Conoco profit falls on lower production
Conocophillips, the U.S. oil company that plans to spin off its fuel-processing and pipelines business next week, said first-quarter profit fell three per cent because of production declines and lower refining earnings.
Net income dropped to $2.94 billion, or $2.27 a share, from $3.03 billion, or $2.09, a year earlier, Conocophillips said Monday. Profit excluding one-time costs and gains related to asset sales and writedowns was about $2.02 a share, six cents less than the average of 16 analysts’ estimates compiled by Bloomberg.
Conocophillips’s refining profit dropped 6.2 per cent in the quarter from a year earlier to $452 million, missing a Raymond James estimate for more than $600 million from the segment. General and administrative expenses surged 37 per cent from a year earlier to $685 million, topping Raymond James’s estimate of about $500 million.
The weaker earnings report “just kind of looks bad” considering the company is about to spin off its refining unit, said Stacey Hudson, a research associate at Raymond James whose firm has a market perform, or hold, rating on Conocophillips shares.
Conocophillips fell 0.8 per cent to $72.33 at the close in New York.
Conocophillips will focus on finding and producing oil and natural gas after spinning off its refining, chemical and pipeline businesses as Phillips 66 at the end of the month. Regular trading for the separate companies begins May 1. Conocophillips has been selling assets and buying back shares as part of a three-year restructuring.
Revenue in the first quarter totalled $58.4 billion, little changed from $58.2 billion a year earlier. The company had $239 million of earnings related to Russia’s OAO Lukoil in the first quarter of 2011, compared with none this year after it sold its stake in the producer.
Profit from producing oil and gas declined three per cent from a year earlier, excluding one-time costs and gains, to $2.13 billion in the quarter.
The company said first-quarter output of oil and gas fell 3.8 per cent to the equivalent of about 1.64 million barrels of oil a day, citing asset sales and a suspension in China’s Bohai Bay.
For 2012, Conocophillips said it expects production to be 1.55 million to 1.6 million barrels a day, depending on the timing of asset sales.