ConocoPhillips Looking Better or Less-Bad (COP)

ConocoPhillips (NYSE: COP) has reported earnings.  The Buffett-oil trade posted earnings of $1.298 billion, or $0.87 EPS. As oil price are down significantly over last year, this compares with earnings of $5.439 billion or $3.50 EPS. Revenues were reported for this last quarter as $35.4 billion, down from $71.4 billion for the year-ago period.  This is still better than the Thomson Reuters estimate of $0.85 EPS.  There were less than a handful of estimates for revenues to come in around $39 billion.  If you look through the individual metrics of the business, this is actually not as bad as it could have been.

• There is a full earnings preview that included ConocoPhillips, but that also has detailed previews for Exxon, Apache, First Solar, and even Chevron…

The company generated $2.6 billion in cash from operations during the quarter, funded a $2.9 billion capital program and paid $0.7 billion in dividends.

Conoco noted significantly lower commodity prices and lower margins than a year ago, but it noted that E&P production was up 7% and cost reductions helped.  Its total production with its share of LUKOIL was listed as 2.3 million barrels per day and its worldwide refining crude oil capacity utilization rate was listed as 88%.

Exploration and Production, or E&P, segment reported second-quarter earnings of $725 million,  down from $3.999 billion in the second quarter of 2008.

Daily production from the E&P segment averaged 1.87 million barrels of oil equivalent per day, which is actually 122,000 BOE per day higher than the second quarter of 2008 due to new developments in the United Kingdom, Russia, Canada, Norway, China and Vietnam.

Conoco’s Midstream segment had second-quarter earnings of $31 million, down from $162 million in the second quarter of 2008.

The company’s Refining and Marketing segment reported a second-quarter LOSS of $52 million, down sharply from a reported earnings of $664 million in the second quarter of 2008; refining crude oil capacity utilization rate was 88%, down from 93% percent in the second quarter of 2008.

Its LUKOIL segment had earnings of $682 million in the second quarter, down from $774 million in the second quarter of 2008.

The Chemicals segment reported earnings of $67 million, up from $18 million in the second quarter of 2008 due to lower operating costs and partially offset by lower margins.

All said and done, this report was probably better than a baseline scenario might have indicated when you consider the performance of this stock compared to peers.  But ConocoPhillips might not be entirely in charge of its own trading destiny today with oil down so much on CFTC trading and speculation curbs being put in place.  Shares closed at $44.90 yesterday and shares are down at $44.20 in early indications; its 52-week trading range is $34.12 to $85.43.

Jon C. Ogg
July 29, 2009