Exhibit 99.1
ConocoPhillips Reports Fourth-Quarter Net Income of $2.4 Billion;
Full-Year 2004 Net Income Totals $8.1 Billion
HOUSTON--(BUSINESS WIRE)--Jan. 26, 2005--ConocoPhillips (NYSE:COP)
Earnings at a glance
Fourth Quarter Twelve Months
- ----------------------------------------------------------------------
2004 2003 2004 2003
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Income from continuing
operations $2,480 $985 $8,107 $4,593
million million million million
Income (loss) from
discontinued operations $ (48) $ 36 $ 22 $ 237
Cumulative effect of changes
in accounting principles $ - $ - $ - $ (95)
Net income $2,432 $1,021 $8,129 $4,735
- ----------------------------- --------- --------- --------- ----------
Diluted income per share
Income from continuing
operations $ 3.51 $ 1.43 $11.57 $ 6.70
Net income $ 3.44 $ 1.48 $11.60 $ 6.91
- ----------------------------- --------- --------- --------- ----------
Revenues $ 40.1 $ 26.0 $136.9 $105.1
billion billion billion billion
- ----------------------------- --------- --------- --------- ----------
ConocoPhillips (NYSE:COP) today reported fourth-quarter net income
of $2,432 million, compared with $1,021 million for the same quarter
in 2003. Net income per share for the fourth quarter was $3.44, versus
$1.48 for the same period a year ago. Total revenues were $40.1
billion, versus $26.0 billion a year ago. Income from continuing
operations for the fourth quarter was $2,480 million, compared with
$985 million for the same period a year ago. Income from continuing
operations per share for the fourth quarter of 2004 was $3.51,
compared with $1.43 for the fourth quarter of 2003. The quarter's net
income included $74 million, or $0.10 per share, from the company's
equity investment in LUKOIL.
"Operationally, we performed very well during the fourth quarter,"
said Jim Mulva, chairman and chief executive officer. "Overall, our
upstream operations ran well, enabling us to benefit from the strong
commodity price environment. The total company produced 1.75 million
barrels of oil equivalent per day, including 1.60 million BOE per day
from our Exploration and Production segment and an estimated 150,000
barrels of oil per day from our LUKOIL equity investment. Downstream,
our domestic operations benefited from improved heavy-light crude oil
differentials, and our international refineries ran well, with strong
capacity utilization rates. Worldwide, our refineries ran at 94
percent of capacity, excluding the impact of LUKOIL.
"Our financial position continues to steadily improve, and our
return on capital employed remains strong and competitive. We ended
the year with a debt-to-capital ratio of 26 percent. For the full
year, we generated $12.0 billion in cash from operations, spent $9.5
billion on capital projects and investments, including the purchase of
approximately 10 percent of LUKOIL, and paid $1.2 billion in
dividends."
For the twelve months of 2004, net income was $8,129 million, a 72
percent improvement when compared with $4,735 million for 2003. Net
income per share was $11.60 for the full year 2004, versus $6.91 for
2003. Income from continuing operations was $8,107 million, a 77
percent increase over $4,593 million for the same period a year ago.
Income from continuing operations per share for the twelve months of
2004 was $11.57, compared with $6.70 for the same period in 2003.
Total revenues were $136.9 billion, versus $105.1 billion a year ago.
As of the end of 2004, ConocoPhillips owned about 10 percent of
LUKOIL. ConocoPhillips' equity share of LUKOIL's operational and
financial information has been estimated and reported in the LUKOIL
Investment segment. In addition to the company's proportionate share
of LUKOIL's earnings, this segment also reflects the amortization of
the estimated basis difference between ConocoPhillips' equity interest
in the net assets of LUKOIL and the historical cost of the company's
investment in LUKOIL. As expected, during the Jan. 24, 2005,
extraordinary general meeting of LUKOIL shareholders, all charter
amendments reflected in the shareholder agreement were passed and
ConocoPhillips' nominee was elected to LUKOIL's board of directors.
The results of ConocoPhillips' business segments follow. Results
from the company's equity investment in LUKOIL are reported separately
in the LUKOIL Investment segment.
Exploration & Production (E&P)
Fourth-quarter financial results: E&P income from continuing
operations in the fourth quarter was $1,671 million, up from $1,420
million in the third quarter of 2004 and up from $991 million in the
fourth quarter of 2003. The increase from the third quarter was
primarily the result of higher crude oil and natural gas prices, as
well as higher production, partially offset by certain impairments.
Improved results from the fourth quarter of 2003 were primarily due to
higher crude oil and natural gas prices, partially offset by the
reduced impact of international tax benefits.
ConocoPhillips' E&P daily production for the quarter averaged 1.60
million barrels of oil equivalent (BOE) per day, including Canadian
Syncrude. This excludes the estimated 150,000 barrels per day (BPD) of
oil reported in the LUKOIL Investment segment below. When compared
with the third quarter, increased E&P output was primarily the result
of the completion of third-quarter scheduled maintenance in Alaska and
the North Sea, partially offset by the adverse impact of approximately
15,000 BOE per day due to the change in the Venezuelan governmental
royalty rate. When compared with the fourth quarter of 2003, adjusted
for the disposition of Petrovera, production for the fourth quarter of
2004 was flat, as increased production from Bayu-Undan, Vietnam and
Hamaca offset other asset sales and natural decline.
Twelve months financial results: E&P income from continuing
operations for the twelve months of 2004 was $5,702 million, up from
$4,160 million in 2003, primarily due to higher realized worldwide
crude oil and natural gas prices, partially offset by lower volumes
largely associated with asset sales. As expected, production,
including Canadian Syncrude, for the full year averaged 1.56 million
BOE per day, which is slightly higher than that of the previous year
when adjusted for dispositions.
Midstream
Fourth-quarter financial results: Midstream income from continuing
operations was $100 million, up from $38 million in the third quarter
of 2004 and up from $43 million in the fourth quarter of 2003.
Contributing to the increase over the prior quarter were higher
natural gas liquids prices for both Duke Energy Field Services, LLC
(DEFS) and the company's consolidated operations, and reduced asset
impairments in DEFS. The increase over the fourth quarter of 2003 was
primarily the result of higher natural gas liquids prices in both
DEFS' and the company's consolidated operations.
Twelve months financial results: Midstream operating results
increased to $235 million, from $130 million in 2003. The increase was
primarily the result of higher natural gas liquids prices in both DEFS
and the company's consolidated operations, partially offset by
increased impairment charges in DEFS.
Refining and Marketing (R&M)
Fourth-quarter financial results: R&M income from continuing
operations was $753 million, up from $708 million in the previous
quarter and up from $202 million in the fourth quarter of 2003. The
increase in fourth-quarter R&M earnings, compared with the third
quarter of 2004, was due to improved realized international refining
margins. Improved results over the fourth quarter of 2003 were
primarily due to higher worldwide refining margins.
During the fourth quarter, the company's domestic refinery crude
oil capacity utilization rate was 93 percent. Although realized
refining margins were lower than those of the third quarter, they were
not as low as would have been expected from market-indicator crack
spreads due to the impact of wider heavy-light crude oil differentials
and improved product yields. In addition, U.S. marketing results were
lower due to inventory impacts, partially offset by improved margins.
Internationally, a 3 percent increase in the company's refinery
crude oil capacity utilization rate and improved refining optimization
contributed to improved refining margins. International marketing
margins also were improved over the previous quarter.
Overall, R&M's fourth-quarter refinery crude oil capacity
utilization rate averaged 94 percent, the same as last quarter. R&M's
total refining throughput for the quarter was 2.7 million BPD, which
excludes the estimated 77,000 BPD shown in the LUKOIL Investment
segment below. Fourth-quarter turnaround costs were $73 million
before-tax, compared with $57 million in the third quarter of 2004.
Twelve months financial results: R&M income from continuing
operations for the twelve months of 2004 increased to $2,743 million,
compared with $1,397 million in the same period a year ago. The
increase was primarily the result of higher worldwide refining
margins, and was partially offset by lower U.S. marketing margins and
increased turnaround, energy, impairment and contingency costs.
Full-year turnaround costs, before-tax, were $267 million.
LUKOIL Investment
Fourth-quarter financial results: Income from continuing
operations in the fourth quarter was $74 million. This represents
ConocoPhillips' estimate of the company's weighted average equity
share of LUKOIL's income for the fourth quarter based on market
indicators and historical production trends of LUKOIL. This segment
also includes the amortization of the estimated basis difference
between ConocoPhillips' equity interest in the net assets of LUKOIL
and the historical cost of the company's investment in LUKOIL.
ConocoPhillips' share of estimated crude oil production was
150,000 BPD. The company's share of estimated daily refining crude oil
throughput was 77,000 BPD.
Chemicals
Fourth-quarter financial results: The Chemicals segment, which
includes the company's 50 percent interest in Chevron Phillips
Chemical Company LLC, reported income from continuing operations of
$83 million, compared with $81 million in the third quarter of 2004
and $11 million in the fourth quarter of 2003. The increase from the
third quarter was largely due to higher margins, particularly in the
olefins and polyolefins business line, partially offset by higher
utility costs. The increase over the fourth quarter of 2003 reflects
improved margins and volumes in olefins and polyolefins, as well as
improved margins in the aromatics and styrenics business line.
Twelve months financial results: During the twelve months of 2004,
the Chemicals segment had income from continuing operations of $249
million, compared with $7 million for the same period a year ago.
Contributing to the increase were higher margins and volumes in both
the olefins and polyolefins, and aromatics and styrenics business
lines.
Emerging Businesses
Fourth-quarter financial results: The Emerging Businesses segment
had a loss from continuing operations of $24 million in the fourth
quarter of 2004, compared with losses of $27 million in the third
quarter of 2004 and $24 million in the fourth quarter of 2003.
Corporate and Other
Fourth-quarter financial results: After-tax Corporate expenses
from continuing operations were $177 million, compared with $209
million in the previous quarter and $238 million in the fourth quarter
of 2003. The decrease from the third quarter was primarily driven by a
reduction in net interest charges largely associated with the early
debt retirement premium paid during the third quarter. Contributing to
the decrease from the fourth quarter of 2003 were lower net interest
expense and reduced merger-related costs, partially offset by reduced
foreign currency gains.
Total debt at the end of the fourth quarter was $15.0 billion,
compared with $15.5 billion at the end of the previous quarter and
$2.8 billion below year-end 2003. At the end of the fourth quarter,
the company's debt-to-capital ratio was 26 percent, down from 28
percent at the end of the third quarter.
The company's fourth-quarter effective tax rate of 42 percent was
lower than that of the third quarter, primarily due to a lower
proportion of income from international upstream operations located in
higher tax-rate jurisdictions.
Discontinued Operations
Fourth-quarter financial results: Fourth-quarter losses from
discontinued operations were $48 million, compared with a loss of $5
million in the third quarter of 2004 and income of $36 million in the
fourth quarter of 2003. The losses in the fourth quarter were
primarily related to asset sales.
Twelve months financial results: During the twelve months of 2004,
income from discontinued operations was $22 million, compared with
$237 million for the same period a year ago. The decrease is primarily
attributable to the impacts of asset sales.
Outlook
Mr. Mulva concluded:
"We had another good quarter, which contributed to a strong year
in terms of operating performance and market conditions, enabling us
to achieve strong financial results. We are delivering on our
commitments, and remain focused on continuous improvement in all of
our operations.
"We expect 2005 production, including Canadian Syncrude, to
increase to approximately 1.62 million BOE per day, excluding the
impacts of LUKOIL. Production increases are anticipated through the
continued ramp-up of Magnolia, Hamaca, Bayu-Undan and Belanak. Further
increases also are expected as expansion projects in the United
Kingdom and Alaska are completed during the year.
"Downstream, we remain committed to cost and capital discipline,
executing projects well, and leveraging our refining technologies and
position. Looking forward, we anticipate maintaining a high capacity
utilization rate, while successfully executing our extensive 2005
clean-fuels program and increased turnaround activity, all of which
will help ensure that we maximize the availability of high-quality
clean fuels to the market.
"Our 2005 cash capital budget is approximately $6.9 billion. These
expenditures will be directed toward our existing portfolio and the
development of additional legacy assets, which is expected to bolster
future growth. This cash capital budget excludes capitalized interest
and minority interests, and certain expenditures associated with the
LUKOIL strategic alliance. We anticipate additional capital
expenditures of approximately $500 million related to the closing of
our Timan-Pechora joint venture with LUKOIL, as well as discretionary
investment to increase the company's equity ownership in LUKOIL."
ConocoPhillips is an integrated petroleum company with interests
around the world. Headquartered in Houston, the company had
approximately 35,800 employees, $93 billion of assets, and $136.9
billion of revenues as of Dec. 31, 2004. For more information, go to
www.conocophillips.com.
ConocoPhillips' quarterly conference call is scheduled for 10 a.m.
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/4q04earnings.html.
For detailed supplemental information, go to
www.conocophillips.com/news/nr/earnings/detail/4q04summary.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 "(w)e
expect 2005 production, including Canadian Syncrude, to increase to
approximately 1.62 million BOE per day, excluding the impacts of
LUKOIL"; "(p)roduction increases are anticipated through the continued
ramp-up of Magnolia, Hamaca, Bayu-Undan and Belanak"; "(f)urther
increases also are expected as expansion projects in the United
Kingdom and Alaska are completed during the year"; "(w)e anticipate
maintaining a high capacity utilization rate, while successfully
executing our extensive 2005 clean-fuels program and increased
turnaround activity"; and "(w)e anticipate additional capital
expenditures of approximately $500 million related to the closing of
our Timan-Pechora joint venture with LUKOIL, as well as discretionary
investment to increase the company's equity ownership in LUKOIL"
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 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, Houston, Texas 77079 or on the company's Web site at
www.conocophillips.com. This information can also be obtained from the
SEC by calling 1-800-SEC-0330 or on the SEC's Web site at www.sec.gov.
CONTACT: ConocoPhillips, Houston
Kristi DesJarlais, 281-293-4595 (media)
Clayton Reasor, 212-207-1996 (investors)