- 27Oct
(Reuters) - ConocoPhillips (COP.N), the third-largest U.S. oil company, said on Wednesday that its quarterly profit more than doubled as crude oil and natural gas prices rebounded from a year-ago and its refining results improved.
Third-quarter profits at oil companies including Conoco have benefited from higher oil and gas prices. A recovering global economy has also increased demand for fuel, lifting refining margins.
"The earnings were pretty much where we expected them to be and output was OK," Fred Burke, president of Johnston Lemon Asset Management, said. "As far as the stock goes, we think it's time to sell at $64 to $65, so there's not much upside."
Conoco's shares fell 1.4 percent in afternoon trading as the energy sector was hit by a drop in crude oil prices, analysts said.
Houston-based Conoco is about halfway through a two-year restructuring plan aimed at reducing debt and improving shareholder returns with stock buybacks and higher dividends. The plan has helped drive outperformance in Conoco shares.
To raise cash, the company said it will sell $10 billion in assets. The auction is going well so far, with total proceeds at $7 billion.
Next year, Conoco plans to sell its Wilhelmshaven refinery in Germany, more oil and gas properties in the United States and Western Canada and other overseas exploration and refining assets, the company told analysts on a conference call.
The stock is trading around a two-year high, and so far
this year, it is up 20 percent, outperforming the Chicago Board Options Exchange index of oil companies .OIX, which is slightly lower.
"Their restructuring is proceeding as planned, it was a very good quarter," Brian Youngberg, an oil analyst with Edward Jones, said. "To some degree, that success is built into the share price."
BUDGET SWELLS
Looking ahead to 2011, Conoco said it plans to spend $13 billion, with up to $3 billion earmarked for increasing the company's exposure to the deepwater Gulf of Mexico or for U.S. shale assets.
"Over the last several years, we've felt Conoco was underrepresented in the Gulf," CEO Jim Mulva, told Reuters, adding that the company was looking to join existing partnerships or add acreage to its inventory.
This year, the company will spend $10 billion.
Profit in the third quarter was $3.1 billion, or $2.05 per share, compared with $1.5 billion, or 97 cents per share, a year ago.
Excluding items, Conoco earned $2.2 billion, or $1.50 per share. On that basis, analysts on average expected a profit of $1.46 per share, according to Thomson Reuters I/B/E/S.
Conoco's oil and gas output in the quarter was 1.72 million barrels of oil equivalent (boe) per day, down 4 percent from a year ago. The decline in production is due in part to asset sales and its decision to curtail natural gas production in North America due to low gas prices.
For the fourth quarter, Conoco will shut in 20,000 to 30,000 boe per day, the company told investors.
Analysts had expected Conoco to report output of about 1.7 million barrels oil equivalent. For the fourth quarter, Conoco said it expects oil and gas output to slip to 1.71 million boe per day.
Adjusted profits in the company's exploration and production unit soared 59 percent to $1.506 billion, while its refining unit had a profit of $268 million, up from $94 million a year ago.
Conoco's shares were down 82 cents at $60.00 in afternoon trading on the New York Stock Exchange.
