Wednesday, July 28, 2010

Conoco's 2nd Quarter Profit Soars, Plans To Sell Entire Lukoil Stake

ConocoPhillips' (COP) second quarter earnings more than quadrupled on higher commodities prices and as its refining business returned to profitability, with results topping expectations. The company also reached an agreement to sell about 40% of its stake in Russian oil giant OAO Lukoil Holdings (LUKOY, LKOH.RS) and unveiled plans to sell all of it by the end of next year, instead of prior plans to just halve it. Conoco agreed to sell the initial part of its 20% stake in Lukoil for $3.44 billion. The deal is set to close in the current quarter. The rest will be sold to either Lukoil or on the open market.

Conoco, the third largest U.S. oil company by market value after Exxon Mobil Corp. (XOM) and Chevron Corp. (CVX), is in the midst of a major restructuring program that includes plans for $10 billion in divestitures in an effort to repay debt, a shift from a debt fueled acquisition spree when commodities prices were soaring. It reported a profit of $4.16 billion, or $2.77 a share, up from $900 million, or 57 cents a share, a year earlier. The latest quarter included a net $1.10 a share in gains. Analysts polled by Thomson Reuters forecast earnings of $1.56 a share. Conoco didn't provide revenue figures.

Exploration and production, which accounts for most of the company's profits, saw earnings soar on higher prices, though, as average daily oil and gas production fell 7.5% amid normal field declines and planned maintenance. Conoco's refining business profit also soared as margins strengthened and utilization rates improved. Refiners have benefited as demand for gasoline and diesel began to improve this year, though the sustainability is highly uncertain. Shares closed Tuesday at $54.44 and were inactive premarket. The stock is up 6.6% this year.

From the.....Dow Jones Newswire.


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