ConocoPhillips profit beats estimates on higher production

(Reuters) - U.S. oil and gas company ConocoPhillips' quarterly profit exceeded analysts' estimates on Tuesday, as higher shale production and a gain from asset sales offset the impact from lower crude prices and higher exploration costs.

Shares rose 2.9% in morning trading to $57.26.

The largest U.S. independent crude producer's results kicked off a quarter in which shale producers were expected to post sharp earnings declines from a year earlier.

The oil and gas producer has been divesting assets to focus on its U.S. shale assets and earlier this month, agreed to sell its northern Australian business to partner Santos Ltd for $1.39 billion. It has used the asset sales to boost payouts to shareholders.

Conoco reported total production, excluding Libya, rose by 98,000 barrels of oil equivalent per day (boe/d) to 1.322 million boe/d, with output from U.S. shale basins including Eagle Ford, Bakken and the Permian up 21% in the quarter.

Net earnings rose to $3.1 billion, or $2.74 per share, in the third quarter ended Sept. 30, from $1.9 billion, or $1.59 per share, a year earlier.

The profit was lifted by a $2.68 billion sale of its U.K. assets to North Sea oil producer Chrysaor that added about $1.57 to per share results.

Excluding items, ConocoPhillips earned 82 cents per share, which was down sharply from $1.42 a share in the same quarter last year but still beat estimates of 75 cents, according to IBES data from Refinitiv.

The lower year-over-year profit reflected lower prices received in the quarter for each barrel of oil equivalent. That realized price fell 18% to $47.07 in the quarter.

Still, Mizuho Securities analyst Paul Sankey said the results show Conoco can continue to finance higher dividends needed to attract investors to oil and gas producers. Conoco "is uniquely positioned to deliver on it right now," he wrote in a note on Tuesday.

The Houston-based company said it expects fourth quarter production to be in the range of 1.265 million boe/d to 1.305 million boe/d, excluding Libya, and includes the impacts from the divestiture.

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