ConcocoPhillips Corporation (NYSE:COP) confirmed today its week-ago operations update that the company would take a $34 billion non-cash impairment charge in the fourth quarter of 2008. Adjusted earnings, after the charge, were $1.9 billion (EPS of $1.28), compared with $4.1 billion (EPS of $2.55) for the same quarter a year ago.
Conoco won’t be alone in its impairment charges. Exxon MobilCorporation (NYSE:XOM) and Chevron Corporation (NYSE:CVX) will bothneed to evaluate their reserves based on prices for crude on December31st. Compared with December 31, 2007, the price of crude has fallenabout 50%. Because petroleum reserves account for such a large portionof these companies’ assets, the impairment charges are sure to be huge.
We covered Conoco’s interim report last week, so today’sreport is not really a surprise. The company did beat revised estimatesof $1.22 EPS and revenues of $36.27 billion for the quarter, and thatseems to be enough to put a little air into the share price, which isup about 1% in early trading. The thinking must be that at least Conocobeat something.
Paul Ausick
January 28, 2009
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