Quick Stats

Quick Stats

    You are here

    ConocoPhillips Profit Falls on Refining Margins

    Net income drops 5.2 percent as refined fuel fails to keep up with crude costs.

    HOUSTON -- Following an announcement two weeks ago that its third-quarter earnings would fall on lowered refining margins, ConocoPhillips, the third-largest U.S. oil producer, saw net income fall 5.2 percent during the quarter as refined fuel prices could not keep pace with gains in crude oil, resulting in narrowed profit margins on gas and diesel, Bloomberg News reported.

    Third-quarter profit fell to $3.67 billion from $3.88 billion seen a year earlier, while revenue fell 4.2 percent to $46.1 billion, the report stated.

    "It comes down to one thing, which is refining margins," Bernard Picchi, an analyst at Wall Street Access in New York who owns a small number of the company’s shares, told Bloomberg News. "Margins are lower this year because of higher crude oil-prices and the inability of the marketers, for whatever reason, to be able to capture in their prices the cost of the raw material."

    In addition, Conoco saw its oil and natural gas output fall caused by downtime at oil fields from Alaska to the North Sea, and a decision made earlier this year to exit Venezuela, the report stated.

    The decline in earnings is a result of record oil prices during the quarter, which has slimmed margins. The average gap between prices for crude and refined fuels narrowed to $6.65 per barrel at the end of the third quarter, from $20.71 at the start, based on futures contracts cited by Bloomberg News.

    The third quarter is a typically weak period for refiners, as it marks the end of the summer driving season and the start of heating demand, however, the situation is worsened by a slowing economy, Robert Goodof, who helps manage $22 billion at Loomis Sayles & Co., told Bloomberg News.

    "The refining issues are real," said Goodof, whose holdings include about 550,000 ConocoPhillips shares. "The economy is slowing."

    • About

    Related Content

    Related Content