ConocoPhillips earns $1.2 billion in 4Q

By CHRIS KAHN

posted: 13 DAYS 18 HOURS AGO

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NEW YORK -ConocoPhillips said Wednesday it earned $1.2 billion in the fourth quarter as profits from oil production made up for huge losses in the company's refining business.

The nation's third-largest oil company reported earnings of 81 cents a share in the final three months of 2009. That compares with a loss of $32 billion, or $21.37 a share, in the fourth quarter of 2008, when oil prices tanked and forced a massive writedown in the company's assets.

Excluding charges associated with its natural gas properties in Canada and a joint venture in Russia, the Houston company earned $1.16 per share in the fourth quarter. Analysts, who typically exclude one-time charges, expected fourth-quarter earnings of $1.13 a share on revenue of $40.5 billion.

Revenue fell 3 percent to $43.6 billion.

"We performed well in 2009 despite difficult global economic conditions that severely impacted the energy industry," Clayton Reasor, ConocoPhillips vice president of corporate affairs said in a conference call with analysts.

ConocoPhillips is the first of the major integrated companies to report fourth quarter results. Occidental Petroleum reports on Thursday, followed by Chevron Corp. on Friday.

After dealing with thin refining margins and lower natural gas prices throughout most of 2009, ConocoPhillips said it planned to shed $10 billion in assets and cut capital spending by 12 percent over the next two years.

Reasor said that plan remains on track, though he didn't provide any additional details.

ConocoPhillips also expects to cut capital spending in 2010 to $11.2 billion, a 40 percent drop from 2008 levels.

For the full year, ConocoPhillips posted earnings of $4.85 billion, or $3.24 a share, compared with a loss of $17 billion, or $11.16 a share in 2008.

Oil prices, which doubled from February to December, both help and hurt integrated companies like ConocoPhillips. While they can make more money from the crude they pull from the ground, the companies' refining businesses struggle to pass higher oil prices along to consumers.

That was certainly the case with ConocoPhillips.

In the fourth quarter, the company's U.S. oil and gas production operation boosted profits nearly threefold to $667 million, while its refineries lost $325 million.

As crude prices squeezed its margins, ConocoPhillips cut refinery runs along with the rest of the industry. It was operating at 76 percent capacity in the fourth quarter, down from 90 percent in the third quarter.

A yearlong plunge in natural gas prices also cut into profits in 2009. ConocoPhillips was able to sell natural gas at higher prices in the fourth quarter, but that didn't make up for earning less than half as much per barrel in the previous three quarters.

ConocoPhillips shares gave up $1.02 at $49.41 in afternoon trading.

2010-01-27 15:27:02