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CORPORATISM -
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ConocoPhillips Profit Rises 89% to Record $3.8 Bln

Posted in the database on Thursday, October 27th, 2005 @ 18:25:01 MST (1375 views)
from Bloomberg.com  

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ConocoPhillips, the No. 3 U.S. oil company, said third-quarter profit jumped 89 percent to a record $3.8 billion as supply disruptions and rising demand lifted prices to unprecedented highs.

Net income rose to $2.68 a share from $2.01 billion, or $1.43 a share, a year earlier, the Houston-based company said today in a statement. Per-share profit was 11 cents higher than the average estimate from 19 analysts surveyed by Thomson Financial. Revenue increased 43 percent to $49.7 billion.

Oil, natural-gas and gasoline prices, already near record levels because of rising demand in Asia and the Americas, set new highs after Hurricanes Katrina and Rita disrupted supplies from Gulf of Mexico wells and U.S. Gulf Coast refineries. Oil futures in New York averaged $63.31 a barrel during the third quarter, up 44 percent from a year earlier.

``The economics of oil are great right now,'' said Phil McPherson, director of research at investment bank C.K. Cooper & Co. in Irvine, California. ``When oil prices go up, it's supposed to stop demand, but that hasn't happened.''

ConocoPhillips is the first of the major U.S. oil companies to report third-quarter earnings. Irving, Texas-based Exxon Mobil Corp., the world's largest publicly traded oil company, is scheduled to release its results tomorrow. Chevron Corp., the No. 2 U.S. oil producer, plans to report earnings on Oct. 28.

Prices Climb

Oil and gas prices rose after Katrina toppled production platforms, shut ports and flooded refineries in and around the Gulf of Mexico, the biggest U.S. source of crude. The gap between oil costs and fuel prices averaged $15.22 a barrel during the quarter, up 92 percent from a year earlier, based on benchmark crude-oil and fuel futures traded in New York.

Increases in gasoline and diesel prices more than made up for production losses at three ConocoPhillips refineries that were damaged by Katrina, which slammed the Gulf Coast on Aug. 29. Each 25-cent increase in per-barrel refining margins raises ConocoPhillips annual net income by $125 million, according to company filings.

``Profits are being driven by higher prices,'' Paul Ausick, an analyst at Bandersnatch Research LLC in Bozeman, Montana, said before the earnings statement was released. ``There's nothing to suggest there's been any real slowdown in demand.''

Shares of ConocoPhillips rose 39 cents to $62.83 at 10:13 a.m. in New York Stock Exchange composite trading. The stock has climbed 45 percent this year, more than triple the share gains by Exxon Mobil Corp. and Chevron Corp.

Production Rises

Third-quarter oil and gas production rose 22 percent to the equivalent of 1.79 million barrels of oil a day, ConocoPhillips said, largely on the purchase of shares of OAO Lukoil.

Chief Executive James Mulva increased ConocoPhillips's stake in Lukoil, Russia's largest oil producer, to 14.8 percent during the quarter from 12.6 percent three months earlier.

Third-quarter profit from oil and gas sales rose 61 percent from a year earlier to $2.29 billion, led by higher prices and production gains in Russia, Alaska, Norway, the Timor Sea, Indonesia and Vietnam. Oil and gas sales account for 60 percent of the company's net income.

Drilling and production costs rose 18 percent to $1.475 billion, ConocoPhillips said.

Third-quarter refining earnings almost doubled to $1.39 billion from $708 million a year earlier, ConocoPhillips said. The company ran its refineries at 95 percent of capacity, up from 94 percent a year earlier.

Fuel Prices Jump

Retail prices for ConocoPhillips's gasoline averaged $2.14 a gallon during the July-September period, excluding excise taxes, a 42 percent increase from a year earlier. Wholesale diesel, jet- fuel and heating-oil prices averaged $1.97 a gallon, up 52 percent.

ConocoPhillips is the second-largest U.S. refiner based on oil-processing capacity, behind San Antonio-based Valero Energy Corp. The company is delaying repairs and other maintenance at some plants ``in an effort to help stabilize U.S. supply,'' Mulva, 59, said in the statement.

For the first nine months of this year, net income rose 73 percent to $9.85 billion. Revenue climbed to $131.2 billion from $96.8 billion in 2004's first three quarters.



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