ConocoPhillips says profit down 80 percent
HOUSTON — ConocoPhillips said Thursday its first-quarter profit tumbled 80 percent from a year ago as sharply lower crude and natural-gas prices walloped results at the nation’s third-largest oil company.
But the results easily beat Wall Street expectations and ConocoPhillips shares rose 3.2 percent, or $1.23, to $39.29 in afternoon trading.
The Houston-based company said net income for the January-March period amounted to $840 million, or 56 cents per share, versus $4.14 billion, or $2.62 per share, a year earlier. Excluding one-time items, ConocoPhillips’ profit amounted to 52 cents a share, the company said.
Analysts surveyed by Thomson Reuters had expected earnings of 42 cents a share, on average. Those estimates typically exclude one-time items.
Revenue fell 44 percent to $30.7 billion from $54.9 billion a year ago.
ConocoPhillips was the first of the major oil companies to report first-quarter results, which as a whole are expected to be the worst in years as the global economic downturn saps demand for energy. After peaking around $150 in July, the price of crude tumbled hard and fast and today costs less than $50 a barrel.
Year-over-year comparisons aside, ConocoPhillips’ January-March results were greatly improved from the fourth quarter, when it was stung by $34 billion in asset writedowns linked in part to lower commodity prices.
In January, Conoco announced 1,300 job cuts and, anticipating a difficult 2009, has reduced its capital spending budget by 37 percent this year. Across the oil sector, producers large and small are scaling back spending on oil and gas projects as the global recession crushes energy consumption.
On the operations side, ConocoPhillips said earnings at its exploration and production, or upstream, arm were reduced by more than three quarters in the first quarter. Net income amounted to $700 million in the most-recent quarter, compared with $2.9 billion a year ago.
On a positive note, upstream production for the quarter averaged 1.93 million barrels of oil equivalent per day, up from 1.79 million barrels in the year-ago period. The company attributed the increase to new production in the United Kingdom, Russia, Norway, Vietnam, China and Canada.
ConocoPhillips said it expects second-quarter upstream production to be lower than the first quarter, primarily because of maintenance and seasonal factors. But the company said it still expects full-year output to top 2008 levels.
Net income at Conoco’s refining and marketing, or downstream, segment fell 61 percent to $205 million from a year ago primarily because of lower volumes the company pegged in part to increased maintenance in the United States.
The company said the utilization rate at its U.S. refineries was about 80 percent in the first quarter, down from a 90 percent rate a year ago. Besides maintenance, many refiners have slowed production in recent months as people drive less because of the bad economy.
At a time of year when people traditionally begin hitting the road and buying more gas, stockpiles of gasoline rose by 800,000 barrels last week, the government reported.
ConocoPhillips is the third-biggest U.S. oil company behind No. 1 Exxon Mobil Corp. and No. 2 Chevron Corp. To date, neither Exxon nor Chevron has announced layoffs, but their profits are expected to decline as well.
Exxon and Chevron are set to report first-quarter results next week, along with European giants Royal Dutch Shell PLC and BP PLC.
Also Thursday, Occidental Petroleum said its first-quarter earnings fell 80 percent from a year ago, but like Conoco the results easily beat Wall Street expectations.
Already this week, oilfield services contractor Halliburton Co. said first-quarter net income tumbled 35 percent and it eliminated more than 2,000 jobs in the first three months of 2009. The company’s chief executive, Dave Lesar, said there are no clear signs when the downturn will end, and that the industry’s prospects will continue to be weak for the coming quarters.
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