ConocoPhillips first-quarter profit more than doubles on higher oil prices

ConocoPhillips 1Q profit jumps on oil prices

ConocoPhillips said Thursday that its first-quarter earnings more than doubled as oil prices climbed.

Oil prices were about twice as high during the quarter as they were year ago, and more than offset the company’s losses from its refining business.

ConocoPhillips, based in Houston, made $2.1 billion, or $1.40 per share, for the quarter ended March 31, compared with $840 million, or 56 cents per share, in the year ago quarter.

Refiners have had difficulty passing higher fuel costs on to customers as energy demand continues to be weak as the economy recovers from the recession.

Revenue totaled $44.8 billion in the quarter, up from $30.7 billion in the year-ago quarter.

Discounting one-time charges of $110 million, the company said it would have made $2.2 billion, or $1.47 per share. The charge is connected to its pullout from two projects in the Middle East, including a refinery planned for Saudi Arabia, as it looks to shrink its struggling refinery business.

The results boosted the company’s stock at one point in Thursday’s trading session to $60.15, a new high for the past year.

Production fell to 1.8 million barrels of oil equivalent per day, down 5 percent from 1.9 million barrels per day a year ago.

ConocoPhillips’ average oil price was about $72 a barrel during the quarter, compared with $40 a year ago when the Great Recession sent energy prices tumbling. Crude is above $80 a barrel now.

The company’s refining and marketing business lost $4 million in the quarter compared with a profit of $205 million in the year-ago quarter.

ConocoPhillips has taken steps to become a smaller company. It announced last year that it intends unload $10 billion in assets in 2010 and 2011, as it reconfigured itself into a more profitable company with less debt and fewer costly projects.

CEO Jim Mulva told analysts on a conference call that opportunities for profitable investments for large, integrated oil companies have changed dramatically in the past few years.

“The question for our company is how do we create value for our shareholders in this type of environment given the assets, the resources, and the opportunities we already have in our existing portfolio,” he said.

Mulva said the decision to pull out of the Shah natural gas project in the United Arab Emirates and the Yanbu refining project in Saudi Arabia were difficult, but consistent with the company’s plan to focus on projects with higher returns.

This month, ConocoPhillips agreed to sell its interest in a Canadian oil sand projects for $4.65 billion. The company also began efforts to sell its stake in the 2,000-mile Rockies Express natural gas pipeline along with other properties in the Lower 48 and Canada.

It also intends to sell half of its 20 percent stake in Russian oil giant Lukoil, which produced earnings of $387 million in the quarter for ConocoPhillips.

ConocoPhillips invested heavily in acquisitions and projects during the heyday of the oil industry a few years ago and built up sizable debt. It bought oil-and-gas producer Burlington Resources in 2006 for about $35 billion in cash and additional debt.

The company expects production in 2010 to be flat with 2008, after discounting the asset sales.

ConocoPhillips shares rose $1.41, or 2.4 percent, to $59.96 in midday trading.