UPDATE: ConocoPhillips 3Q Profit Falls 71%, Output Rises
October 28 2009 - 10:53AM
Dow Jones News
ConocoPhillips's (COP) said Wednesday its third-quarter earnings
declined 71% compared to the same period last year on sharply lower
oil and natural gas prices and poor refining margins, even as its
quarterly production rose 2.5%.
The Houston-based company reported profits of $1.5 billion, or
$1 a share, down from $5.19 billion, or $3.39 per share, a year
earlier. Revenue dropped 42% to $41.3 billion. The results,
however, bested analysts' estimates, which expected the
third-largest U.S. oil company by market value to report earnings
of 94 cents a share.
Major oil companies are facing a tough quarter as oil and
natural gas prices remain far below last year's peaks and refining
margins are still tight. Exxon Mobil Corp. (XOM) and Chevron Corp.
(CVX) are expected to also report significantly lower earnings
Thursday and Friday, respectively.
ConocoPhillips, however, is expected to be the hardest hit among
all majors as the oil giant is more exposed to lower natural gas
prices, which recently recovered from a seven-year low, and the one
with the higher debt. In its earnings release, ConocoPhilliips
didn't provide more details about its recently announced
restructuring, but the oil giant confirmed it's planning to sell
$10 billion in assets in the next two years and reduced its 2010
capital expenditure to $11 billion from this year's $12.5
billion.
"Investors are not going to focus on these earnings, but in
which assets the company is planning to sell," said Fadel Gheit,
analysts with Oppenheimer & Co. Inc. Analysts expect company
executives to disclose more details on the restructuring during a
conference call to be held at 11 a.m. EDT.
ConocoPhillips said quarterly production excluding its share in
Russia's OAO Lukoil (LKOH.RS) was 1.8 million barrels of oil
equivalent per day, or 2.5% higher than the same period in 2008.
The company's year-to-date production increased 4% mainly due to
new production from major project developments in the U.K., China,
Canada, Vietnam and Norway. Conoco said its worldwide utilization
rate for the quarter was 90%.
ConocoPhillips' shares were recently trading 1.06%, or 54 cents,
lower at $50.30.
The company said it expects fourth-quarter cash from operations
to improve due to higher oil and natural gas prices and rising
refining margins. In addition, ConocoPhillips expects its
fourth-quarter revenue and earnings to benefit by approximately
$1.5 billion and $150 million, respectively, from the liquidation
of positions built during the year in response to contango market
conditions.
-By Isabel Ordonez, Dow Jones Newswires; 713.547.9207;
isabel.ordonez@dowjones.com
(Tess Stynes in New York contributed to this article)