-quarter production, excluding Libya, fell 214,000 boe/d year-over-year to 1.2 million boe/d, largely due to asset sales.
Conoco plans to hold a conference call with investors to discuss quarterly results later on Thursday.