Exhibit 99.1
ConocoPhillips Reports Fourth Quarter Net Income of $1.0 Billion;
Full Year 2003 Net Income Totals $4.7 Billion
HOUSTON--(BUSINESS WIRE)--Jan. 28, 2004--ConocoPhillips
(NYSE:COP):
Earnings at a glance
Fourth Quarter Twelve Months
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2003 2002 2003 2002
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Income from continuing
operations $985 $558 $4,593 $698
million million million million
Income (loss) from
discontinued
operations 36 (986) 237 (993)
Cumulative effect
of changes in
accounting principles - - (95) -
Net income (loss) 1,021 (428) 4,735 (295)
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Diluted income per share
Income from continuing
operations $1.43 $0.82 $6.70 $1.44
Net income (loss) 1.48 (0.63) 6.91 (0.61)
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Revenues $26.0 $23.5 $105.1 $57.2
billion billion billion billion
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ConocoPhillips (NYSE:COP) today reported fourth quarter net income
of $1,021 million, or $1.48 per share, compared with a net loss of
$428 million, or 63 cents per share, for the same quarter in 2002.
Total revenues were $26.0 billion, versus $23.5 billion a year ago.
Income from continuing operations for the fourth quarter was $985
million, or $1.43 per share, compared with $558 million, or 82 cents
per share, for the same period a year ago.
"Operationally, we performed well overall during the fourth
quarter, and there remains opportunity for improvement," said Jim
Mulva, president and chief executive officer. "We produced 1.61
million barrels-of-oil-equivalent per day and ran our refineries at 94
percent of capacity. Compared with last quarter, lower U.S. refining
margins combined with higher turnaround expenses significantly reduced
downstream earnings.
"We continue to make progress toward strengthening our financial
flexibility. For the full year of 2003, we generated net cash from
operating activities of $9.3 billion, and an additional $2.7 billion
from asset sales. Our disciplined focus enabled us to fund $6.2
billion in capital expenditures, reduce debt by $4.8 billion, improve
our debt-to-capital ratio to 34 percent, and pay $1.1 billion in
dividends to our shareholders."
For the twelve months of 2003, net income was $4,735 million, or
$6.91 per share, compared with a net loss of $295 million, or 61 cents
per share, for the corresponding period in 2002. Income from
continuing operations was $4,593 million, or $6.70 per share, versus
$698 million, or $1.44 per share, for the same period a year ago.
Total revenues were $105.1 billion, versus $57.2 billion a year ago.
The ConocoPhillips merger was consummated on Aug. 30, 2002, and
used purchase accounting to recognize the fair value of the Conoco
assets and liabilities. Results for the twelve months of 2002 include
eight months' activity for Phillips and four months of activity for
ConocoPhillips.
The results of ConocoPhillips' business segments follow.
Exploration & Production (E&P)
Fourth quarter financial results: E&P income from continuing
operations in the fourth quarter was $991 million, up from $967
million in the third quarter of 2003 and up from $808 million in the
fourth quarter of 2002. The increase from the third quarter was
primarily the result of impacts from international tax benefits in the
fourth quarter, increased international natural gas prices, and
increased production. These improvements were partially offset by
lower gains on asset sales and increased exploration costs. Improved
results from the fourth quarter of 2002 were primarily due to higher
realized crude oil and natural gas prices, and the impact from
international tax benefits in 2003, partially offset by lower equity
earnings and lease impairments.
ConocoPhillips' daily production for the quarter was higher than
that of the third quarter, averaging 1.61 million
barrels-of-oil-equivalent (BOE), including Canadian Syncrude.
Increased production was primarily due to normal seasonality, higher
production in Vietnam and improved operations in the U.K. North Sea,
partially offset by operating interruptions in Venezuela, Alaska and
Indonesia. Disposition proceeds of approximately $275 million during
the fourth quarter brought total E&P asset sales during 2003 to
approximately $1 billion. These dispositions were producing
approximately 22,000 BOE per day when sold, contributing approximately
13,000 BOE per day to fourth quarter average production.
ConocoPhillips' fourth quarter 2003 average worldwide crude oil
sales price was $27.24 per barrel, up from $27.00 in the third quarter
of 2003. Realized crude oil prices did not rise as rapidly as the
industry's market indicators (e.g., West Texas Intermediate) due to
widening price differentials and the lag effect of Alaska North Slope
pricing. The company's U.S. Lower 48 and worldwide natural gas prices
averaged $4.27 and $4.07 per thousand cubic feet, respectively,
compared with $4.56 and $3.80 in the third quarter of 2003. Lower U.S.
natural gas market prices were more than offset by higher prices in
the United Kingdom.
During the fourth quarter, the company realized international tax
benefits, including a $95 million net income benefit from tax rate
reductions enacted by the Canadian Parliament and Alberta provincial
government.
Twelve months financial results: E&P income from continuing
operations for the twelve months of 2003 was $4,160 million, up from
$1,749 million in 2002, primarily due to additional volumes from the
Conoco operations, higher realized worldwide crude oil and natural gas
prices, and the impact of various international tax benefits.
ConocoPhillips' average worldwide crude oil price was $27.47 per
barrel for the twelve months of 2003, compared with $24.07 for the
same period in 2002. The company's U.S. Lower 48 and worldwide natural
gas prices averaged $4.76 and $4.07 per thousand cubic feet,
respectively, versus $2.79 and $2.77 in 2002.
Midstream
Fourth quarter financial results: Midstream income from continuing
operations was $43 million, up from $31 million in the third quarter
of 2003 and up from $20 million in the fourth quarter of 2002. The
increase from the third quarter of 2003 was due primarily to improved
natural gas liquids sales prices. The increase over the fourth quarter
of 2002 was primarily due to higher natural gas liquids sales prices
and increased equity earnings from Duke Energy Field Services, LLC
(DEFS).
Twelve months financial results: Midstream operating results
increased to $130 million, from $55 million in 2002. Contributing to
the increase were higher equity earnings from DEFS and the addition of
the Conoco midstream operations.
Refining and Marketing (R&M)
Fourth quarter financial results: R&M income from continuing
operations was $202 million, down from $485 million in the previous
quarter and up from $105 million in the fourth quarter of 2002.
The decline from the third quarter of 2003 was primarily driven by
lower worldwide refining and marketing margins and increased
turnaround activity. Fourth quarter 2003 results also were negatively
impacted by extended downtime at the Humber refinery in the United
Kingdom and unplanned maintenance at the Alliance refinery in
Louisiana. The improved results over the fourth quarter of 2002 were
attributable to higher refining and marketing margins, and lower
impairment charges, partially offset by higher turnaround activity.
For the fourth quarter, the company's crude oil capacity
utilization rate averaged 94 percent, compared with 95 percent last
quarter and 89 percent in the fourth quarter of 2002. After-tax
turnaround costs were $42 million and $13 million in the fourth
quarter and third quarter of 2003, respectively.
Twelve months financial results: R&M income from continuing
operations for the twelve months of 2003 increased to $1,397 million,
compared with $143 million for the twelve months of 2002. Increased
refining and marketing margins, as well as the addition of the Conoco
assets, contributed to the increase.
Chemicals
Fourth quarter financial results: The Chemicals segment, which
reflects the company's 50 percent interest in Chevron Phillips
Chemical Company LLC, reported income from continuing operations of
$11 million, compared with $7 million in the third quarter of 2003 and
a loss of $13 million in the fourth quarter of 2002.
Twelve months financial results: During the twelve months of 2003,
the Chemicals segment had income from continuing operations of $7
million, compared with a loss of $14 million for the same period a
year ago. The increase was primarily due to improved results from the
aromatics and styrenics product line.
Emerging Businesses
The Emerging Businesses segment had a loss from continuing
operations of $24 million in the fourth quarter of 2003, compared with
losses of $18 million in the third quarter of 2003 and $40 million in
the fourth quarter of 2002. The increased loss from the third quarter
was primarily associated with the operating costs of a newly
operational gas-to-liquids demonstration plant. The lower losses from
the fourth quarter of 2002 primarily resulted from reduced costs
associated with the company's carbon fibers assets, as well as reduced
construction costs in connection with the company's gas-to-liquids
operations.
Corporate and Other
Fourth quarter after-tax Corporate expenses from continuing
operations were $238 million, compared with $223 million in the
previous quarter and $322 million in the fourth quarter of 2002. The
increased charges from the third quarter were primarily attributable
to losses on the early retirement of debt and increased
benefit-related charges, partially offset by higher currency
transaction gains. The decrease from the fourth quarter of 2002
primarily resulted from lower merger-related expenses and higher
currency transaction gains in the fourth quarter of 2003.
The company's balance sheet debt level at the end of the fourth
quarter was approximately $17.8 billion. This includes debt reduction
of over $900 million during the quarter and $4.8 billion for the
entire year, including accounting changes implemented during the third
quarter.
The company's fourth quarter effective tax rate of 41 percent was
lower than that of the third quarter primarily due to international
tax benefits, partially offset by a higher proportion of income in
higher-tax-rate jurisdictions.
Discontinued Operations
Fourth quarter 2003 earnings from discontinued operations were $36
million, compared with $57 million in the third quarter and a loss of
$986 million in the fourth quarter of 2002. The decrease from the
third quarter of 2003 was primarily related to decreased volumes due
to asset sales, while the improvement from the fourth quarter of 2002
was primarily related to a 2002 after-tax impairment charge associated
with the company's planned disposition of certain marketing assets.
Outlook
Mr. Mulva concluded:
"We had a good year in terms of operating performance and market
conditions, enabling us to deliver strong financial results. We have
delivered on our commitments, including synergy targets, and are
dedicated to improving total shareholder return through our
disciplined strategy.
"Upstream, we continue to move forward with our legacy projects.
Our Bayu-Undan project in the Timor Sea is set to begin producing
liquids in early 2004, and the start up of the Hamaca upgrader in
Venezuela is expected later this year. We are progressing the
development of our liquefied natural gas business, including our
announced participation in a Freeport, Texas, regasification project.
We also have committed to a development plan for production of heavy
oil from the Surmont project in Alberta, Canada. In addition, we are
continuing to expand our portfolio of legacy projects, with
developments in the Caspian, Middle East and Asia-Pacific regions.
"Downstream, the optimization of spending related to clean fuels
project initiatives will be an important focus area during 2004. We
expect turnaround activity in the first quarter to be higher than that
of the fourth quarter. In addition, we anticipate our crude oil
capacity utilization rate will be slightly lower. We continue to make
good progress toward completing our planned asset disposition program.
"We are focused on creating value for shareholders through
improved return on capital employed, an enhanced upstream portfolio,
and building financial strength."
ConocoPhillips is an integrated petroleum company with interests
around the world. Headquartered in Houston, the company had
approximately 39,000 employees, $82.5 billion of assets, and $105
billion of revenues as of Dec. 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
"Fourth Quarter Earnings" link.
For financial and operational tables, go to
www.conocophillips.com/news/nr/earnings/highlights/4q03earnings.html.
For detailed supplemental information, go to
www.conocophillips.com/news/nr/earnings/detail/4q03summary.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: "our
Bayu-Undan project in the Timor Sea is set to begin producing liquids
in early 2004"; "the start up of the Hamaca upgrader in Venezuela is
expected later this year"; "we expect turnaround activity in the first
quarter to be higher than that of the fourth quarter"; and "we
anticipate our crude oil capacity utilization rate will be slightly
lower." 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 Canadian 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, 281-293-4595 (media)
or
Clayton Reasor, 212-207-1996 (investors)
www.conocophillips.com