Phillips 66 second quarter earnings down 43%

Tuesday, July 23rd 2002, 12:00 am
By: News On 6

BARTLESVILLE, Okla. (AP) _ Second-quarter earnings for Phillips Petroleum Co. fell 43% from the same period a year ago, due in part to lower natural gas prices.

Phillips on Tuesday reported net income of $351 million, or 91 cents per share, compared with $619 million, or $2.40 per share, during the same quarter in 2001. Analysts surveyed by Thomson Financial/First Call had expected earnings of $1.03 per share.

Revenues were $11.6 billion, up from $5.4 billion in the same three months in 2001.

Second-quarter net income was reduced by $18 million in special items, primarily due to the redemption of certain long-term debt and preferred securities, the company said.

``During the quarter, we operated well across the company and continued to effectively manage our costs,'' said Jim Mulva, chief executive officer. ``This, coupled with some improvement from the poor economic climate experienced in the first quarter of 2002, enabled us to post improved operating results over those of the previous quarter.''

Mulva said net income was down partly because commodity prices in upstream business and the company's margins in the refining, marketing and transportation segment were lower than in the second quarter of 2001.

Phillips' second quarter 2002 average worldwide crude oil sales price was $24.40 per barrel, down $1.44, or 6 percent, from the same period last year. Its average natural gas price fell 35 percent from the second quarter of 2001, from $3.91 per thousand cubic feet to $2.56.

``In our gas gathering, processing and marketing segment, earnings compared with the same quarter a year ago were reduced largely due to lower natural gas liquids prices,'' Mulva said. ``In addition, earnings were negatively impacted $4 million due to changes in gas imbalances and inventory storage losses.''

Phillips produced 799,000 barrels of oil per day during the quarter, just below its stated second-quarter target of 800,000. That was below the 834,000 per day in the first quarter due to seasonal declines and curtailments due to quota restrictions, and down from 823,000 per day during the second quarter of 2001.

Refining, marketing and transportation income was $111 million, down from $197 million in the same quarter last year. The company said the quarters are not comparable due to the acquisition of Tosco in the third quarter of 2001.

Excluding the impact of Tosco on the second quarter of 2002, earnings were down as lower refining controllable costs were more than offset by lower refining and marketing margins, the company said.

Mulva said the company is proceeding on schedule with its merger with Conoco, which he said should close in the second half of 2002.