Exhibit 99.1
ConocoPhillips Reports First Quarter Net Income of $1.6 Billion
HOUSTON--(BUSINESS WIRE)--April 28, 2004--ConocoPhillips
(NYSE:COP)
Earnings at a glance
First Quarter
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2004 2003
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Income from continuing operations $1,603 million $1,263 million
Income from discontinued operations 13 53
Cumulative effect of changes in
accounting principles - (95)
Net income 1,616 1,221
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Diluted income per share
Income from continuing
operations $2.31 $1.85
Net income 2.33 1.79
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Revenues $30.2 billion $27.1 billion
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ConocoPhillips (NYSE:COP) today reported first quarter net income
of $1,616 million, or $2.33 per share, compared with $1,221 million,
or $1.79 per share, for the same quarter in 2003. Total revenues were
$30.2 billion, versus $27.1 billion a year ago.
Income from continuing operations for the first quarter was $1,603
million, or $2.31 per share, compared with $1,263 million, or $1.85
per share, for the same period a year ago.
"Our operations turned in another quarter of solid performance,"
said Jim Mulva, president and chief executive officer. "Our oil and
gas production was 1.61 million barrels-of-oil-equivalent (BOE) per
day, and our refining crude oil capacity utilization rate was 95
percent. In addition, favorable commodity prices and margins, along
with further synergy capture, helped income from continuing operations
grow 25 percent per share on a diluted basis over the first quarter of
2003, and provided significant improvement over the previous quarter.
We also experienced good results from our Midstream segment, and our
chemicals joint venture continued to improve its performance.
"We made further progress in strengthening our balance sheet, with
our debt-to-capital ratio declining from 34 percent to 32 percent
during the quarter. In addition to operating cash flows of $2.1
billion, we received proceeds of $449 million from asset sales. This
cash generation allowed us to invest $1.5 billion in capital spending,
pay $294 million in dividends, and reduce balance sheet debt by
approximately $700 million."
The results of ConocoPhillips' business segments follow.
Exploration & Production (E&P)
E&P income from continuing operations in the first quarter was
$1,257 million, up from $991 million in the fourth quarter of 2003 and
from $1,125 million in the first quarter of 2003. Improvement from the
fourth quarter of 2003 primarily came from higher realized crude oil
and natural gas prices, higher gains from asset sales, and lower
exploration costs, partially offset by a reduction of income tax
benefits from various international tax jurisdictions experienced
during the fourth quarter. Improved results from the first quarter of
2003 primarily were due to higher realized U.S. crude oil prices and
gains on the sale of assets, partially offset by higher dry hole
expenses.
ConocoPhillips' daily production, including Canadian Syncrude,
averaged 1.61 million BOE for both the first quarter of 2004 and the
fourth quarter of 2003, and 1.63 million BOE for the first quarter of
2003. Improvements during the first quarter of 2004 from Norway and
Vietnam were offset by decreased production in the United Kingdom and
the impact of asset sales, primarily in Canada. The decrease from the
first quarter of 2003 was primarily due to asset dispositions and
lower production in the United Kingdom, partially offset by a full
quarter of production from Venezuela.
ConocoPhillips' first quarter 2004 average worldwide crude oil
sales price was $30.35 per barrel, up from $27.24 in the fourth
quarter of 2003. The company's U.S. Lower 48 and worldwide natural gas
prices averaged $4.91 and $4.48 per thousand cubic feet, respectively,
compared with $4.27 and $4.07 in the fourth quarter of 2003.
Midstream
Midstream income from continuing operations was $55 million, up
from $43 million in the fourth quarter of 2003 and $31 million in the
first quarter of 2003. The improvement from the fourth quarter was due
primarily to higher equity earnings from Duke Energy Field Services,
LLC (DEFS), partially offset by an impairment of approximately $12
million on an asset package held for sale. The increase over the first
quarter of 2003 was primarily due to higher equity earnings from DEFS
and higher natural gas liquids prices and volumes, partially offset by
the previously mentioned impairment from consolidated operations.
Refining and Marketing (R&M)
R&M income from continuing operations was $464 million, up from
$202 million in the previous quarter and $389 million in the first
quarter of 2003.
Improvements over the fourth quarter of 2003 were primarily driven
by higher refining margins. These improvements were partially offset
by lower U.S. retail and wholesale marketing margins, as well as
higher energy costs. The improved results from the first quarter of
2003 were attributable to higher U.S. refining margins and volumes,
partially offset by lower U.S. retail and wholesale marketing margins.
The refinery crude oil capacity utilization rate for the total
company averaged 95 percent, compared with 94 percent in the previous
quarter and 92 percent in the first quarter of 2003. Turnaround costs,
before tax, were approximately $59 million, versus $63 million in the
fourth quarter of 2003. These costs were lower in the first quarter in
part due to the late first quarter start-up of a turnaround at the
Alliance refinery, which will shift costs to the second quarter.
Chemicals
The Chemicals segment, which reflects the company's 50 percent
interest in Chevron Phillips Chemical Company LLC, reported income
from continuing operations of $39 million. This is compared with
income of $11 million in the fourth quarter of 2003 and a loss of $23
million in the first quarter of 2003. Contributing to the increase
from the fourth quarter were improved ethylene margins. Improvements
from the first quarter of 2003 were primarily driven by higher
ethylene and polyethylene margins and lower utility costs.
Emerging Businesses
The Emerging Businesses segment had a loss from continuing
operations of $22 million in the first quarter of 2004, compared with
losses of $24 million in the fourth quarter of 2003 and $34 million in
the first quarter of 2003. The decreased costs from the first quarter
of 2003 resulted from reduced gas-to-liquids plant construction costs
in 2004.
Corporate and Other
Corporate expenses from continuing operations during the first
quarter were $190 million, compared with $238 million in the previous
quarter and $225 million in the first quarter of 2003. Contributing to
the decrease from the fourth quarter were lower merger-related
expenses, lower interest expense, and the absence of costs associated
with the early retirement of debt, partially offset by a decrease in
foreign currency gains. The decrease from the first quarter of 2003 is
attributable to lower interest and lower merger-related expenses,
partially offset by insurance demutualization benefits recorded in
2003.
Total balance sheet debt at the end of the first quarter was $17.1
billion, down approximately $700 million from the end of the previous
quarter. This improvement resulted from higher cash flows due to
strong earnings, as well as from disciplined capital spending. At the
end of March 2004, the company's debt-to-capital ratio was 32 percent,
down from 34 percent at the end of the fourth quarter of 2003.
The company's effective tax rate was 46 percent in the first
quarter, compared with 41 percent in the previous quarter and 51
percent in the first quarter of 2003. The increase from the fourth
quarter of 2003 was due to a reduction of income tax benefits from
various international tax jurisdictions experienced during the fourth
quarter. The decrease from the first quarter of 2003 is due to a
higher proportion of income from lower tax-rate jurisdictions.
Discontinued Operations
First quarter 2004 earnings from discontinued operations were $13
million, compared with $36 million in the fourth quarter of 2003 and
$53 million in the first quarter of 2003. These decreases are
primarily due to the completion of various refining and marketing
asset sales during 2003.
Outlook
Mr. Mulva concluded:
"Our first quarter results have provided a good start to 2004. We
expect to continue realizing business improvements in our segments as
we execute our operating plan. We remain focused on our disciplined
approach to improving our operations and financial flexibility as we
manage operating costs and capital spending.
"Our asset sales program is nearing completion. Since the merger,
we have realized approximately $3.8 billion in proceeds from asset
sales. Through the remainder of 2004, we expect to close additional
dispositions, primarily midstream and marketing assets, completing our
asset disposition program.
"Liquids production from the Bayu-Undan project began in February
2004, and we anticipate start-up of the Hamaca upgrader later this
year. Although production for the second and third quarters of 2004 is
expected to be lower than that of the first quarter due to planned
downtime and seasonality, overall production for 2004 is expected to
be near 1.56 million BOE per day, as previously stated.
"The entire company continues to operate well under favorable
market conditions. However, we do not anticipate increasing our
previously announced capital program, which is directed toward
progressing our legacy projects and clean fuels initiatives, in
response to such conditions."
ConocoPhillips is an integrated oil company with interests around
the world. Headquartered in Houston, the company had approximately
37,200 employees and $84 billion of assets as of March 31, 2004. 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/1q04earnings.html
For detailed supplemental information, go to
www.conocophillips.com/news/nr/earnings/detail/1q04summary.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
expect to continue realizing business improvements in our segments as
we execute our operating plan"; "we expect to close additional
dispositions, primarily midstream and marketing assets, completing our
asset disposition program"; "we anticipate start up of the Hamaca
upgrader later this year"; "although production for the second and
third quarters of 2004 is expected to be lower than that of the first
quarter due to planned downtime and seasonality, overall production
for 2004 is expected to be near 1.56 million BOE per day, as
previously stated"; and "we do not anticipate increasing our
previously announced capital program which is directed toward
progressing our legacy projects and clean fuels initiatives, in
response to such conditions," 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
Kristi DesJarlais, 281-293-4595 (media)
or
Clayton Reasor, 212-207-1996 (investors)