(Reuters) – Oil producer ConocoPhillips <COP.N>, which is buying Concho Resources Inc <CXO.N> for $8.3 billion, posted a smaller-than-expected quarterly loss on Thursday as it benefited from a recovery in crude oil prices from pandemic-driven lows.
Crude prices began recovering in the third quarter after a number of countries started easing their months-long cornonavirus-led lockdowns, which had slammed fuel demand and forced many oil companies to merge for survival.
ConocoPhillips reported a loss of $500 million, or 42 cents per share, compared with third-quarter 2019 earnings of $3.1 billion, or $2.74 per share.
It narrowly beat analyst expectations with an adjusted loss of 31 cents per share, 1 cent narrower than analysts’ average expectations, according to Refinitiv IBES data.
The beat was driven “mostly by lower cash operating costs,” said RBC Capital Markets analyst Scott Hanold.
Third-quarter production was 1.2 million barrels of oil and gas per day, 4% below last year’s levels.
As oil prices collapsed in the spring during global coronavirus lockdowns, ConocoPhillips said it would curtail more output than any North American producer, reducing its output by 460,000 barrels per day by June.
But the company reversed all curtailments during the third quarter and its Chief Executive Officer, Ryan Lance, said it was now “back to more normal business” and would focus on the Concho acquisition.
It expects to exit the year making 1.1 million barrels of oil and gas per day.
Concho Resources had earlier this week reported a small decline in its third-quarter production. Its merger with ConocoPhillips is expected to be completed early next year.
The company’s acquisition of Concho has triggered a wave of consolidation in the shale industry, with at least two more multi-billion dollar takeovers being announced in a span of one week.
(Reporting by Jennifer Hiller in Houston and Shariq Khan in Bengaluru; Editing by Arun Koyyur, Anil D’Silva and Nick Zieminski)