Conoco Posts Loss; Unocal Gushes Profit

reuters.com Wed January 29, 2003 04:20 PM ET By Carolyn Koo

NEW YORK (Reuters) - ConocoPhillips COP.N , the No. 3 oil company, on Wednesday posted a fourth-quarter loss after more than $1 billion in charges wiped out the benefit of a sharp rise in crude oil and natural gas prices.

The hike in energy prices did, however, lift profits at smaller oil companies Occidental Petroleum Corp. OXY.N and Unocal Corp. UCL.N and should make for a solid round of fourth-quarter results from others in the energy industry.

Crude oil prices in the quarter were up more than 40 percent from a year-ago, driven by fears of a potential war in Iraq, a strike in Venezuela, the world's fifth-largest exporter of oil, and increasing U.S. demand for petroleum products during a frigid winter.

If oil prices continue to rally, first-quarter earnings could be even stronger. "The first quarter is going to be exceptionally strong versus the first quarter last year," said Gene Gillespie, an oil analyst at Howard, Weil, Labouisse.

"It should also make pretty good reading relative to the fourth quarter."

Houston-based ConocoPhillips -- formed by the $15.4 billion combination of Conoco and Phillips last year -- reported a net loss of $410 million, or 60 cents a share, reversing a year-ago profit reported by Phillips as a stand-alone company.

The results include $1.2 billion in charges to account primarily for the planned sale of a substantial portion of its 3,700 company-owned service stations.

The company, which still ranks behind Exxon Mobil Corp. XOM.N and ChevronTexaco Corp. CVX.N in terms of stock market value and revenue, is in the midst of selling assets in its upstream and downstream, or refining and marketing, businesses as part of a plan to shed properties that do not bring in adequate returns.

ConocoPhillips also forecast an impact of about $30 million to $50 million a month as long as the shutdown in Venezuela continues, less than many analysts expected.

"People had been fearful the impact would be greater," said Jacques Rousseau, an analyst at Friedman, Billings, Ramsey, who rates the company an "outperform" and does not own its shares.

He added: "The key thing is they provided some flavor on what's going on in Venezuela, with an estimate of what the strike is costing them."

KERR-MCGEE HURT BY CHARGES

Los Angeles-based Occidental Petroleum said fourth-quarter results swung to a profit of $322 million, or 84 cents a diluted share, from a year-earlier net loss of $247 million, or 65 cents a share. Year-ago results included a $240 million charge for the sale of its interest in the Equistar Chemicals joint venture.

Independent oil and gas explorer Unocal also a reported a fourth-quarter profit -- posting net income of $96 million or 38 cents a share. That reversed a year-ago net loss of $29 million or 12 cents a share.

It also forecast better-than-expected 2003 earnings per share of $2.45 to $2.75 and first-quarter earnings per share of 60 cents to 70 cents, which is in line with expectations. The company expects production for this year at the lower end of a range of 480,000 to 495,000 barrels of oil and gas a day.

Kerr-McGee Corp. KMG.N reported a wider net loss after taking hefty charges for a poorer-than-expected performance at a North Sea oil field and other asset write-downs.