ConocoPhillips Posts 4Q Income of $1.02B

Friday, January 30th 2004, 12:00 am
By: News On 6

HOUSTON (AP) _ Higher oil and natural gas prices helped ConocoPhillips, the nation's third-largest oil company, swing to a $1.02 billion profit in the fourth quarter.

Net income of $1.48 per share during the final three months of 2003 compared with a net loss of 63 cents per share, or $428 million, in the same period of 2002, when the company reported merger-related charges of $1.16 billion.

Revenues for the quarter were $26 billion, compared with $23.5 billion a year ago.

Income from continuing operations for the quarter was $985 million, or $1.43 per share. On this basis, analysts surveyed by Thomson First Call anticipated the company to report earnings of $1.43 per share.

The company produced 1.61 million barrels-of-oil-equivalent per day, a slight drop from 1.62 million per day in the fourth quarter 2002.

But exploration and production income from continuing operations jumped to $991 million from $808 million in the year-ago period primarily because of higher crude oil and natural gas prices and international tax benefits in the fourth quarter, the company said. The company's average worldwide sales price for oil in the fourth quarter was $27.24 per barrel, and for natural gas it was $4.07 per 1,000 cubic feet. In the United States, ConocoPhillips sold natural gas, on average, for $4.27 per 1,000 cubic feet.

The company's refineries ran at 94 percent capacity for the quarter and refining margins were up from a year ago.

``Operationally, we performed well overall during the fourth quarter, and there remains opportunity for improvement,'' said Jim Mulva, ConocoPhillips' president and chief executive officer.

Fadel Gheit, an analyst with Fahnestock & Co., said ConocoPhillips scored a ``strategic coup'' by agreeing to sell 795 service stations to a subsidiary of Lukoil, Russia's No. 2 oil producer, for $266 million in one of two sale deals announced Tuesday. ConocoPhillips has been in talks with Lukoil on a proposed joint venture to tap Russian oilfields.

Gheit said the deal brought ConocoPhillips closer to Lukoil and ``will bring ConocoPhillips closer to government officials and make life much easier on them.''

In the second deal announced Tuesday, ConocoPhillips will sell 385 service stations to Philadelphia-based Sunoco Inc. for $187.4 million. Both deals are expected to close in the second quarter this year.

Mulva told analysts Wednesday the company has sold $3.4 billion in assets since the merger and expects to sell another $1 billion this year. But the merger-driven asset sales have been largely completed, he said. Mulva added the company is unlikely to turn its focus from debt reduction to acquisitions in the near future other than seeking joint ventures.

Wednesday's results represented the first year-to-year comparison of quarterly earnings since Conoco Inc. merged with Phillips Petroleum Co. in August 2002.

However, the Houston-based company's full-year 2003 results are compared to eight months of results for Phillips in 2002 and results of the combined company for the last four months of that year.

For 2003, net income was $4.73 billion, or $6.91 per share, compared to a net loss of $295 million, or 61 cents per share, in 2002. Income from continuing operations for 2003 was $4.59 billion, or $6.70 per share, compared to $698 million, or $1.44 per share, in the prior year. Revenues for 2003 were $105.1 billion, compared to $57.2 billion in 2002.

The company ended the fourth quarter 2003 with $17.8 billion in debt, which was reduced by $4.8 billion throughout the year.