Phillips reports lower fourth quarter earnings

Thursday, January 24th 2002, 12:00 am
By: News On 6

BARTLESVILLE, Okla. (AP) _ Lower oil and natural gas prices reduced fourth quarter earnings by 68 percent at Phillips Petroleum Co., the company announced Thursday.

Net income was $162 million, or 42 cents a share, compared with $744 million, or $2.88 a share, in the fourth quarter of 2000. Total revenues were $10 billion, compared with $6.3 billion a year earlier.

A 36 percent drop in lower average worldwide crude oil prices and a 59 percent decline in average natural gas prices in the lower 48 states reduced earnings, Chief Executive Jim Mulva said.

Net operating income, which excludes special items, was $227 million, or 59 cents a share. That compared with $701 million, or $2.72 a share, in the fourth quarter of 2000.

Net income was reduced by $65 million because of impairments related to chemicals assets and write downs of values for inventories of petroleum and chemicals products. The reduction was offset partly by a settlement gain.

Daily production was 836,000 barrels of oil equivalent, up 7 percent from the third quarter.

Phillips and Houston-based Conoco Inc. annouced merger plans in November with Phillips corporate offices moving to Texas. The deal is expected to close in the last half of the year.

Despite lower oil and gas prices, Phillips' oil and gas production rose 17 percent in the fourth quarter compared with a year earlier.

Phillips' refineries operated at a healthy 94 percent of capacity, although earnings were affected by lower profit margins on motor fuel, distillates and other petroleum products.

Economic fallout from the Sept. 11 terrorist attacks and unseasonably warm weather in the Northeast lowered demand for products, the company said.

At the end of the quarter, Phillips' debt-to-capital ratio was 37 percent, up from 34 percent at the end of the third quarter.

Lower natural gas liquids prices cut into net operating income in the gas gathering, processing and marketing segment.

Refining, marketing and transportation fourth-quarter results reflect a full quarter of operations from the acquisition of Tosco Corp.

Lower margins and sluggish demand also affected performance in the company's chemicals segment.