January 28, 2009 at 12:36 pm #3210
ConocoPhillips has big loss but shares rise
By Anna Driver Anna Driver – 1 hr 44 mins ago , Wed Jan 28, 2009
HOUSTON (Reuters) – ConocoPhillips (COP.N) reported a $31.8 billion fourth-quarter loss on Wednesday compared with a year-earlier profit as the oil major was hit by billions in asset writedowns and a drop in crude oil prices.
Still, shares of the company were up about 1 percent as investors cited the company’s efforts to manage costs and cut spending.
Conoco had warned investors on January 16 it would need to write down the value of its oil and gas assets to reflect the sharp pullback oil prices. In December, crude fell to its lowest level in nearly five years.
At the same time, the third-largest U.S. oil company said it was slashing its 2009 budget and cutting 4 percent of its workforce.
“When the news isn’t worse than they expect the stocks get a bounce… they got everyone cushioned for the fact that they were writing off a lot of goodwill,” James Halloran, analyst at National City Private Client Group, which owns 1.6 million Conoco shares and has a ‘buy’ rating.
Conoco is doing “as good a job as any” in controlling costs, Halloran said, in an environment where crude oil prices have fallen over 70 percent from their summer high over $147 per barrel.
Exxon Mobil Corp (XOM.N), the world’s largest publicly traded company and Chevron Corp (CVX.N), the second-largest U.S. oil company are due to report earnings on Friday. Chevron has warned that its fourth-quarter earnings will be significantly lower than the previous quarter.
Smaller peer Hess Corp (HES.N) also posted a fourth-quarter net loss on Wednesday as oil prices retreated from their year-ago levels and demand for gasoline sagged. Hess had a loss of $74 million, or 23 cents per share, compared with a year-ago profit of $583 million, or $1.59 per share.
Conoco said its net loss in the quarter was $31.8 billion, or a loss of $21.37 per share, compared with a profit of $4.4 billion, or $2.71 per share, a year earlier.
Adjusting for items, ConocoPhillips reported a profit of $1.9 billion, or $1.28 per share, compared with $4.1 billion or $2.55 per share. Analysts on average had expected an adjusted profit of $1.34 per share, according to Reuters Estimates. Revenue fell 15.5 percent to $44.5 billion.
Daily production from Conoco’s exploration and production segment averaged 1.87 million barrels of oil equivalent (BOE) per day, an increase from 1.75 million BOE per day in the previous quarter and 1.84 million BOE per day in the fourth quarter of 2007.
Looking ahead, Conoco said it sees first-quarter production to be near levels seen in the fourth quarter.
The oil major also forecast its worldwide refining crude oil capacity utilization rate in the first quarter will be in the low-80-percent range due to planned turnaround activity in the U.S. and continued run reductions at the Wilhelmshaven refinery in Germany.
In the quarter Conoco took a $7.4 billion impairment charge on its 20 percent equity stake in Russian oil major Lukoil (LKOH.MM) and took a $25.4 billion impairment charge related to exploration and production goodwill.
Shares of Conoco were up 53 cents at $50.04 on the New York Stock Exchange on Tuesday. So far this year, the stock is down about 5 percent, underperforming a 1.5 percent decline in the Chicago Board Options Exchange index of oil companies (.OIX).
(Additional reporting by Matt Daily in New York, editing by Dave Zimmerman)
January 28, 2009 at 12:37 pm #6302
Here is update on start of Oil Companies earnings reports for 4Q2008:
The COP earnings reported a $31.8 B 4Q08 loss (but shares are up because it is better than expected). Smaller Hess has reported a $73 MM loss and ExxonMobil & Chevron report earnings on Friday which are expected to be lower.
The bulk of COP write down is for lower oil prices due drop 70% from $147/B prices, also COP is writing off a large amount of “goodwill” ($25.4 B), and taking big hit for writing off it’s Lukoil assets ($7.4 B).
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