Net income climbed to $2.1 billion, or $1.40 a share, from $800 million, or 54 cents, a year earlier, Houston-based ConocoPhillips said today in a statement. Excluding costs related to pulling out of two Middle East projects, profit was $1.47 a share, 10 cents higher than the average of 15 analyst estimates compiled by Bloomberg. Revenue surged 46 percent.
ConocoPhillips said in October it planned to divest $10 billion of assets as it intensifies its focus on exploring for oil and natural gas. The company reached nearly half its goal when it agreed this month to sell a Canadian oil-sands stake for $4.65 billion.
Improving economic conditions have helped crude prices rise this year. Oil futures traded in New York were 82 percent higher, on average, in the first quarter than a year earlier.
“I think they’re executing about as well as can be expected given the environment they have,” said James Halloran, a consultant at Financial America Securities in Cleveland.
ConocoPhillips rose 55 cents to $59.10 at 4:15 p.m. in New York Stock Exchange composite trading. The stock has nine buy ratings from analysts, eight holds and three sells. Before today, ConocoPhillips had climbed 15 percent this year in New York trading.
Production Falls
ConocoPhillips said production of oil and gas in the first quarter fell about 5 percent from a year earlier to 1.83 million barrels of oil equivalent a day. The company cited normal field declines in the U.K. and North America, the effects of production-sharing agreements and unplanned downtime in North America related to weather.
The company said its earnings from producing oil and gas more than doubled in the first quarter to $1.83 billion. The company’s stake in Russia’s OAO Lukoil had a first-quarter profit of $387 million, compared with $8 million a year earlier.
ConocoPhillips said in March that it wants to sell half its 20 percent stake in Lukoil by the end of 2011. A 10 percent stake was valued at about $5 billion last month. The Lukoil sale is in addition to a plan to sell $10 billion in assets within the same period. This month, ConocoPhillips also said it’s pulling out of the Yanbu refinery venture with Saudi Aramco and the Shah gas project with Abu Dhabi. Costs related to those two projects totaled $110 million in the first quarter.
More Focused
“I think they’re finally realizing that they don’t have to be big to be appreciated by the market,” said Brian Youngberg, an analyst at Edward Jones in St. Louis who has a “buy” rating on ConocoPhillips shares and owns none. “If they focus on returns and operate their assets well, they will be rewarded in terms of improved share price.”
ConocoPhillips said it is increasing drilling in the Eagle Ford shale formation, with four horizontal wells completed and three more being drilled. The company also said three wells in North Dakota’s Bakken Shale began producing last month.
The company is seeking to reduce its refining and marketing business, whose profit margins have been squeezed by reduced demand for transportation fuels. ConocoPhillips has said it eventually wants that segment to comprise 15 percent of its portfolio, compared with 28 percent last year.
Clayton Reasor, vice president of corporate affairs at ConocoPhillips, said in March that the company may enter into some refinery joint ventures or sell interests. ConocoPhillips doesn’t expect to sell a refinery in the next couple of years, he said.
Refining Loss
ConocoPhillips reported a loss of $4 million from refining and marketing in the first quarter, compared with earnings of $205 million a year earlier. The company said its U.S. refining utilization rate was 88 percent in the first quarter, while the international rate was 48 percent in part because of maintenance work.
Profit from DCP Midstream, a pipeline and gas-processing venture with Spectra Energy Corp., fell 37 percent to $77 million. ConocoPhillips’s chemicals business, held in a joint venture with Chevron Corp., earned $110 million, compared with a profit of $23 million a year earlier.
Exxon Mobil Corp. and Chevron are the biggest U.S. oil companies. Exxon Mobil said today that first-quarter profit rose 38 percent. Chevron is scheduled to report earnings tomorrow.
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