By Edward Klump
Jan. 27 (Bloomberg) -- ConocoPhillips, the third-largest U.S. oil company, reported fourth-quarter profit of $1.22 billion after posting a record loss a year earlier when falling energy prices dragged down the value of acquired assets.
Net income was 81 cents a share, compared with a net loss of $31.8 billion, or $21.37, Houston-based ConocoPhillips said today in a statement. Excluding such items as writedowns on asset values, ConocoPhillips earned $1.16 a share, 4 cents more than the average of 16 analysts’ estimates compiled by Bloomberg. Revenue fell 2.8 percent to $43.6 billion.
ConocoPhillips said in October that it planned to sell some $10 billion of assets over two years, cut spending and reduce debt. In December, the company said its capital budget will be an estimated $11.2 billion for 2010, a drop of 10 percent from last year. That comes after the fourth quarter of 2008 included costs of about $34 billion to reflect a drop in asset values.
“They’re trying to reposition the company as best they can,” said James Halloran, a consultant with Financial America Securities in Cleveland. “Going forward, I think they have more of a hurdle to overcome to get back to being viewed as a company that’s sort of in control of its own destiny.”
ConocoPhillips rose 57 cents, or 1.1 percent, to $51 as of 8:44 a.m. in pre-market trading on the New York Stock Exchange. The stock has 9 “buy” ratings from analysts, 10 “holds” and 2 “sells.”
ConocoPhillips is first among the nation’s largest producers to report fourth-quarter earnings. Exxon Mobil Corp. of Irving, Texas, is scheduled to announce its results Feb. 1. San Ramon, California-based Chevron Corp. plans to report earnings Jan. 29.
Refining Capacity
Fourth-quarter worldwide crude-refining capacity utilization rate at ConocoPhillips, which has the largest U.S. refining capacity among integrated oil companies, was 76 percent.
“One reason it’s lagged here the last year or so is it has a larger exposure to refining than its peers just given its smaller size,” said Brian Youngberg, an analyst at Edward Jones near St. Louis who has a “buy” rating on ConocoPhillips shares and owns none. “As refining improves here as we go forward, which I think it will, that should provide a bit of a catalyst for them to play some catch-up with their peers.”
The company said fourth-quarter production of oil and natural gas fell to about 1.83 million barrels of crude equivalent a day. Daily output, which excludes the company’s stake in Russia’s OAO Lukoil, was 1.87 million barrels a year earlier.
‘Pretty Decent Year’
ConocoPhillips also said that full-year output for 2009 was about 1.85 million barrels a day. Daily production was equivalent to 1.79 million barrels of crude in 2008.
“Production-wise, they had a pretty decent year,” said Philip Weiss, an analyst at Argus Research in New York who has a “hold” rating on ConocoPhillips shares and owns none.
ConocoPhillips agreed to buy gas producer Burlington Resources Inc. in 2005, the day before prices hit an all-time high of $15.78 per million British thermal units. Gas averaged $4.93 in the fourth quarter, a drop of 23 percent from a year earlier.
On Jan. 19, ConocoPhillips said it would record fourth- quarter costs of $54 million related to its stake in Lukoil after that company’s third-quarter profit was lower than ConocoPhillips estimated when it determined the amount to include from the stake in its own earnings.
To contact the reporter on this story: Edward Klump in Houston at eklump@bloomberg.net.
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