Exhibit 99.1
ConocoPhillips Reports First-Quarter Net Income of $2.9 Billion
HOUSTON--(BUSINESS WIRE)--April 27, 2005--ConocoPhillips
(NYSE:COP)
Earnings at a glance
First Quarter
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2005 2004
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Income from continuing operations $2,923 million $1,603 million
Income (loss) from discontinued
operations (11) 13
Net income $2,912 1,616
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Diluted income per share
Income from continuing operations $4.12 $2.31
Net income 4.10 2.33
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Revenues $38.9 billion $30.2 billion
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ConocoPhillips (NYSE:COP) today reported first-quarter net income
of $2,912 million, or $4.10 per share, compared with $1,616 million,
or $2.33 per share, for the same quarter in 2004. Total revenues were
$38.9 billion, versus $30.2 billion a year ago.
Income from continuing operations for the first quarter was $2,923
million, or $4.12 per share, compared with $1,603 million, or $2.31
per share, for the same period a year ago.
"Overall, our performance for the quarter was good, and would have
been stronger without unplanned downtime," said Jim Mulva, chairman
and chief executive officer. "In our Exploration and Production
segment, oil and gas production was negatively impacted by planned and
unplanned downtime. This resulted in total production of 1.80 million
BOE per day, including our share of estimated LUKOIL production of 0.2
million BOE per day. In the Refining and Marketing segment, higher
turnaround activity and unplanned downtime during the quarter reduced
our crude oil capacity utilization to 92 percent and lowered our clean
product yield.
"We continued to strengthen our financial position. Our return on
capital employed remains strong and competitive, and our
debt-to-capital ratio declined from 26 percent to 23 percent during
the quarter. We generated $4.1 billion in cash from operations, and
spent $1.8 billion on capital projects and investments, including the
purchase of an additional 1.3 percent of LUKOIL. Also, we announced a
restructuring of DEFS that ultimately will increase our equity
ownership to 50 percent.
"We were pleased to recently announce a 24 percent increase in our
dividend and a 2-for-1 stock split. In addition, we continue to
acquire company stock consistent with the goal of bringing our diluted
shares outstanding to approximately 700 million shares. As of the end
of the first quarter of 2005, the company had purchased 2.1 million
shares under this program."
The results of ConocoPhillips' business segments follow.
Exploration & Production (E&P)
E&P income from continuing operations in the first quarter was
$1,787 million, up from $1,671 million in the fourth quarter of 2004
and from $1,257 million in the first quarter of 2004. Higher realized
crude oil and natural gas prices, increased crude oil sales and gains
on asset sales, partially offset by reduced tax benefits, contributed
to the improvement from the fourth quarter of 2004. Improved results
from the first quarter of 2004 primarily were due to higher realized
crude oil prices.
ConocoPhillips' E&P daily production, including Canadian Syncrude
and excluding the LUKOIL Investment segment, averaged 1.60 million
barrels of oil equivalent (BOE) per day for the first quarter of 2005,
flat with the prior quarter and down slightly from 1.61 million BOE
per day in the first quarter of 2004. When compared with the previous
quarter, the company experienced greater output during the first
quarter of 2005 from Venezuela, the Lower 48 and Indonesia. These
increases were offset by approximately 15,000 BOE per day of
unscheduled maintenance in the United Kingdom, Canada and Alaska as
well as approximately 10,000 BOE per day of planned downtime in Norway
and Alaska. The decrease from the first quarter of 2004 primarily was
due to lower production in the United Kingdom, Canada, Norway and
Alaska and asset dispositions, partially offset by increases in the
Timor Sea, Venezuela and the Gulf of Mexico. These increases include
the ramp-up of production at Bayu-Undan, Hamaca and Magnolia.
Midstream
Midstream income from continuing operations was $385 million, up
from $100 million in the fourth quarter of 2004 and $55 million in the
first quarter of 2004. The improvement from the prior periods
primarily was due to higher equity earnings from Duke Energy Field
Services, LLC (DEFS), which included a gain from the sale of DEFS'
interest in TEPPCO Partners, L.P. (TEPPCO). In addition, first-quarter
2005 natural gas liquids realizations were lower than the fourth
quarter of 2004. The net first-quarter impact to ConocoPhillips
associated with the restructuring of its ownership in DEFS, including
the sale of TEPPCO, was $300 million.
Refining and Marketing (R&M)
R&M income from continuing operations was $700 million, down from
$753 million in the previous quarter and up from $464 million in the
first quarter of 2004. Higher U.S. refining margins during the first
quarter of 2005 were more than offset by lower worldwide marketing
margins, lower international refining margins, and higher turnaround
activity and unplanned downtime. The improved results from the first
quarter of 2004 were attributable to increased worldwide refining
margins, partially offset by lower worldwide marketing margins,
reduced volumes, and higher turnaround and utility costs.
Domestically, realized refining margins benefited from continued
strong light-heavy crude differentials. The company experienced
planned turnaround activity at its Borger, Lake Charles, San
Francisco, Sweeny and Wood River refineries. In addition, unplanned
downtime at the company's Alliance and Borger refineries reduced
processed inputs by approximately 60,000 barrels per day. As a result,
first-quarter domestic refinery crude oil capacity utilization
averaged 90 percent and clean products yield was two percentage points
lower than that of the fourth quarter of 2004. In addition, U.S.
marketing margins fell sharply from the previous quarter.
Internationally, lower refining and sharply lower marketing
margins significantly reduced first-quarter results. First-quarter
international crude oil capacity utilization was 100 percent.
Overall, R&M's refinery crude oil capacity utilization rate
averaged 92 percent, compared with 94 percent in the previous quarter
and 96 percent in the first quarter of 2004. Before-tax turnaround
costs were $108 million, versus $73 million in the fourth quarter of
2004.
LUKOIL Investment
Income from continuing operations in the first quarter of 2005 was
$110 million, compared with $74 million in the prior quarter. This
represents ConocoPhillips' estimate of the company's 10.6 percent
weighted average equity share of LUKOIL's income for the first quarter
based on market indicators and historical production trends of LUKOIL.
The increase from the fourth quarter of 2004 primarily was
attributable to higher realized price estimates and an increased
equity ownership position. At the end of the first quarter of 2005,
the company's equity ownership in LUKOIL was 11.3 percent.
ConocoPhillips' share of estimated BOE production was 201,000 per
day. The company's share of estimated daily refining crude oil
throughput was 92,000 barrels per day.
Chemicals
The Chemicals segment, which reflects the company's 50 percent
interest in Chevron Phillips Chemical Company LLC, reported income
from continuing operations of $133 million. This is compared with
income of $83 million in the fourth quarter of 2004 and $39 million in
the first quarter of 2004. Improvements from the fourth quarter
primarily were driven by improved olefin and polyolefin margins,
offset by slightly lower volumes. The increase from the first quarter
of 2004 primarily was related to improved margins in both the olefins
and polyolefins, as well as aromatics and styrenics business lines.
Emerging Businesses
The Emerging Businesses segment had a loss from continuing
operations of $8 million in the first quarter of 2005, compared with
losses of $24 million in the fourth quarter of 2004 and $22 million in
the first quarter of 2004. Improved international and domestic power
operations and the timing of certain expenses contributed to the
reduced operating losses from both periods.
Corporate and Other
Corporate expenses from continuing operations during the first
quarter were $184 million, compared with $177 million in the previous
quarter and $190 million in the first quarter of 2004. The increase
from the fourth quarter primarily was related to debt retirement
premiums and lower foreign exchange gains, partially offset by lower
net interest expense. Contributing to the decrease from the first
quarter of 2004 was the absence of merger-related expenses recorded in
the prior period.
Total balance sheet debt at the end of the first quarter was $14.0
billion, down approximately $1.0 billion from the end of 2004. At the
end of the first quarter of 2005, the company's debt-to-capital ratio
was 23 percent, down from 26 percent at the end of the prior year.
The company's income tax provision for the first quarter of 2005
was $2.0 billion, resulting in an effective tax rate of 43 percent,
excluding the DEFS restructuring, and 41 percent including the DEFS
restructuring. This is compared with 42 percent in the previous
quarter and 46 percent in the first quarter of 2004.
Discontinued Operations
First quarter 2005 losses from discontinued operations were $11
million, compared with $48 million in the fourth quarter of 2004 and
income of $13 million in the first quarter of 2004. The losses in the
first quarter of 2005 primarily were due to the continued completion
of various marketing asset sales.
Outlook
Mr. Mulva concluded:
"A favorable commodity-price environment contributed to strong
earnings, cash flows and continued debt reduction this quarter. We
remain focused on our disciplined approach to improving operations and
financial flexibility.
"Although we expect second quarter production to be lower than
that of the first quarter due to scheduled maintenance and facility
downtime, we still anticipate full-year daily production, including
Canadian Syncrude, to be approximately 3 percent higher than the
amount produced in 2004, excluding the impacts of LUKOIL. We continue
to progress plans for a joint venture with LUKOIL in Russia's
Timan-Pechora province. We expect to complete the formation of the
venture, which will be included in our E&P segment, sometime in the
second quarter of 2005.
"Downstream, execution of our extensive 2005 clean-fuels
initiative is progressing as planned. We expect the second quarter to
be another period of significant turnaround activity; however, we
anticipate our full-year crude oil capacity utilization rate to be in
the upper 90-percent range.
"In addition to our announced capital program, we are planning to
spend an additional $3 billion over the period 2006 through 2010 to
increase our refining system's ability to process heavy-sour crude oil
and other low-quality feedstocks. These investments, primarily
domestic, are expected to incrementally increase refining capacity and
clean products yield at our existing facilities, while providing
competitive returns."
As previously announced, capital spending for 2005 is expected to
be $7.4 billion, excluding capitalized interest and minority interest,
as well as the ConocoPhillips share repurchase program and additional
equity investment in LUKOIL.
ConocoPhillips is an integrated oil company with interests around
the world. Headquartered in Houston, the company had approximately
36,000 employees and $97 billion of assets as of March 31, 2005. For
more information, go to www.conocophillips.com.
ConocoPhillips' quarterly conference call is scheduled for 10:00
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 "First Quarter Earnings" link.
For financial and operational tables, go to
www.conocophillips.com/news/nr/earnings/highlights/1q05earnings.html.
For detailed supplemental information, go to
www.conocophillips.com/news/nr/earnings/detail/1q05summary.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 second quarter production to be lower than that of the first
quarter"; "we still anticipate full-year production, including
Canadian Syncrude, to be approximately 3 percent higher than the
amount produced in 2004, excluding the impacts of LUKOIL"; "we
continue to progress plans for a joint venture with LUKOIL in Russia's
Timan-Pechora province"; "we expect to complete the formation of the
venture, which will be included in our E&P segment, sometime in the
second quarter of 2005"; "we expect the second quarter to be another
period of significant turnaround activity; however, we anticipate our
full-year crude oil capacity utilization rate to be in the upper
90-percent range"; "we are planning to spend an additional $3 billion
over the period 2006 through 2010 to increase our refining system's
ability to process heavy-sour crude oil and other low-quality
feedstocks"; "these investments, primarily domestic, are expected to
incrementally increase refining capacity and clean products yield at
our existing facilities, while providing competitive returns"; and
"capital spending for 2005 is expected to be $7.4 billion, excluding
capitalized interest and minority interest, as well as the
ConocoPhillips share repurchase program and additional equity
investment 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 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
Laura Hopkins, 281-293-6030 (media)
or
Clayton Reasor, 212-207-1996 (investors)