ConocoPhillips yesterday reported second-quarter earnings of $1,298 million, or $0.87 per share. This compared with earnings of $5,439 million, or $3.50 per share, for the same quarter in 2008. Revenues were $35.4 billion, versus $71.4 billion a year ago.

“Although we experienced significantly lower commodity prices and
margins than in the second quarter of last year, we delivered solid
operational results during the quarter,” said Jim Mulva, chairman and
chief executive officer. “E&P production was up 7 percent, and we
realized cost reductions due to market forces and other improvements.
During the second quarter, total production, including our share of
LUKOIL, was 2.3 million BOE per day and our worldwide refining crude
oil capacity utilization rate was 88 percent.”
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. As of June 30, 2009, debt was $30.4 billion, with a
debt-to-capital ratio of 34 percent and a cash balance of $0.9 billion.
The results for ConocoPhillips’ business segments follow.
Exploration and Production (E&P)
Second-quarter financial results: The E&P segment reported
second-quarter earnings of $725 million, compared with $3,999 million
in the second quarter of 2008. The decrease was primarily due to the
impact of significantly lower commodity prices, partially offset by
higher volumes and lower operating costs. In addition, second-quarter
2009 included a noncash after-tax impairment of $51 million related to
the expropriation of our assets in Ecuador, as well as an after-tax
charge of $37 million for costs associated with platform damage
suffered at the company’s Ekofisk field in the North Sea.
Daily production from the E&P segment, including Canadian Syncrude,
averaged 1.87 million barrels of oil equivalent (BOE) per day, 122,000
BOE per day higher than the second quarter of 2008. The increase was
mainly due to new developments in the United Kingdom, Russia, Canada,
Norway, China and Vietnam, which more than offset the impact of base
field declines. Production also increased due to the impacts of
royalties and production sharing contracts, as well as improved well
performance and less unplanned downtime.
Six-month financial results: E&P earnings for the first six months
of 2009 were $1,425 million, compared with earnings of $6,886 million
during the first six months of 2008. The decrease was primarily due to
the impact of significantly lower commodity prices, partially offset by
higher volumes and lower operating costs.
Midstream
Second-quarter financial results: The Midstream segment had
second-quarter earnings of $31 million, compared with $162 million in
the second quarter of 2008, primarily due to lower realized prices and
volumes.
Six-month financial results: Midstream earnings for the first six
months of 2009 were $154 million, compared with earnings of $299
million in the corresponding period of 2008. The decrease was primarily
due to lower realized prices, partially offset by the first-quarter
2009 $88 million after-tax gain on shares previously issued by a
subsidiary of DCP Midstream.
Refining and Marketing (R&M)
Second-quarter financial results: The R&M segment reported a
second-quarter loss of $52 million, compared with earnings of $664
million in the second quarter of 2008.
The decrease in earnings was primarily due to lower worldwide realized
refining margins and volumes, partially offset by lower operating
expenses. Worldwide realized refining margins were lower primarily due
to the significant decrease in distillate margins and the narrowing of
light-heavy crude differentials, partially offset by the impact of
lower crude oil prices on secondary product margins. In addition,
second-quarter 2009 included a noncash after-tax impairment of $72
million primarily related to segment goodwill allocated to the planned
sale of the company’s investment in the Keystone Pipeline.
The domestic refining crude oil capacity utilization rate for the
second quarter was 93 percent, compared with 94 percent in the second
quarter of 2008. The international crude oil capacity utilization rate
was 72 percent, down from 88 percent in the second quarter of 2008,
reflecting turnaround activity in Europe, and run reductions at the
Wilhelmshaven, Germany, refinery due to market impacts.
Worldwide, R&M’s refining crude oil capacity utilization rate was
88 percent, down from 93 percent in the second quarter of 2008.
Before-tax turnaround costs were $121 million in the second quarter of
2009, down from $170 million in the second quarter of 2008.
Six-month financial results: R&M earnings for the first six months
of 2009 were $153 million, compared with earnings of $1,184 million in
the six-month period of 2008. The decrease was primarily due to lower
worldwide realized refining margins and volumes, as well as a lower net
benefit from asset rationalization efforts, partially offset by lower
operating expenses.
LUKOIL Investment
Second-quarter financial results: The LUKOIL Investment segment had
earnings of $682 million in the second quarter, compared with $774
million in the second quarter of 2008. The second-quarter 2009 results
include ConocoPhillips’ estimated equity share of OAO LUKOIL’s income
based on market indicators, LUKOIL’s publicly available operating
results, and other publicly available information.
Second-quarter 2009 earnings were lower than second-quarter 2008
earnings primarily due to lower estimated realized prices, partially
offset by lower estimated taxes and higher estimated volumes. In
addition, second-quarter 2009 included a $192 million positive
alignment of first-quarter estimated net income to LUKOIL’s reported
results, compared with a $120 million negative alignment in the same
period of last year.
For the second quarter of 2009, ConocoPhillips estimated its equity
share of LUKOIL production was 442,000 BOE per day and its share of
LUKOIL daily refining crude oil throughput was 281,000 barrels per day.
Six-month financial results: Earnings for the first six months of 2009
were $730 million, compared with earnings of $1,484 million in the
first six months of 2008. The decrease was primarily due to lower
estimated realized prices, partially offset by lower estimated taxes
and a net $328 million positive impact from the alignment of estimated
net income to LUKOIL’s reported results.
Chemicals
Second-quarter financial results: The Chemicals segment reported
second-quarter earnings of $67 million, compared with $18 million in
the second quarter of 2008. The increase from the second quarter of
2008 was primarily due to lower operating costs, partially offset by
lower margins.
Six-month financial results: Earnings for the first six months of 2009
were $90 million, compared with earnings of $70 million in the
corresponding period of 2008. The increase was due to lower operating
costs, partially offset by lower margins.
Emerging Businesses
The Emerging Businesses segment’s second-quarter earnings were $2 million, down from $8 million in the second quarter of 2008.
Corporate and Other
Second-quarter Corporate expenses were $157 million after-tax, compared
with $186 million in the second quarter of 2008, primarily due to
higher foreign exchange gains and lower corporate costs, partially
offset by higher net interest expense.
ConocoPhillips is an international, integrated energy company with
interests around the world. Headquartered in Houston, the company had
approximately 30,000 employees, $150 billion of assets, and $132
billion of annualized revenues as of June 30, 2009. For more
information, go to www.conocophillips.com.

Source: ConocoPhillips

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