ConocoPhillips First-Quarter Profit Off 27% on Spinoff, Divestitures
ConocoPhillips' first-quarter earnings fell 27% after the exploration and production company reported lower revenue amid the spinoff of its refining and marketing arm in 2012 and as the year-earlier period benefited from $950 million in asset sale gains.
ConocoPhillips reported a profit of $2.14 billion, or $1.73 a share, down from $2.94 billion, or $2.27 a share, a year earlier. The year-earlier period included a $712 million income contribution from ConocoPhillips former refining and marketing arm, which was spun off as Phillips 66 nearly a year ago as part of the multiyear revamp aimed at improving the company's finances.
Excluding asset write-downs, asset-sale gains, spinoff-related expenses and other items, adjusted earnings from continuing operations were up at $1.42 from $1.38. Revenue decreased 8.9% to $14.65 billion.
Analysts polled by Thomson Reuters had most recently projected earnings of $1.41 on revenue of $13.57 billion.
The newly independent exploration and production company is in the midst of a three-year repositioning in which the oil major has shed billions of dollars in assets and is planning to divest itself of more operations as it seeks to focus on fast-growing shale plays in the U.S.
Average daily production fell 1.6% amid the asset sales and the company warned that it will likely fall further in the second quarter.
ConocoPhillips executives had said at the end of the 2012 fourth quarter that 2013 would be a low point for the company's production, as it aims to refocus its efforts on North America while shedding other international assets.
But the company reported that in the Eagle Ford, Bakken and Permian basins, unconventional U.S. reservoirs that ConocoPhillips expects to be drivers of its future growth, combined production climbed 42%.
Simmons and Co. analysts said the ConocoPhillips exceeded expectations with low corporate charges and "well-behaved" productions.
"Overall, results were better than we had expected, and in-line to better than the street had expected as well," they wrote.
Chairman and Chief Executive Ryan Lance said the company is on track to grow production and improve margins this year, pointing to discoveries in the Gulf of Mexico last quarter.
"Our base business is operating to plan, our development programs and major projects are performing as expected and we are on track to deliver production and margin improvements this year," he said.
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