ConocoPhillips: lower crude, gas prices in 3Q
October 2nd, 2008 - Posted in energy investmentHOUSTON: ConocoPhillips, the third-largest U.S. oil company, said Thursday that global production of oil and natural gas in the third quarter was likely flat or slightly below second-quarter levels, in part from disruptions caused by two storms in the Gulf of Mexico.
The Houston-based company said hurricanes Gustav and Ike, which shut down Gulf production for several weeks in late August and September, would have a negative after-tax impact of about $200 million for the July-September period.
In an overview of market conditions for the third quarter, ConocoPhillips also said it expects to report lower global refining margins and capacity utilization, partly because of the hurricanes, but it expected higher marketing margins.
In recent quarters, higher crude costs have squeezed profits at the refining arms of companies like ConocoPhillips, which don’t produce enough crude themselves to satisfy their refining operations so they have to buy supplies at market prices.
Those margins reflect the difference between the cost of crude and what the company makes on refined products such as gasoline.
ConocoPhillips noted third-quarter results would reflect lower crude and natural gas prices versus the second quarter.
The company is scheduled to report quarterly earnings Oct. 22. Its shares fell $3.07, or 4.3 percent, to $67.63 in early trading. That’s only slightly higher than its 52-week low of $67.31. The trading high during that period was $95.96.
In its overview, ConocoPhillips said disruptions caused by the two hurricanes likely reduced its output by about 20,000 barrels of oil equivalent a day. The U.S. Minerals Management Service reported Wednesday that about 40 percent of Gulf oil production was back on line, and about 50 percent of natural gas production.
The market price for oil — based on the benchmark West Texas Intermediate — was down $6.15 a barrel from the second quarter, but up more than $42 a barrel versus the third quarter a year ago, the company said in its report, citing figures from Platts, a division of McGraw-Hill Cos. The market price for natural gas was roughly flat compared with the second quarter but up significantly from the year-ago period.
ConocoPhillips noted its actual crude oil and natural gas prices may vary greatly from the price indicators because of quality, pricing lags and other factors.
ConocoPhillips said its exploration expenses amounted to about $275 million before-tax in the quarter, while share repurchases came to about $2.5 billion.
