ConocoPhillips earnings rise with record oil prices
NEW YORK (Reuters) - ConocoPhillips (COP.N) said on Wednesday second-quarter operating earnings rose 13 percent as record crude prices propelled profits from its oil and gas production business, but sapped results at its refining business.
Those results exclude a $4.5 billion charge taken in 2007 related to Venezuela's takeover of the third-largest U.S. oil company's operations there.
Net income in the quarter rose to $5.44 billion, or $3.50 a share, from $301 million, or 18 cents a share, last year. Excluding the charge from Venezuela, ConocoPhillips earned about $4.81 billion in the year-earlier quarter.
The results fell slightly short of analysts' forecasts. They had expected the company to post earnings of about $3.53 according to Reuters Estimates.
Revenue in the quarter rose more than 50 percent to $71.4 billion.
"The strength of the commodity prices just comes through" in the company's earnings, said Lewis Ropp, energy analyst at Barrow, Hanley, Mewhinney & Strauss, which owns about 21 million ConocoPhillips shares.
Ropp said the company delivered on expectations in the quarter, which he said was critical.
"The market is jumping on any kind of disappointments," he said.
Shares of ConocoPhillips fell $1.03, or 1.2 percent, to $83.28 as lower oil prices weighed on the whole sector.
U.S. oil prices averaged slightly less than $125 a barrel in the quarter, nearly double prices in the year-earlier period.
But gasoline prices only rose 25 percent during that same period, resulting in weak product margins for oil companies like ConocoPhillips that not only produce oil, but refine it to make gasoline and other products.
Operating earnings at Conoco's exploration and production business nearly doubled to just under $4 billion from $2.11 billion last year.
Production fell to 2.2 million barrels of oil equivalent per day from 2.38 million barrels of oil equivalent per day last year, mostly due to the loss of production from the company's Venzuelan assets.
Conoco's average realized price for oil in the quarter was $118.01 a barrel, up from $61.97 a barrel last year. Its natural gas prices also rose to $9.87 per thousand cubic feet from $6.44 per thousand cubic feet last year.
It expects third-quarter production to stay in line with second quarter levels.
ConocoPhillips' refining and marketing profits dropped 72 percent to $664 million. It said its worldwide refinery utilization rate was 93 percent in the quarter.
The company said profits from its 20 percent investment in Russia's Lukoil (LKOH.MM) rose to $774 million from $526 million last year on higher realized prices.
Through Tuesday's close, ConocoPhillips shares were down about 4.5 percent this year, slightly outperforming the Chicago Board Options Exchange's oil index .OIX, which has fallen about 6.9 percent over the same period.
(Reporting by Michael Erman, editing by Dave Zimmerman)
