You are here
ConocoPhillips recorded earnings of $4.2 billion, compared with second-quarter 2009 earnings of $900 million. Excluding a net benefit of $1.7 billion -- primarily from dispositions and an impairment -- its second-quarter 2010 adjusted earnings were $2.5 billion.
"We had a solid quarter, with strong earnings and meaningful progress in executing our plans to create value," said Jim Mulva, chairman and CEO. "E&P delivered production volumes and costs in line with expectations, while our R&M business benefited from improved global refining and marketing margins and higher U.S. refining capacity utilization rates."
ConocoPhillips also announced its intention to sell its 7.6-percent interest in LUKOIL. "Over the past five years, ConocoPhillips and LUKOIL have worked closely together to develop opportunities in and out of Russia," Mulva said. "Our experience with LUKOIL and the Russian authorities has been positive, and we look forward to a productive relationship in the future. However, given the expected business environment and our stated strategy to enhance returns and increase distributions, we have made the decision to sell our entire stake in LUKOIL. We expect to accomplish this by the end of 2011, with the proceeds used primarily to repurchase ConocoPhillips shares."
ConocoPhillips and LUKOIL have reached an agreement under which approximately 64.6 million Russian registered shares will be purchased by LUKOIL for $3.44 billion. These shares represent a 7.6-percent interest in LUKOIL, or 40 percent of ConocoPhillips' 163.3 million shares currently owned. This transaction is expected to close in the third quarter of 2010. The remaining 60 percent owned by ConocoPhillips are depositary receipts and are expected to be sold in open market transactions or to LUKOIL by the end of 2011.
ConocoPhillips' refining and marketing business benefited from improved market conditions, with global refining market crack spreads improving more than 15 percent, compared with the same period last year. Realized refining margins improved more than $550 million and primarily reflect stronger distillate market cracks, as well as increased premium coke production, the company said.
In the United States, distillate market cracks almost doubled from the low levels experienced a year ago, while internationally they improved nearly 50 percent. Realized marketing margins improved approximately $150 million, compared with a year ago, largely due to favorable market conditions.
ConocoPhillips' second-quarter results were not significantly impacted by the current U.S. offshore drilling moratorium, as less than 1 percent of the company's oil and natural gas production comes from the impacted areas, the company noted. ConocoPhillips is participating with peers in a plan to build and deploy a rapid response system, designed to improve the industry's capability to contain oil in the event of a potential future underwater well blowout in the deepwater Gulf of Mexico.
"There has been heightened public focus on the safety of the oil and gas industry during this past quarter, and we are committed to improve our ability to respond immediately to offshore incidents," said Mulva.
For Hess Corp., this quarter's $375 million net income compared to a second-quarter 2009 net income of $100 million. Marketing and refining generated a loss of $19 million in the period, compared to a loss of $30 million in the second quarter 2009. Refining operations incurred a loss of $31 million, compared with a loss of $26 million last year, as the company's Port Reading refining facility was shut down for 41 days for a scheduled turnaround.
Marketing earnings were $17 million, an increase of $30 million from the second quarter of 2009, primarily due to higher margins.