HOUSTON—ConocoPhillips' second-quarter profit fell 18% on the absence of income from its former investment in Russia, though it benefited from high oil prices and improved refining margins.
ConocoPhillips, the third-largest U.S. oil company by market value after ExxonMobil Corp. and Chevron Corp., said its quarterly earnings would have been 38% higher than year-earlier earnings if the year-ago results for the Russian investment had been stripped out.
The prior year included profit from Conoco's investment in Russian oil giant Lukoil Holdings. The company recently sold its 20% stake in Lukoil as part of a three-year restructuring plan launched in 2009 aimed at shoring up its finances and boosting its share price.
The latest step in Conoco's restructuring plan was announced earlier this month, when it said it plans to spin off its refining-and-marketing business next year in order to focus on exploration and production.
ConocoPhillips reported a profit of $3.4 billion, or $2.41 a share, down from $4.16 billion, or $2.77 a share, a year earlier. Excluding asset-sale gains, write-downs and other items, earnings rose to $2.41 a share from $1.63, it said. The year-earlier results included $546 million in profit from Lukoil [$0.38/sh].
Conoco's quarterly profit beat analysts expectations of $2.19 a share due to outsized results at both its exploration-and-production and chemicals operations, said Fadel Gheit, an analyst at Oppenheimer & Co. The results in these segments topped his views by about 10% each.Revenue rose 34% to $67 billion, higher than analyst expectations of $58.71 billion.
"These are solid quarterly results," said Phil Weiss, an analyst at Argus Research. "It's obvious the company benefited from high oil prices."
ConocoPhillips' adjusted exploration-and-production earnings jumped about 70% to $2.55 billion, mostly on higher prices. Conoco's realized crude-oil price was about $103, up 46% from the same quarter a year earlier. The increase in adjusted upstream earnings came despite a 5.2% drop in quarterly production to 1.64 million barrels of oil equivalent. Conoco's production is expected to decline until 2013 due to the impact of its asset sales.
ConocoPhillips Chief Executive Jim Mulva said that while the company's production fell, the earnings impact was limited because the company shifted production from North American natural gas toward higher-margin oil and liquids production from Canada, the lower 48 U.S. states and international liquefied-natural-gas production.
Meanwhile, refining-and-marketing profit edged higher to $766 million on an adjusted basis, held back by lower international refining margins as costs rose amid foreign-exchange impacts.
The company's chemical segment reported adjusted earnings of $199 million, up from $138 million a year earlier.
In the second quarter, ConocoPhillips repurchased 42 million of its own shares, or 3% of shares outstanding, for $3.1 billion.‹
Market Data 
Markets 
AI
