Lower oil prices shrank quarterly profits at ConocoPhillips (COP.N) and Hess Corp (HES.N), 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 expenditures.
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 Street expectations.
"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.
(Reporting By Matt Daily in New York and Anna Driver in Houston; editing by John Wallace)