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ConocoPhillips profit hits $1.4 billion but production slides Higher prices boost earnings in upstream, downstream; Venezuela hurts output Allen Baker Petroleum News Contributing Writer
ConocoPhillips powered to a profit of $1.44 billion for the first quarter as executives said savings from the recent merger were taking hold. Higher prices were a big driver, as with many oil firms reporting this quarter.
Conoco and Phillips were operating separately at this time last year, so there’s no direct comparisons with the corresponding period. But looking back just a quarter, the earnings figure was an improvement from the fourth quarter, when the Houston-based company had $747 million in profits before a bunch of charges that resulted in a $410 million loss.
Daily production was hurt by the decline at Venezuela operations affected by the political turmoil there. But Alaska production rose, compared with the fourth quarter, at least, while China and Indonesia also helped.
Overall, production was flat with the fourth quarter, at 1.62 million barrels of oil equivalent.
The company was able to ramp up production in Venezuela to nearly the normal rate in March, president Jim Mulva said in a conference call with analysts, at which he also said the company was beginning to see the savings envisioned from combining the operations of the old Conoco and Phillips. Alaska down from year ago Alaska’s crude yield was 337,000 barrels a day in the first quarter. That was down 5 percent from the 353,000 produced a year ago. But it was in line with the 2002 average and up 4 percent from the fourth quarter’s 323,000 barrels.
Prices showed a big improvement. Average worldwide crude price was $30.72 a barrel, up 59 percent from $19.37 a year ago.
In Alaska, the comparison was even more striking, with North Slope crude bringing $31.47 a barrel in the recent quarter, up 68 percent from $18.72 in the same period a year ago.
Natural gas prices averaged $4.49 per thousand cubic feet. That’s a gain of 37 percent from $3.27 a year earlier.
Gas production rose a bit sequentially to 3,617 million cubic feet from 3,542 million in the fourth quarter.
Overall, E&P profits totaled $1.14 billion, up 38 percent sequentially from $824 million in the fourth quarter. Downstream recovers The big refining and marketing operation brought in $371 million, more than triple the $105 million from that segment in the fourth quarter. R&M showed a loss a year ago of $87 million.
The company has much of its retail marketing assets up for sale, and writedowns there affected the numbers in both recent quarters.
Improvements in the sale prices for refined products were dramatic. Gasoline brought $1.37 at retail, up 69 percent from 81 cents a year earlier. That figure was also up a third from $1.02 in the fourth quarter.
Wholesale gasoline sold for $1.10, up from 92 cents in the fourth quarter and 67 cents a year ago.
Distillates showed similar gains.
Despite the Venezuelan interruptions, refinery capacity utilization rose to 92 percent from 89 percent in the fourth quarter.
Total crude runs worldwide were 2,404,000 barrels daily. Chemicals still in the red Chemicals showed a net loss of $23 million, still more red ink than the $13 million loss in the fourth quarter and the $11 million loss a year earlier on the company’s share of Chevron Phillips Chemical Co.
Higher upstream prices mean higher costs for chemical feedstocks, so the loss isn’t a big surprise. The chemical industry has been depressed for some time now.
Midstream improved on higher prices for natural gas liquids. The segment produced $31 million in income from continuing operations, up from $20 million in the fourth quarter.
And the emerging businesses segment showed a loss of $34 million from continuing operations, an improvement from $40 million worth of red ink in the fourth quarter as the company went ahead with shutting down its carbon fibers business. ConocoPhillips continued its drive to reduce debt, cutting $1.5 billion in the quarter alone.
Total debt at the end of the first quarter was $18.2 billion. The debt figure was $19.8 billion at the end of the fourth quarter, $20.5 billion at the end of the third quarter. Revenues for the quarter reached $27.1 billion, up 15 percent from $23.5 billion in the last quarter of 2002.
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