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I feel bad for 'em...NOT.
ConocoPhillips reports $31.8B loss on charges
By JOHN PORRETTO
AP Energy Writer
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HOUSTON (AP) -- ConocoPhillips said Wednesday it lost $31.8 billion in the final three months of 2008 as the third-largest U.S. oil company recorded massive, previously disclosed one-time charges and encountered sharply lower crude prices.
Net income for the October-December period amounted to a loss of $21.37 per share, compared with a profit of $4.4 billion, or $2.71 per share, during the same period a year earlier. Revenue fell 18 percent to $44.5 billion from $52.7 billion a year ago.
Excluding one-time items, adjusted earnings for the fourth quarter were $1.9 billion, or $1.28 a share, versus $4.1 billion, or $2.55 a share, a year ago.
Analysts surveyed by Thomson Reuters had been expecting earnings of $1.22 a share on revenue of $36.3 billion. Those forecasts typically exclude one-time items.
Houston-based ConocoPhillips was the first of the major oil companies to report fourth-quarter earnings. As expected, the results were by far the worst of 2008.
"Our financial performance for the quarter reflects the depressed economic conditions and business environment impacting not only our industry, but domestic and global markets as well," chairman and chief executive Jim Mulva said in a statement.
In addition to the one-time charges, ConocoPhillips was hit hard by oil's unprecedented plunge after peaking above $147 a barrel in July. When the fourth quarter began Oct. 1, crude was trading at around $100 a barrel. By year's end, the price was down to $44.60, a decline of nearly 60 percent.
Also, operating costs haven't fallen as quickly as oil and gas prices, placing another strain on profitability.
The oil and gas industry is trying to adjust to the recession by scaling back spending and eliminating jobs. So far, the cuts haven't been as severe as some other sectors of the U.S. economy, but they've picked up in recent weeks as oil continues to hover around year-end prices.
What's different for oil and gas producers, though, is the sharp reversal from favorable market conditions that fueled record profits as recently as last summer.
In a sign of how bad tumbling prices have hurt the industry, ConocoPhillips announced two weeks ago it was cutting 4 percent of its overall work force - about 1,300 workers - slashing capital spending by 18 percent and writing down the value of various assets by $34 billion.
It itemized the impairments in Wednesday's report, citing the substantial decline in global equity markets, commodity prices and operating margins.
The biggest of the impairment charges was $25.4 billion to writedown the goodwill value of certain exploration and production assets, including those from ConocoPhillips' $35.6 billion purchase of Burlington Resources in 2006.
Goodwill is the difference between the purchase price of a company and the book value of its tangible assets, such as equipment and real estate. Accounting rules require companies to take a look at the value of goodwill every year, and adjust for any declines on their financial statements.
ConocoPhillips also reduced the value of its equity investment in Russian oil producer Lukoil by $7.3 billion. Other writedowns totaling $1.3 billion included $537 million to lower the book value of two refineries.
Shares rose 3.4 percent, or $1.70, to $51.21 in premarket trading.
© 2009 The Associated Press. All rights reserved. This material may not be published, broadcast, rewritten or redistributed. Learn more about our Privacy Policy.
ConocoPhillips reports $31.8B loss on charges
By JOHN PORRETTO
AP Energy Writer
Advertisement
Buy AP Photo Reprints
Your Questions Answered
Ask AP: Afghanistan's insurgents, pets on a plane
HOUSTON (AP) -- ConocoPhillips said Wednesday it lost $31.8 billion in the final three months of 2008 as the third-largest U.S. oil company recorded massive, previously disclosed one-time charges and encountered sharply lower crude prices.
Net income for the October-December period amounted to a loss of $21.37 per share, compared with a profit of $4.4 billion, or $2.71 per share, during the same period a year earlier. Revenue fell 18 percent to $44.5 billion from $52.7 billion a year ago.
Excluding one-time items, adjusted earnings for the fourth quarter were $1.9 billion, or $1.28 a share, versus $4.1 billion, or $2.55 a share, a year ago.
Analysts surveyed by Thomson Reuters had been expecting earnings of $1.22 a share on revenue of $36.3 billion. Those forecasts typically exclude one-time items.
Houston-based ConocoPhillips was the first of the major oil companies to report fourth-quarter earnings. As expected, the results were by far the worst of 2008.
"Our financial performance for the quarter reflects the depressed economic conditions and business environment impacting not only our industry, but domestic and global markets as well," chairman and chief executive Jim Mulva said in a statement.
In addition to the one-time charges, ConocoPhillips was hit hard by oil's unprecedented plunge after peaking above $147 a barrel in July. When the fourth quarter began Oct. 1, crude was trading at around $100 a barrel. By year's end, the price was down to $44.60, a decline of nearly 60 percent.
Also, operating costs haven't fallen as quickly as oil and gas prices, placing another strain on profitability.
The oil and gas industry is trying to adjust to the recession by scaling back spending and eliminating jobs. So far, the cuts haven't been as severe as some other sectors of the U.S. economy, but they've picked up in recent weeks as oil continues to hover around year-end prices.
What's different for oil and gas producers, though, is the sharp reversal from favorable market conditions that fueled record profits as recently as last summer.
In a sign of how bad tumbling prices have hurt the industry, ConocoPhillips announced two weeks ago it was cutting 4 percent of its overall work force - about 1,300 workers - slashing capital spending by 18 percent and writing down the value of various assets by $34 billion.
It itemized the impairments in Wednesday's report, citing the substantial decline in global equity markets, commodity prices and operating margins.
The biggest of the impairment charges was $25.4 billion to writedown the goodwill value of certain exploration and production assets, including those from ConocoPhillips' $35.6 billion purchase of Burlington Resources in 2006.
Goodwill is the difference between the purchase price of a company and the book value of its tangible assets, such as equipment and real estate. Accounting rules require companies to take a look at the value of goodwill every year, and adjust for any declines on their financial statements.
ConocoPhillips also reduced the value of its equity investment in Russian oil producer Lukoil by $7.3 billion. Other writedowns totaling $1.3 billion included $537 million to lower the book value of two refineries.
Shares rose 3.4 percent, or $1.70, to $51.21 in premarket trading.
© 2009 The Associated Press. All rights reserved. This material may not be published, broadcast, rewritten or redistributed. Learn more about our Privacy Policy.
