ConocoPhillips 2Q earnings more than double; plans to sell full Lukoil stake by end of 2011

ConocoPhillips 2Q earnings more than double

NEW YORK — ConocoPhillips said Wednesday its second-quarter income more than doubled as oil prices increased and refining margins jumped.

The Houston oil company also announced plans to sell its entire holdings in Russian oil company Lukoil by the end of next year.

The company purchased a stake in Lukoil, Russia’s largest private oil company, hoping that it would open the door to more exploration and production projects in the region.

“That hasn’t really materialized quite like we thought,” CEO Jim Mulva told analysts in a conference call. “Not because of lack of interest or intent. But the business environment is quite different than what we thought.”

Mark Gilman, an analyst with The Benchmark Company said the Lukoil deal was flawed from the start. Since Lukoil is a private company, and not government owned, it doesn’t enjoy the kind of influence other Russian companies have.

“Lukoil is not regarded within Russia or outside of Russia as being the type of player that’s a door-opener,” Gilman said.

ConocoPhillips reported earnings of $4.16 billion, or $2.77 per share, for the second quarter. That compares with $859 million, or 57 cents per share, in the same part of 2009. Revenue rose to $45.69 billion from $35.45 billion.

Excluding a gain the company earned $1.67 per share in the latest quarter. On that basis, analysts expected $1.56 per share.

The rebound in energy prices has boosted oil companies’ sales this quarter. Conoco pumped 8 percent less oil in the second quarter, but the average price it received for each barrel increased 37 percent to $71.09. Natural gas prices also increased 22 percent to $4.50 per million cubic feet.

ConocoPhillips continues to move forward with plans to shed $10 billion in assets. In June, the company completed a $4.65 billion deal win Sinopec to sell its stake in a Canadian oil sands project.

The company said Wednesday it plans to sell 40 percent of its Lukoil stake for $3.44 billion by the third quarter. Conoco aims to sell the remaining 60 percent either to Lukoil or on the open market by the end of 2011.

ConocoPhillips has been trying to sell more of its refining business, which has struggled to pass higher oil prices on to motorists. In the second quarter, however, company refineries enjoyed higher profit margins on gasoline and other petroleum products.

Its U.S. refineries reported income of $782 million in the quarter. But companywide the operation lost money after including a $1.1 billion impairment charge related to its Wilhelmshaven refinery in Germany.

ConocoPhillips planned to upgrade the refinery but now wants to sell it or use it in another way.

ConocoPhillips shares fell 4 cents to $54.40 in afternoon trading.