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Phillips posts loss on refining; production slides, prices shrink Company reports overall $25 million loss in first quarter — Phillips earned $162 million in fourth quarter, $516 million in first quarter last year Allen Baker PNA Contributing Writer
Phillips Petroleum Co. slipped to a loss in the first quarter as refining margins took a toll on profits. Other companies also lost money on refining, but most were able to stay profitable with upstream cash flows.
Not Phillips, which reported an overall loss of $25 million, compared with a profit of $516 million a year earlier when prices were booming. The Bartlesville, Okla., company earned $162 million in the fourth quarter.
Downstream operations lost $88 million in the quarter, as margins dropped 45 percent just compared with the previous quarter. On the year-over-year comparison, average crack spread was down 62 percent. Scheduled maintenance in the quarter cut capacity utilization to 86 percent, compared with 94 percent a year ago, and cut operating results by about $45 million after taxes. The refining, marketing and transportation segment showed a profit of $46 million in the same quarter a year ago, before the Tosco acquisition.
On the upstream side, production slipped 1 percent from a year ago to 834,000 barrels of oil equivalent daily from 845,000. Fourth-quarter flow was 836,000, but the company said seasonal declines in Alaska will push the number to about 800,000 for the current quarter.
Exploration and production yielded a profit of $158 million for the quarter, just a third of the $472 million of a year ago as prices were significantly lower for both oil and gas. Steep drop in Alaska Alaska operations showed an even steeper drop, with the state contributing $33 million in profits this quarter, compared with $227 million a year ago. That came even though Alaska production rose to 353,000 barrels daily from 349,000 a year ago.
Phillips said contractual pricing lags in Alaska and other areas hurt results even though crude prices rose in the first quarter compared with the fourth quarter of 2001. Revenues from the E&P segment dropped by more than a billion dollars overall compared to the 2001 quarter, to $1.29 billion from $2.31 billion.
The chemicals business, a joint operation with ChevronTexaco, cut its losses a bit, to $8 million from $39 million a year ago.
But corporate expenses drained $139 million from the bottom line, up from $125 million a year ago.
The company said that was due to $15 million in benefit-related costs, particularly accelerated vesting of some stock compensation because shareholders approved the merger with Conoco.
Revenues for the quarter were $9.40 billion, compared with $5.32 billion a year earlier, before the Tosco acquisition. The company took in 6 percent less than the prior quarter, when revenues were $9.96 billion.
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