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ConocoPhillips posts $410 million loss as company changes focus Huge special charges revalue downstream assets that are up for sale Allen Baker PNA Contributing Writer
ConocoPhillips reported a loss of $410 million for the fourth quarter as the company took $1.2 billion in special charges as it prepares to sell downstream assets. Without the charges, the company made a profit of $747 million.
It was the first full quarter of operations for the new company, and results aren’t easy to compare with prior quarters when Conoco and Phillips were separate entities. In the third quarter, which included a month of combined operations plus two months of Phillips alone, operating profits were $456 million. With merger-related charges, that quarter was a losing period also.
The company says it plans to sell a large part of its retail sites, and exit some regional markets. Overall, executives expect to book $1.3 billion in after-tax charges as part of the sale program, and $1.1 billion of that came in the fourth quarter.
Upstream profitable Upstream operations brought in $824 million in the 2002 fourth quarter, compared with $244 million for Phillips alone a year ago and $499 million in the hybrid third quarter. In either case, it’s an apples to apples-and-oranges comparison.
For production, the company provided combined Conoco and Phillips numbers for the year before. The Houston-based company had daily production of 1.62 million barrels of oil equivalent, down 5 percent from the fourth quarter of 2001. That was due to assets sales, the problems in Venezuela, and normal field declines, the company said.
Overall volumes were up 5 percent on a BOE basis compared with the third quarter. But that fell short of the 8 percent improvement company officials had predicted in announcing the last quarter’s results.
Alaska flows decline percent For Alaska, crude production was 323,000 barrels a day in the recent quarter, down from 346,000 a year earlier, but up from 310,000 in the third quarter of 2002.
The year overall also showed lower Alaska crude production. ConocoPhillips produced 331,000 barrels daily from the state in 2002, a 2 percent decline from 339,000 barrels a day in 2001. Natural gas liquids production from Alaska was an additional 10,000 barrels a day in each year, after subtracting reinjected volumes.
Company-wide, liquids production was 1,033,000 barrels daily, down 59,000 barrels a day for the fourth quarter compared with Conoco and Phillips totals a year earlier. Daily natural gas production dropped by 170 million cubic feet to 3,542 million cubic feet.
Higher prices helped E&P results. Alaska crude brought an average of $26.43 in the quarter, up 38 percent from $19.12 in the final quarter of 2001. Worldwide, the average price was $25.31, up 34 percent from $18.95.
For natural gas, the company-wide average was $3.27. That was up 47 percent from $2.23 a year earlier.
Downstream improvement Downstream operations showed an improvement with operating income of $193 million as the company collected more for its refined products. The income figure was up from $59 million in the third quarter and $79 million for the same quarter a year ago.
Again, with various merger issues, the numbers aren’t directly comparable. But the improvement in product sale prices for the quarter was telling. Gasoline brought 92 cents a gallon at wholesale, up 35 percent from 68 cents a year ago. The retail average was $1.02, up 21 percent from 84 cents, and distillates sold for 86 cents, up from 63 cents in the 2001 quarter.
Refinery capacity utilization slid a bit to 89 percent from 93 percent in the year-ago quarter and 91 percent in the third quarter.
Loss in chemicals Chemicals showed a net loss of $13 million, compared with a loss of $17 million a year ago. That segment did post a profit of $5 million in the third quarter. Midstream operations contributed $20 million in the quarter, up slightly from $19 million a year ago without the Conoco contribution. The third-quarter figure was $11 million.
The company is selling assets to restructure and reduce debt, which stood at $19.8 million at the end of the quarter, down from $20.5 million as upstream sales netted $600 million. Revenues for the quarter reached $23.5 billion. Phillips alone had revenues of $8.7 billion in the year-ago quarter. The third-quarter total, with a partial contribution from Conoco, was $15.7 billion.
2002 revenues more than double For the year, revenues totaled $57.2 billion, up from $24.8 billion a year ago. The company lost money for the year with all the charges, posting $277 million worth of red ink against $1,66 billion in profits for Phillips in 2001. Factoring out the special items, net operating income was $1.51 billion for 2002, compared with $1.67 billion for Phillips in 2001.
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