UPDATE 1-ConocoPhillips says cut debt in 1st-qtr

<a href=reuters.com>Reuters Thu April 3, 2003 09:52 AM ET (Recasts lead, adds details, stock price)

NEW YORK, April 3 (Reuters) - ConocoPhillips COP.N , the No. 3 U.S. oil company, on Thursday said it lowered its debt balance by about $1.5 billion in a first quarter marked by higher crude oil prices and improved natural gas prices.

The Houston-based company made the announcement as part of its first-quarter interim update which featured forecasts for an increase in exploration and production, but saw problems with their chemical operations and lease losses due to the sale of some gas stations.

Its exploration and production, or upstream, division is set for production of crude oil, natural gas and natural gas liquids to be higher than its previous estimate of 1.55 million barrels per day.

Operations in Venezuela, crippled by a strike, resumed full production in early March, reaching about 80,000 barrels per day, the company said.

Refining and marketing, or downstream, margins and sales volumes in the first quarter are expected to be similar to the fourth quarter.

However, it warned that 2003 net income will be hurt by additional lease loss provisions stemming from the planned sale of some gas stations. The provisions are expected to be about $25 million after-tax related to continuing operations and $25 million related to discontinuing operations in the first quarter.

The chemicals business continued to suffer from poor market conditions in the first quarter, ConocoPhillips said.

Corporate charges from continuing operations are forecast to be about $240 million and the debt balance at the end of the first quarter is expected to be about $18.3 billion.

Shares of ConocoPhillips were down 30 cents at $53.05 in Thursday morning on the New York Stock Exchange.