Wednesday, April 26, 2006

ConocoPhillips Reports Record Oil Profits

Apr 26, 2006 7:36 pm


ConocoPhillips Reports Record Oil Profits

(CBS) NEW YORK ConocoPhillips, the nation's third-largest oil and gas producer, said Wednesday that its profits rose 13 percent as stronger exploration and production results yielded the best first-quarter earnings since Phillips Petroleum Co. and Conoco Inc. combined in 2002.

Net income jumped to $3.29 billion, or $2.34 per share for the January-March period, from $2.91 billion, or $2.05 per share, in the year-earlier period. Those results were in line with analysts' expectations, according to Thomson Financial.

ConocoPhillips is the first of the three largest U.S. oil companies to report earnings this week. Exxon Mobil Corp. reports Thursday and Chevron Corp. on Friday. The three were expected this week to report a total of more than $16 billion in first-quarter profits.

Revenue at ConocoPhillips grew to $47.9 billion in the first quarter from $38.9 billion last year. The company said higher oil prices were partially tempered by lower natural gas prices compared with the fourth quarter.

Fadel Gheit, analyst with Oppenheimer & Co., said things will only get better for the company, citing its $33.9 billion acquisition of Burlington Resources completed March 31.

The swelling oil company profits and soaring gasoline prices have prompted both political parties to scramble to gain the high ground on an issue of extreme importance to many voters.

President Bush announced several initiatives Tuesday aimed at curbing the high price of filling up. He relaxed clean-fuel standards and ordered a temporary halt to deposits to the nation's strategic petroleum reserve — ostensibly making more oil available for consumer needs and relieving pressure on pump prices.

The president also vowed to pursue any collusion or price gouging and directed the Justice Department to help states pursue allegations that "gas prices have been unfairly manipulated."

Democrats dismissed Mr. Bush's actions as too little and too late.

Sen. Chuck Schumer, D-N.Y., said big oil companies were the culprits behind runaway gas prices, which, he says, go "way beyond what supply and demand would merit."

He said Mr. Bush refused to "get tough on big oil."

In an interview with CBS News, another Democrat, New York State Attorney General Eliot Spitzer, said taking action only after prices skyrocketed at the pumps showed a lack of preparation and insight by the Bush administration.

With daily global demand at roughly 85 million barrels per day, the world's oil producers have less than 2 million barrels per day of spare production capacity. This means that amid a tight global market, tensions with oil-rich nations and increased demand, particularly in China, have severe effects on the commodities market — and at the pump.

"I would suggest that in the international markets, there is a disequilibrium," Spitzer told CBS News correspondent Russ Mitchell. "We have seen demand for oil increase dramatically year after year, especially due to the increase in demand in the Asian markets," which the Bush administration could have anticipated, Spitzer claimed.

(© 2006 CBS Broadcasting Inc. All Rights Reserved. This material may not be published, broadcast, rewritten, or redistributed. The Associated Press contributed to this report.)


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