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ConocoPhillips' Results Soar on Higher Oil Prices

July 27, 2006|From Reuters

No. 3 U.S. oil company ConocoPhillips said Wednesday that quarterly profit surged 65% to top $5 billion, propelled by higher crude oil prices and the recent acquisition of Burlington Resources.

Oil companies are enjoying another bumper quarter as crude prices stay at stubbornly high levels, driven by anxiety over Middle East supplies.

Houston-based ConocoPhillips sounded a cautious note about the third quarter, however, saying that production would be hurt by seasonal maintenance and that it would take a $400-million charge due to higher tax rates in Britain.

It also warned that it was feeling the pinch from sharply higher operating costs that were hitting all parts of its business, and it suggested that was becoming a crucial factor in deciding which projects to pursue.

"What we are seeing is anything you do -- not only in the Middle East, but around the world -- the cost has gone up dramatically," ConocoPhillips Chief Executive Jim Mulva said.

Still, that did not stop the company from posting a second-quarter profit of $5.19 billion, or $3.09 a share, up from $3.14 billion, or $2.21, a year earlier. That easily beat Wall Street's consensus forecast of a profit of $2.79 a share, according to Reuters Estimates.

Revenue rose nearly 13% to $47.1 billion.

Oil and gas production was up 38% to 2.13 million barrels of oil equivalent per day, excluding ConocoPhillips' 18% stake in Russian oil giant Lukoil at the end of the second quarter.

The higher crude oil prices and inclusion of the first full quarter of Burlington's earnings into its results helped push earnings at its exploration and production unit to $3.3 billion from $1.92 billion a year earlier.

Earnings from refining and marketing rose to $1.71 billion from $1.11 billion a year earlier, as higher domestic refining margins helped offset lower worldwide marketing margins.

Shares of ConocoPhillips rose $1.15 to $68.60.

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