Conoco earnings down 84 percent; flow rises for new Phillips partner

Allen Baker, PNA contributing writer

Earnings dropped sharply at Conoco Inc. as the company took a hit from lower prices and refinery margins, in line with other companies in the industry.

Profits for the quarter slid 84 percent to $104 million, from $653 in the record quarter a year ago. Conoco’s profits were $127 million in the fourth quarter of 2001.

Special items, including a $42 million gain due to an accounting change on maintenance costs, contributed $49 million, just short of half the total profits for the quarter. Merger costs trimmed $10 million as part of those adjustments.

Production rose 26 percent over a year ago, due to the acquisition of Gulf Canada, but that didn’t propel earnings. Even revenue was down 25 percent, to $8.01 billion from $10.68 billion a year ago. Fourth-quarter revenues were $8.49 billion.

“This was the most difficult quarter we’ve experienced in four years,” said Archie W. Dunham, chairman and CEO of the Houston company that’s planning to merge with Phillips Petroleum Co. later this year.

Upstream earnings dropped 73 percent to $155 million on lower prices — $18.75 per barrel of crude worldwide, down 19 percent. Gas prices dipped 61 percent to

$2.64 per thousand cubic feet in the United States, while international gas brought $2.85, down 30 percent.

Production, as oil equivalent, rose to 860,000 barrels daily from 685,000. Gas volumes outside the United States rose 66 percent to 1.7 billion cubic feet daily, while

U.S. volumes dropped 11 percent to 733 million cubic feet each day.

Gulf Canada provided the gain, while natural field decline and sales of some wells were blamed for the U.S. decline.

With the Gulf Canada flow, along with big contributions from the United Kingdom and Norway, 79 percent of Conoco’s oil and gas came from outside the United States. And after adjustments for hedging, the U.S. upstream operations actually lost $35 million for the quarter.

Downstream earnings were just $19 million, down 85 percent. International operations contributed just over half of that. Domestic refineries processed 335,000 barrels daily, up 2 percent. International throughput dropped 4 percent to 355,000 barrels a day.