* Conoco profit ex-items $1.22/share vs Street view $1.17
* Conoco oil and gas output down 6 pct
* Hess production up 15 percent
* Conoco shares off 2.5 pct; Hess shares up 0.5 pct
* Spending plans raised 25 pct by Hess, 6 pct by Conoco
By Anna Driver and Matt Daily
July 25 Lower oil prices shrank quarterly
profits at ConocoPhillips and Hess Corp, and
both companies raised their 2012 spending plans in a bid to
increase crude production.
Global oil prices weakened in the second quarter as tensions
in the Middle East around Iran eased and the economic outlook
soured, but prices have rebounded a bit in July.
Conoco said it would spend $16 billion this year, up from an
earlier projection of $15 billion. The Houston company was a big
buyer in the most recent U.S. Gulf of Mexico lease sale and also
added to its deepwater position in Angola, Chief Financial
Officer Jeff Sheets said in an interview.
"We've had a fairly significant spend building up the
exploration portfolio this year," Sheets said, noting that the
timing of planned asset sales had also affected capital
Second-quarter earnings at both companies topped Wall Street
expectations, but analysts at Barclays characterized Conoco's
earnings as "neutral."
Hess' production came in better than expected as its output
in North Dakota's Bakken field surged and Libyan production came
back on line. The company raised it 2012 spending estimate by 25
percent, to $8.5 billion.
Shares of Conoco were down 2.7 percent to $53.19 in
afternoon trading. Hess shares were up 4.9 percent at $46.07.
Conoco, reporting earnings for the first time since shedding
its refining and chemicals businesses, said oil and gas output
slipped below its full-year production goal as asset sales,
maintenance and curtailed gas production weighed. But the
company said its new projects were coming on line as planned.
"I think Conoco operated well in this transition period,"
said Brian Youngberg, an oil analyst at Edward Jones in Saint
Louis. "Their projects are on time and progressing toward
operation in the future."
Conoco profit fell 32 percent to $2.3 billion, or $1.80 per
share. Excluding one-time items, earnings per share were $1.22,
beating analysts' average forecast by 5 cents, according to
Thomson Reuters I/B/E/S.
The company's oil and gas output for the quarter fell 6
percent to 1.54 million barrels of oil equivalent (BOE), below
its 2012 target of 1.55 to 1.6 million BOE but matching Wall
"Our production was on target, our major growth projects are
on track, and we are continuing to add to our conventional and
unconventional exploration inventory," Conoco Chief Executive
Ryan Lance said in a statement.
Conoco's average price for crude fell to $105.56 per barrel
in the second quarter, down $7.39 from a year earlier, while its
average natural gas price dropped 20 percent to $5.50 per
thousand cubic feet.
Conoco's quarterly figures included one month of the
refining operations, which were split off at the end of April.
The bulk of Hess' spending increase will come in the Bakken,
where leases it has signed require it to drill in order to hold
onto the land, the company told investors on a conference call.
It is also changing its well completion process and using a more
expensive material in hydraulic fracturing.
"We're in investment mode now, primarily due to the Bakken."
CEO John Hess told investors.
The company now expects to spend $3 billion in the Bakken
this year, up from a previous estimate of $2 billion.
Hess' profit in the second quarter fell nearly 10 percent to
$549 million, or $1.61 per share.
The New York company's oil and gas production jumped 15
percent to 429,000 barrels of oil equivalent per day. Analysts
at Barclays had expected 403,000 BOE.
The higher-than-expected production helped push earnings
past Wall Street expectations. Excluding one-time items, Hess
had a profit of $1.72 per share, topping analysts' average
forecast of $1.38.
Driving the production increase was a jump in output at the
Bakken, to 55,000 BOE per day from 25,000 BOE last year.