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ConocoPhillips' Net Income Jumps 51%

January 26, 2006|From Bloomberg News

ConocoPhillips, the third-largest U.S. oil company, said fourth-quarter profit jumped 51% as rising demand and supply disruptions lifted energy prices.

Net income climbed to $3.68 billion, or $2.61 a share, from $2.43 billion, or $1.72, a year earlier, the Houston-based company said Wednesday. Revenue rose 30% to $52.2 billion.

ConocoPhillips and other oil companies reaped record earnings last year as energy prices surged to all-time highs. U.S. crude-oil futures averaged $60.05 a barrel during the fourth quarter, up 24% from a year earlier. Natural-gas futures traded 77% higher than a year earlier.

Profit excluding asset sales was $3.78 billion, or $2.69 a share, ConocoPhillips said. The company was expected to earn $2.62 a share, the average estimate from 21 analysts surveyed by Thomson Financial.

Shares of ConocoPhillips fell 94 cents to $63.54.

Prices, already rising amid increasing demand in the U.S. and Asia, climbed further after hurricanes Katrina and Rita struck in August and September, shutting down most oil and gas production in the Gulf of Mexico.

About 26% of gulf oil output and 18% of gas production remained idle as of Jan. 11, according to the U.S. Minerals Management Service.

"This is a market that's probably 75% driven by the commodity-price cycle and the expectation of that," said John Parry, an analyst at John S. Herold Inc. "It's a given assumption that companies are taking advantage of it."

The company also benefited from record profit margins on gasoline and other refined fuels. In the fourth quarter, the average U.S. gap between crude-oil costs and fuel prices widened to almost $11 per barrel processed from $6.74 a year earlier, based on futures contracts traded in New York.

ConocoPhillips is the first to report fourth-quarter earnings among the three largest U.S. oil companies. Irving, Texas-based Exxon Mobil Corp., the world's largest oil company, is scheduled to release its earnings report Monday. Chevron Corp., the No. 2 U.S. oil producer, plans to report earnings Friday.

ConocoPhillips had profit of $3.8 billion in the third quarter, the highest since the company was formed through Phillips Petroleum Co.'s 2002 acquisition of Conoco Inc.

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