EXHIBIT 99.1
ConocoPhillips Reports First-Quarter Net Income of $3.3 Billion or
$2.34 Per Diluted Share; Effectively reinvested 141 percent of net
income
HOUSTON--(BUSINESS WIRE)--April 26, 2006--ConocoPhillips
(NYSE:COP):
Earnings at a glance
First Quarter
- ---------------------------------------------------------------------
2006 2005
- ---------------------------------------------------------------------
Income from continuing
operations $3,291 million 2,923 million
Loss from discontinued
operations $ - (11)
Net income $3,291 2,912
- ---------------------------------------------------------------------
Diluted income per share
Income from continuing
operations(a) $ 2.34 2.06
Net income(a) $ 2.34 2.05
- ---------------------------------------------------------------------
Revenues $ 47.9 billion 38.9 billion
- ---------------------------------------------------------------------
(a) Per-share amounts in all periods reflect the impact of a 2-for-1
stock split on June 1, 2005.
ConocoPhillips (NYSE:COP) today reported first-quarter net income
of $3,291 million, or $2.34 per share, compared to $2,912 million, or
$2.05 per share, for the same quarter in 2005. Total revenues were
$47.9 billion, versus $38.9 billion a year ago. During the quarter,
the company reinvested 141 percent of its net income into the
development of oil and gas resources and its global refining business,
excluding the acquisition of Burlington Resources.
"We ended the quarter by successfully completing the acquisition
of Burlington Resources and are pleased with the progress toward
integrating the combined companies," said Jim Mulva, chairman and
chief executive officer. "This transaction establishes ConocoPhillips
as the leading natural gas producer in North America, with a portfolio
comprised mainly of high-quality, long-life natural gas reserves.
"In addition, we finalized the acquisition of the Wilhelmshaven,
Germany, refinery, in line with our strategy to expand our global
refining presence. We also advanced plans to upgrade the refinery to
allow it to process higher sulfur crude oil into an array of more
valuable light-end products.
"With respect to our upstream operating performance, we produced
1.93 million BOE per day, including 1.61 million BOE per day from our
Exploration and Production segment and an estimated 0.32 million BOE
per day from our LUKOIL Investment segment. E&P production was
negatively impacted by unscheduled production shutdowns. These
operating results do not reflect the acquisition of Burlington
Resources, which was completed at the close of business on March 31.
"In our downstream business, our worldwide refining crude oil
capacity utilization rate was 85 percent. We experienced significant
unplanned downtime and heavy refining turnaround activity, due in part
to turnarounds we delayed in response to the 2005 hurricanes.
"We ended the quarter with debt of $32.2 billion and a
debt-to-capital ratio of 30 percent, due to the acquisition of
Burlington Resources. Cash at the end of the quarter was $3.0 billion.
During the quarter, we generated $4.8 billion in cash from operations;
funded $4.6 billion in capital projects, investments and loans to
affiliates, excluding the acquisition of Burlington Resources; and
paid $496 million in dividends, which reflects a 16 percent increase
to 36 cents per share."
The results for ConocoPhillips' business segments follow.
Exploration & Production (E&P)
First-quarter financial results: E&P net income was $2,553
million, up from $2,426 million in the fourth quarter of 2005 and
$1,787 million in the first quarter of 2005. The increase from the
fourth quarter of 2005 primarily was due to the fourth-quarter
negative impact of mark-to-market valuation of certain natural gas
contracts in the United Kingdom and lower exploration expenses in the
first quarter. These improvements were partially offset by lower crude
oil and natural gas sales volumes, as a result of the first quarter
being shorter than the fourth quarter by two days, as well as the
timing of liftings. The impact of higher realized crude oil prices was
offset by lower natural gas prices. Improved results from the first
quarter of 2005 primarily were due to higher realized prices and lower
dry hole exploration expenses. These improvements were partially
offset by gains on asset sales recognized in the prior year, higher
operating expenses, and higher depreciation, depletion and
amortization.
ConocoPhillips' E&P daily production, including Canadian Syncrude
and excluding LUKOIL, averaged 1.61 million barrels of oil equivalent
(BOE) per day, which is improved from 1.59 million BOE per day in the
previous quarter and 1.60 million BOE per day in the first quarter of
2005. Compared with the previous quarter, increased production from
the Timor Sea, Venezuela and the U.S. Lower 48 was partially offset by
an unscheduled shutdown at Prudhoe Bay, as well as lower volumes from
Canada, Vietnam and Indonesia. Results in the first quarter do not
include Libyan production volumes, which the company began lifting in
April. In addition, the Burlington Resources acquisition did not
impact first-quarter operating statistics.
Midstream
First-quarter financial results: Midstream net income was $110
million, down from $147 million in the previous quarter and $385
million in the first quarter of 2005. The decrease from the previous
quarter primarily was due to lower natural gas liquids prices. The
decrease from the first quarter of 2005 primarily was due to higher
first-quarter 2005 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). The net first-quarter 2005 impact to
ConocoPhillips associated with the restructuring of its ownership in
DEFS, including the sale of TEPPCO, was $300 million. This was
partially offset by the impact of higher natural gas liquids prices
and increased ownership in DEFS.
Refining and Marketing (R&M)
First-quarter financial results: R&M net income was $390 million,
down from $973 million in the previous quarter and $700 million in the
first quarter of 2005. The decrease from the fourth quarter of 2005
primarily was the result of lower worldwide refining and marketing
margins and reduced volumes associated with turnaround activity and
unplanned downtime. This was partially offset by lower maintenance
expense primarily due to hurricane impacts in the previous quarter, as
well as a previous quarter charge associated with the adoption of
Financial Accounting Standards Board (FASB) Interpretation No. 47,
"Accounting for Conditional Asset Retirement Obligations, an
interpretation of FASB Statement No. 143." The decrease from the first
quarter of 2005 primarily was the result of reduced volumes associated
with turnaround activity and unplanned downtime, lower international
refining and U.S. marketing margins, and higher turnaround,
maintenance and utility costs.
Domestic first-quarter realized refining margins decreased
relative to the fourth quarter, consistent with market conditions. In
addition, the return to normal operations following damage caused by
Hurricane Katrina at the 247,000-barrel-per-day Alliance refinery
located in Belle Chasse, La., was more complex and time consuming than
anticipated. The phased startup of certain processing units at the
Alliance refinery primarily resulted in the production of lower value
intermediates, rather than higher value finished products. Compared
with the previous quarter, U.S. marketing results were significantly
lower.
U.S. refineries operated at 83 percent of crude oil capacity,
mainly due to turnaround activity, the delayed startup of the Alliance
refinery and unplanned downtime at the Lake Charles, Bayway, Trainer
and Ferndale refineries. Planned turnarounds occurred at the Lake
Charles, Borger, Trainer and Ferndale refineries. Turnarounds at the
Sweeny and Ponca City refineries also occurred in the first quarter
after being delayed by the company in response to the supply
disruptions following the 2005 hurricanes. In addition, a
first-quarter turnaround at the Bayway refinery, originally scheduled
for the second and third quarters, was accelerated due to operational
issues.
International first-quarter realized refining margins were lower
than the fourth quarter. Crude oil capacity utilization was 94
percent, which is lower than the previous quarter, primarily due to
unplanned downtime at the Humber refinery in the United Kingdom. R&M
results reflect one month of activity from the Wilhelmshaven, Germany,
refinery.
Worldwide, R&M's refining crude oil capacity utilization rate
averaged 85 percent, compared with 88 percent in the previous quarter
and 92 percent in the first quarter of 2005. Before-tax turnaround
costs were $163 million in the first quarter of 2006, versus $86
million in the previous quarter and $108 million in the first quarter
of 2005.
LUKOIL Investment
First-quarter financial results: Net income was $249 million, up
from $189 million in the previous quarter and $110 million in the
first quarter of 2005. This represents ConocoPhillips' estimate of the
company's 16.6 percent weighted-average equity share of LUKOIL's
income for the first quarter, based on market indicators and
historical production trends for LUKOIL. The increases from the
previous quarter and the first quarter of 2005 were attributable to
higher price estimates and the company's increasing equity ownership
position. At the end of the first quarter, the company's equity
ownership in LUKOIL was 17.1 percent.
For the first quarter of 2006, ConocoPhillips estimates its equity
share of LUKOIL production was 322,000 BOE per day and its share of
LUKOIL daily refining crude oil throughput was 163,000 barrels per
day.
Chemicals
First-quarter financial results: The Chemicals segment, which
includes the company's 50 percent interest in Chevron Phillips
Chemical Company LLC (CPChem), reported net income of $149 million,
compared with $114 million in the fourth quarter of 2005 and $133
million in the first quarter of 2005. Improved results from the
previous quarter primarily were attributed to higher polyolefins
margins and the recognition of a payment commitment towards a business
interruption claim. In addition, olefins and polyolefins sales volumes
recovered from hurricane impacts in the previous quarter. The increase
from the first quarter of 2005 was largely due to improved margins
from olefins and polyolefins and the recognition of the business
interruption claim, partially offset by lower aromatics and styrenics
margins.
Emerging Businesses
The Emerging Businesses segment had net income of $8 million in
the first quarter of 2006, compared with a net loss of $5 million in
the fourth quarter of 2005 and a net loss of $8 million in the first
quarter of 2005.
Corporate and Other
First-quarter after-tax Corporate expenses were $168 million,
compared with $165 million in the previous quarter and $195 million in
the first quarter of 2005. The increased charges in the first quarter
included higher benefit- and acquisition-related charges. Offsetting
these increased charges were the absence of premiums incurred on the
early retirement of debt and losses from discontinued operations in
the previous quarter. The decreased charges from the first quarter of
2005 included reduced benefit-related charges, lower net interest
expense and the absence of losses from discontinued operations,
partially offset by negative foreign exchange impacts and
acquisition-related charges.
Due to the acquisition of Burlington Resources, total debt at the
end of the first quarter was $32.2 billion, up approximately $19.7
billion from the end of 2005, while the company's debt-to-capital
ratio was 30 percent, compared to 19 percent at the end of 2005. The
cash balance was $3.0 billion at the end of the first quarter.
The company's tax provision for the first quarter of 2006 was $2.5
billion, resulting in an effective tax rate of 43.2 percent. This is
compared with 42.9 percent in the previous quarter and 40.8 percent in
the first quarter of 2005.
Outlook
Mr. Mulva concluded:
"We were pleased to start 2006 by enhancing both our upstream and
downstream businesses through the completion of two significant
strategic acquisitions. The integration efforts are progressing in
line with our expectations due to the dedication of our global work
force. A key aspect of the integration plan will be to improve
financial results by capturing synergies and optimizing our portfolio.
We also will continue to emphasize the importance of operating
excellence and capital discipline.
"As anticipated, we commenced production and completed initial
deliveries of LNG from our facility near Darwin, Australia, during the
quarter. We expect LNG deliveries of approximately 2 million tons in
2006, consistent with our plan. The facility performance continues to
improve through the commissioning process and is expected to produce 3
million tons of LNG annually at normal operating capacity.
"As previously communicated, we will begin recording our share of
production from the Waha concession in Libya in April and anticipate
substantial recovery of our underlift position by year-end.
"In our downstream business, the Alliance refinery returned to
normal operations in mid-April. Domestically, we anticipate another
quarter of significant turnaround activity. Capacity utilization is
expected to be in the mid-90 percent range with turnaround costs of
approximately $100 million, before-tax, in the second quarter. Also,
in the second quarter, we expect to complete our transition to
ethanol-blended gasoline and preparations to comply with the new
ultra-low sulfur diesel regulations.
"Our total 2006 capital program, including Burlington Resources'
remaining capital program and the acquisition and initial expenditures
on the deep conversion of the Wilhelmshaven refinery, is now estimated
to be approximately $18 billion. This includes loans to affiliates of
$1 billion and the estimated investment necessary to bring our
ownership in LUKOIL to 20 percent."
ConocoPhillips is an integrated petroleum company with interests
around the world. Headquartered in Houston, the company had
approximately 38,000 employees, $160 billion of assets, and $47.9
billion of revenues as of March 31, 2006. For more information, go to
www.conocophillips.com.
ConocoPhillips' quarterly conference call is scheduled for 11 a.m.
Eastern today.
To listen to the conference call and to view related presentation
materials, go to www.conocophillips.com and click on the "Investor
Information" link.
For financial and operational tables and detailed supplemental
information, go to
http://www.conocophillips.com/investor/reports/index.htm
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 including
statements as to the expected benefits of the Burlington Resources
acquisition such as efficiencies, cost savings, market profile and
financial strength, and the competitive ability and position of the
combined company, and other statements identified by words such as
"estimates," "expects," "projects," "plans," and similar statements,
such as "in line with our strategy to expand our global refining
presence"; "We also advanced plans to upgrade the refinery to allow it
to process higher sulfur crude oil into an array of more valuable
light-end products"; "The integration efforts are progressing in line
with our expectations due to the dedication of our global work force";
"We expect LNG deliveries of approximately 2 million tons in 2006,
consistent with our plan"; "The facility performance continues to
improve through the commissioning process and is expected to produce 3
million tons of LNG annually at normal operating capacity"; "we will
begin recording our share of production from the Waha concession in
Libya in April and anticipate substantial recovery of our underlift
position by year-end"; "we anticipate another quarter of significant
turnaround activity"; "Capacity utilization is expected to be in the
mid-90 percent range with turnaround costs of approximately $100
million, before-tax, in the second quarter"; "Also, in the second
quarter, we expect to complete our transition to ethanol-blended
gasoline and preparations to comply with the new ultra-low sulfur
diesel regulations"; and "Our total 2006 capital program, including
Burlington Resources' remaining capital program and the acquisition
and initial expenditures on the deep conversion of the Wilhelmshaven
refinery, is now estimated to be approximately $18 billion", 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). Unless
legally required, ConocoPhillips undertakes 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 and the company's Web site at
www.conocophillips.com/investor/sec. This information also can be
obtained from the SEC by calling 1-800-SEC-0330.
CONTACT: ConocoPhillips, Houston
Laura Hopkins, 281-293-6030 (media)
or
Gary Russell, 212-207-1996 (investors)