ConocoPhillips Sees Lower Crude Prices Hurting Quarterly Results
ConocoPhillips said it expects first-quarter results to be hurt by lower crude oil prices and production compared with the fourth quarter, but projects stronger natural gas prices and improved margins in its refining business.
Oil and gas production on an equivalent basis is expected to be lower than the fourth quarter, including its Canadian Syncrude operations but excluding its Russian Lukoil business. Cuts in output mandated by the Organization of Petroleum Exporting Countries and unexpected downtime in the U.S. reduced first-quarter production, ConocoPhillips said.
In the fourth quarter, ConocoPhillips reported average daily production of 2.05 million barrels of oil equivalent.
The market price of oil -- based on the benchmark West Texas Intermediate -- averaged $57.99 a barrel in the first quarter, down from $59.94 in the fourth quarter and below the average of $63.28 a year ago.
Global refining margins, however, are forecast to be "significantly higher," above both fourth quarter and first quarter 2006 in all regions.
Determined by the difference between the cost of crude and selling price of refined products such as gasoline and heating oil, refining margins made the sharpest gains on the West Coast, where refinery outages among oil companies drove up the price of gasoline and other products faster than in other parts of the country.
ConocoPhillips said its crude oil refining capacity utilization rate would be in the mid-90% range. The company estimates refinery maintenance costs of about $70 million pretax.
Partly offsetting those gains, worldwide marketing margins are projected to be lower than in the fourth quarter.
Results in its midstream pipeline and storage business and chemicals segment are expected to decline from the prior period.
ConocoPhillips is the nation's No. 3 integrated oil company, behind Exxon Mobil and Chevron . ConocoPhillips is scheduled to report results on April 25.