(Reuters) - ConocoPhillips (COP.N), the largest U.S. oil company without refining operations, said on Thursday its fourth-quarter profit rose more than expected, helped by the sale of its Algerian business and production of more North American crude oil.
Conoco, which shed its refining business in 2012, has sold billions of dollars of lower-yielding assets to focus on more profitable oil production from North American shale basins, like the Eagle Ford in south Texas.
Now that strategy is beginning to pay off, analysts said.
In a note to clients, Ed Westlake of Credit Suisse dubbed Conoco the best performing large oil company, citing 7 percent growth in cash flow despite asset sales, a reduced share count and more cash on the balance sheet.
Profit in the quarter was $2.5 billion, or $2.00 per share, compared with $1.4 billion, or $1.16 per share, a year earlier.
Excluding items, Houston-based Conoco had a profit of $1.40 per share. Analysts on average had expected a profit of $1.31 per share, according to Thomson Reuters I/B/E/S.
Analysts characterized Conoco's reserve replacement ratio, a measure of a company's ability to find new oil and gas reserves to replace what is produced, as strong.
Shares of Conoco were down 0.3 percent at $65.62 in morning trading on the New York Stock Exchange.
Separately, shares of Exxon Mobil Corp (XOM.N) the world's largest publicly traded oil company by market value, fell after it posted lower-than-expected quarterly profit due to declining production.
Better-than-expected results from Conoco's operations in Alaska, Canada and Europe helped boost profits, according to analysts at energy-focused investment bank Simmons & Co.
Oil and gas output by Conoco was 1.518 million barrels oil equivalent per day, down from 1.607 million boepd in the 2012 fourth quarter.
Earlier this month, Conoco said its fourth-quarter production from continuing operations would be lower than expected as severe weather in parts of the United States and the North Sea hampered operations. Fourth quarter production from continuing operations was 1.473 million boepd.
In the current quarter, the company forecast oil and gas output from continuing operations of 1.490 million to 1.530 million boepd.
On a preliminary basis, Conoco's proved reserves rose 3 percent from a year ago to 8.9 billion barrels of oil equivalent (BOE). Proved organic reserve additions are expected to be approximately 1.1 billion BOE for a replacement ratio of 179 percent of 2013 production.
Editing by Chizu Nomiyama and Bernadette Baum