ConocoPhillips CEO Ryan Lance said Thursday that the energy industry needs to consolidate and that his company is looking at possible acquisitions.
"It is in need of consolidation. There's too much fixed costs, investors have too many choices, your market cap's not relevant anymore. So absolutely we're on the lookout," Lance said on CNBC's "Power Lunch."
Energy stocks have been pummeled this year as the demand for oil has evaporated with large portions of the world economy shut down due to the coronavirus pandemic. Whiting Petroleum and Diamond Offshore have already filed bankruptcy, and more energy companies are expected to follow.
"It's got to be accretive, can't destroy our financial framework. But we're watching it very closely," Lance said about potential deals.
The global glut of oil has led to concerns about where it can be stored, leading to the May futures contract for West Texas Intermediate oil to trade in negative territory as it approached expiration last week. The price of the June contract, which settled at $18.84 per barrel on Thursday, has swung wildly in recent weeks but has not gone negative.
Lance said that the historic fall showed that the futures market was "disconnected" from the physical market, but said that ConocoPhillips is cutting production until oil prices rebound.
"We're choosing to store our oil down in the reservoir. We're choosing not to produce it. We've voluntarily curtailed for the month of June 460,000 barrels a day, which really represents about a third of our companies production," Lance said.
Earlier on Thursday, ConocoPhillips beat Wall Street expectations for earnings in the first quarter with 45 cents in adjusted earnings per share. Analysts expected 23 cents per share, according to Refinitiv. Shares fell slightly on Thursday, and the stock is down about 35% for the year.
The company has suspended its share buybacks but is keeping its dividend, despite the downturn. It reported that it had $4.2 billion in cash and cash equivalents on hand at the end of the quarter.
"We set the dividend back in 2015-2016 that we thought we could maintain through the downturns, through the cycles of our industry experiences, so we're very comfortable with where we sit," Lance said.