Exhibit 99.1
ConocoPhillips Reports First Quarter Net Income of $1.4 Billion
HOUSTON--(BUSINESS WIRE)--April 30, 2003--ConocoPhillips
(NYSE:COP)
Earnings at a glance
First Quarter
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2003 2002
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Income (loss) from continuing
operations $1,270 million $ (98) million
Income (loss) from discontinued
operations $ 22 (4)
Cumulative effect of change in
accounting principle $ 145 -
Net income (loss) $1,437 (102)
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Diluted income per share
Income (loss) from continuing
operations $ 1.86 (0.26)
Net income (loss) $ 2.10 (0.27)
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Revenues $ 27.1 billion $ 8.5 billion
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ConocoPhillips (NYSE:COP) today reported first quarter net income
of $1,437 million, or $2.10 per share, compared with a net loss of
$102 million, or 27 cents per share, for the same quarter in 2002.
Total revenues were $27.1 billion, versus $8.5 billion a year ago.
Income from continuing operations for the first quarter was $1,270
million, or $1.86 per share, compared with a loss of $98 million, or
$0.26 per share, for the same period a year ago.
"We are very pleased with our first quarter performance," said Jim
Mulva, president and chief executive officer. "Operationally, we
performed well, with upstream production of 1.6 million
barrels-of-oil-equivalent (BOE) per day, and downstream, we ran at 92
percent of capacity.
"This is the first quarter in which we can measure our progress
against the operating plan we presented in November. Our solid
operating performance allowed us to secure the benefits of higher oil
and gas prices and higher worldwide refining margins. These factors
contributed to our debt reduction of $1.5 billion. Also contributing
to our strong performance were business improvements resulting from
progress made on implementing the synergy initiatives we incorporated
into our 2003 operating plans."
The ConocoPhillips merger was consummated on Aug. 30, 2002, and
used purchase accounting to recognize the fair value of the Conoco
assets and liabilities. While the results of the first quarter reflect
operations of the combined company, the first quarter of 2002 reflects
only Phillips' results, restated for discontinued operations resulting
from dispositions required by the Federal Trade Commission (FTC) and
the planned disposition of certain marketing assets. As of early in
the second quarter of 2003, definitive sales agreements for all asset
dispositions required by the FTC have been executed. Pending FTC
approval, all agreements are expected to be closed by the end of the
third quarter.
The results of ConocoPhillips' business segments follow.
Exploration & Production (E&P)
E&P income from continuing operations in the first quarter was
$1,137 million, up from $808 million in the fourth quarter of 2002 and
from $142 million in the first quarter of 2002. Improvement from the
fourth quarter primarily came from higher realized crude oil and
natural gas prices. Improved results from the first quarter of 2002
were due to higher realized crude oil and natural gas prices, as well
as increased production resulting from the addition of the Conoco
assets. Additionally, improvements from prior periods reflect progress
made on the implementation of synergy initiatives.
ConocoPhillips' daily production for the quarter was similar to
that of the fourth quarter of 2002, averaging 1.62 million BOE per
day, including Canadian Syncrude. Decreased production in Venezuela
was offset by higher output from Alaska, China and Indonesia.
ConocoPhillips' first quarter 2003 average worldwide crude oil
sales price was $30.72 per barrel, up from $25.31 in the fourth
quarter of 2002. The company's U.S. Lower 48 and worldwide natural gas
prices averaged $5.47 and $4.49 per thousand cubic feet, respectively,
compared with $3.43 and $3.27 in the fourth quarter of 2002. The
company's realized prices for oil and gas in the United States did not
increase as much as the market indicators due to quality and location
differentials, as well as the effect of pricing lags.
Midstream
Midstream income from continuing operations was $31 million, up
from $20 million in the fourth quarter of 2002 and $12 million in the
first quarter of 2002. The improvement from the fourth quarter was due
primarily to higher natural gas liquids prices. The increase over the
first quarter of 2002 was primarily due to the addition of Conoco's
midstream operations and higher equity earnings from Duke Energy Field
Services, LLC resulting from higher natural gas liquids prices.
Refining and Marketing (R&M)
R&M income from continuing operations was $371 million, up from
$105 million in the previous quarter and a loss of $87 million in the
first quarter of 2002.
Improvements in refining over the fourth quarter of 2002 were
primarily driven by higher worldwide refining margins and a full
quarter of operations at the Humber refinery in the United Kingdom.
These improvements were partially offset by higher energy costs and
increased turnaround expenses in the first quarter. U.S. marketing
operations incurred a loss of $9 million during the first quarter of
2003, compared with a loss of $38 million in the fourth quarter of
2002. These losses include marketing impairments and lease loss
accruals of $25 million in the first quarter and $88 million in the
fourth quarter.
The improved results from the first quarter of 2002 were
attributable to the addition of the Conoco assets and higher refining
and marketing margins, as well as business improvements, which
included benefits of progress made on implementing synergy
initiatives.
The refinery crude oil capacity utilization rate for the total
company averaged 92 percent, compared with 89 percent in the previous
quarter. The loss of Venezuelan crude supply was effectively managed
and had a relatively minor impact on crude runs and net income during
the first quarter.
The impact of turnarounds at the Ferndale, Wash., Wood River,
Ill., and Sweeny, Texas, refineries was offset by a full quarter of
operations at the Humber refinery in the United Kingdom. After-tax
turnaround costs incurred during the first quarter reduced earnings by
approximately $40 million, versus $17 million in the fourth quarter of
2002.
Chemicals
The Chemicals segment, which reflects the company's 50 percent
interest in Chevron Phillips Chemical Company LLC, reported a loss
from continuing operations of $23 million. This is compared with
losses of $13 million in the fourth quarter of 2002 and $11 million in
the first quarter of 2002. Contributing to the declines were increased
fuel and feedstock costs.
Emerging Businesses
The Emerging Businesses segment had a loss from continuing
operations of $34 million in the first quarter of 2003, compared with
losses of $40 million in the fourth quarter of 2002 and $5 million in
the first quarter of 2002. The improvement from the fourth quarter was
primarily attributable to a reduction in certain carbon fibers
expenses as a result of the company's announced plan to shut down this
operation due to market, operating and technological uncertainties.
The increased costs from the first quarter of 2002 resulted from the
addition of the Conoco assets.
Corporate and Other
First quarter Corporate expenses were $212 million, after tax,
from continuing operations, compared with $322 million in the previous
quarter and $149 million in the first quarter of 2002. Contributing to
the decrease from the fourth quarter were lower restructuring charges
and insurance demutualization benefits. The increase from the first
quarter of 2002 is attributable to the inclusion of the Conoco assets,
merger-related expenses and losses on the early redemption of debt,
partially offset by the insurance demutualization benefits.
Total debt at the end of the first quarter was $18.2 billion, down
$1.5 billion from the end of the previous quarter. This improvement
resulted from higher cash flows due to strong earnings, working
capital reductions and lower capital spending. At the end of March,
the company's debt-to-capital ratio was 36 percent, down from 39
percent at the end of the fourth quarter of 2002.
The company's effective tax rate of 50.5 percent was lower than
expected due to a higher proportion of income from lower tax-rate
jurisdictions in March.
Discontinued Operations
First quarter 2003 earnings from discontinued operations were $22
million, compared with a loss of $986 million in the fourth quarter of
2002. The improvement was related to fourth quarter impairment charges
of approximately $1 billion associated with the company's planned sale
of a substantial portion of its marketing operations. First quarter
earnings were negatively impacted by $25 million associated with lease
loss accruals on the company's downstream marketing operations.
Cumulative Effect of Change in Accounting Principle
Income from continuing operations in the first quarter of 2003
does not include a positive impact of $145 million related to the
cumulative effect of a change in accounting principle associated with
the adoption of Statement of Financial Accounting Standards No. 143,
"Accounting for Asset Retirement Obligations."
Outlook
Mr. Mulva concluded:
"We remain focused on integrating our businesses and on capturing
synergies by optimizing our assets and applying disciplined spending
to accomplish our stated target.
"Upstream, we are continuing construction of the upgrader
associated with the Hamaca heavy crude oil project in Venezuela, with
start-up expected in the second half of 2004, and we are moving
forward with development of Phase I of the Bayu-Undan project in the
Timor Sea and are negotiating production sharing contracts in
anticipation of receiving the final approvals needed to advance Phase
II. Additionally, we expect to drill approximately 50 exploration and
appraisal wells this year.
"In our downstream business, we are moving forward with our plan
to dispose of a substantial portion of our retail marketing assets. In
addition, we have signed a memorandum of understanding to acquire
certain refining assets in Hartford, Ill. These assets will be
incorporated into the operations of our nearby Wood River refinery."
ConocoPhillips is an integrated petroleum company with interests
around the world. Headquartered in Houston, the company had
approximately 56,600 employees and $80 billion of assets as of March
31, 2003. For more information, go to www.conocophillips.com.
ConocoPhillips' quarterly conference call is scheduled for noon
Central today.
To listen to the conference call and to view related presentation
materials, go to www.conocophillips.com and click on the "First
Quarter Earnings" link.
For financial and operational tables, go to
www.conocophillips.com/news/nr/earnings/highlights/1q03earnings.html.
For detailed supplemental information, go to
www.conocophillips.com/news/nr/earnings/detail/1q03summary.xls
CAUTIONARY STATEMENT FOR THE PURPOSES OF THE "SAFE HARBOR"
PROVISIONS OF THE PRIVATE SECURITIES LITIGATION REFORM ACT OF 1995
This update contains forward-looking statements within the meaning
of the "safe harbor" provisions of the Private Securities Litigation
Reform Act of 1995. The forward-looking statements, such as "we are
continuing construction of the upgrader associated with the Hamaca
heavy crude oil project in Venezuela, with start-up expected in the
second half of 2004"; "we are moving forward with development of Phase
I of the Bayu-Undan project in the Timor Sea"; "(we) are negotiating
production sharing contracts in anticipation of receiving the final
approvals needed to advance Phase II (of the Bayu-Undan project in the
Timor Sea)"; "we expect to drill approximately 50 exploration and
appraisal wells this year"; "we are moving forward with our plan to
dispose of a substantial portion of our retail marketing assets"; and
"we have signed a memorandum of understanding to acquire certain
refining assets in Hartford, Ill.," involve certain risks,
uncertainties and assumptions that are difficult to predict. Further,
certain forward-looking statements are based on assumptions as to
future events that may not prove to be accurate. Therefore, actual
outcomes and results may differ materially from what is expressed or
forecast in such forward-looking statements. Economic, business,
competitive and regulatory factors that may affect ConocoPhillips'
business are generally as set forth in ConocoPhillips' filings with
the Securities and Exchange Commission (SEC). ConocoPhillips is under
no obligation (and expressly disclaims any such obligation) to update
or alter its forward-looking statements whether as a result of new
information, future events or otherwise.
Cautionary Note to U.S. Investors -- The SEC permits oil and gas
companies, in their filings with the SEC, to disclose only proved
reserves that a company has demonstrated by actual production or
conclusive formation tests to be economically and legally producible
under existing economic and operating conditions. Production is
distinguished from oil and gas production because SEC regulations
define Syncrude as mining-related and not part of conventional oil and
natural gas reserves. We use certain terms in this release, such as
"including Syncrude" that the SEC's guidelines strictly prohibit us
from including in filings with the SEC. U.S. investors are urged to
consider closely the disclosure in the company's periodic filings with
the SEC, available from the company at 600 North Dairy Ashford Road,
Houston, Texas 77079. This information can also be obtained from the
SEC by calling 1-800-SEC-0330.
CONTACT: ConocoPhillips, Houston
Kristi DesJarlais (media), 281/293-4595
or
Clayton Reasor (investors), 212/207-1996