ConocoPhillips Reports Massive $5.4B, $3.50 per Share Q2



ConocoPhillips has reported a second-quarter net income of $5,439 million, or $3.50 per share. This compared with $301 million, or $0.18 per share, for the same quarter in 2007, which included a $4,512 million impairment associated with the company’s Venezuelan operations. Second-quarter 2007 earnings adjusted for the Venezuela impairment were $4,813 million, or $2.90 per share. Revenues were $71.4 billion, versus $47.4 billion a year ago.

“During the second quarter, we produced 2.2 million BOE per day, including an estimated 0.4 million BOE per day from our LUKOIL Investment segment,” said Jim Mulva, chairman and chief executive officer. “In the downstream business, our worldwide refining crude oil capacity utilization rate improved to 93%.
“We generated $5.4 billion of cash from operations during the quarter, and this enabled us to repurchase $2.5 billion of ConocoPhillips common stock, fund $3.6 billion of our capital program, and pay $0.7 billion in dividends. We ended the quarter with debt of $21.9 billion and a debt-to-capital ratio of 19%.”

Exploration and Production second-quarter net income was $3,999 million, compared with net income of $2,887 million in the previous quarter and a net loss of $2,404 million in the second quarter of 2007. Second-quarter 2007 earnings adjusted for the Venezuela impairment were $2,108 million.

The increase from the first quarter of 2008 was primarily due to higher commodity prices, partially offset by higher production taxes and increased operating costs. The increase from the second-quarter 2007 adjusted earnings was primarily due to higher commodity prices, partially offset by higher production taxes, lower volumes, and increased operating costs.

Daily production from the E&P segment, including Canadian Syncrude, averaged 1.75 million barrels of oil equivalent (BOE) per day, a decrease from 1.79 million BOE per day in the previous quarter and 1.91 million BOE per day in the second quarter of 2007. The decrease from the previous quarter was primarily due to downtime associated with planned and unplanned maintenance activities, mainly in the United Kingdom, Norway, Alaska and Canada. This decrease was partially offset by a net increase in production in the U.S. Lower 48, as higher natural gas production in the San Juan Basin was partly offset by planned maintenance in the region.

The decrease from the second quarter of 2007 was primarily due to the expropriation of the company’s Venezuelan oil projects, as well as normal field decline. This decrease was partially offset by production from new developments, mainly in Indonesia, Norway, the United Kingdom, the U.S. Lower 48 and Canada.
Before-tax exploration expenses were $288 million in the second quarter of 2008, compared with $309 million in the previous quarter and $259 million in the second quarter of 2007.

The increase from the first quarter of 2008 was primarily due to higher commodity prices, partially offset by higher production taxes and increased operating costs. The increase from the second-quarter 2007 adjusted earnings was primarily due to higher commodity prices, partially offset by higher production taxes, lower volumes, and increased operating costs.

Investments in the Russian firm Lukoil also paid off, as profits from the venture totaled $774 million, up from $710 million the previous quarter, and from $526 million in the second quarter of 2007.

“Looking ahead to the third quarter, we anticipate the company’s E&P segment production will be similar to the second quarter," said Mulva. "We expect full-year 2008 production will be consistent with our operating plan. We anticipate exploration expenses to be approximately $375 million for the quarter."
 


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