Stock of the Day
|
ConocoPhillips (COP)
Pump Prices Hurt ConocoPhillips
The third-largest U.S. oil producer, ConocoPhillips, released its first quarter earnings today which reported that net income fell 80% from a year ago. Net income dropped to $840 million, or 56 cents a share, from $4.14 billion, or $2.62, a year earlier. It is no secret that crude oil prices have dramatically fallen from their 2008 highs so was this report of an 80% drop in line with analysts' expectations?
|
| Daily Chart |
If you are not able to see the chart, your email client probably does not support javascript. To view it, please click here
|
| Stock Analysis |
ConocoPhillips actually beat analysts' expectations with earnings of $0.56 per share. Analysts polled by Thomson Reuters expected earnings of $0.42 a share. The stock jumped over 3.55% as of 11:15 AM to $39.52. Before today, the stock had fallen 27% this year and is only a fraction of its 52-week high of $95.96. Shares of ConocoPhillips hit a five-year low of $34.12 a share on March 6. "Although we delivered solid operational performance in our upstream business during the first quarter, lower commodity prices and realized margins negatively impacted our financial results," said Chairman and CEO Jim Mulva.
|
U.S. oil futures averaged $43.31 a barrel in the quarter, 56% lower than a year earlier. They are down almost 70% from their record high of $147.27 reached last July. Overall weakness in the global economy, not just crude oil, also contributed falling revenues. ConocoPhillips produces large amounts of natural gas which tumbled 49%. Gas futures, which traded above $13 per million British thermal units last July, slid as low as $3.43 this week. Profits from its chemicals division dropped 56%. Chemicals companies have been hurt by the sharp declines in the auto and housing sectors. First quarter profit from refining and marketing was down 61% to $205 million, from a year earlier. Maintenance work cut utilization of U.S. refineries to 80% in the first quarter from 94% in the previous quarter.
|
Also reporting its earnings today was Occidental Petroleum Corp. (OXY: Charts, News, Offers) which said its first-quarter net income fell 80%, even as its total output rose. Similar to ConocoPhillips, Occidental posted a profit of $368 million, but it was down significantly from a year earlier. Rival oil producer Exxon Mobil Corp (XOM: Charts, News, Offers) is scheduled to announce its results April 30 and Chevron Corp. (CVX: Charts, News, Offers) plans to report its earnings May 1. Both Exxon Mobil and Chevron Corp share prices have held up somewhat better than ConocoPhillips.
|
The future is cloudy for ConocoPhillips and other oil producers. While commodity prices have come down significantly, the cost structure of the industry has not come down as much. "Looking ahead to next quarter, we expect the company's second-quarter E&P segment production will be lower than the first quarter, primarily due to planned maintenance and seasonality," said CEO Jim Mulva. However, full-year production is expected to be slightly higher than 2008. ConocoPhillips, like many other companies, is likely to see larger profits once the global economy rebounds.
|
Profile |
Click here to view a detailed profile of ConocoPhillips.
|
|
|
|
|
