Anchorage Daily News

HOUSTON -- Record crude prices helped oil giant Conoco Phillips' second-quarter profit climb 13 percent from adjusted results a year ago, beginning what is expected to be a string of robust earnings announcements from major oil companies. The company's profits from Alaska production grew 31 percent.

The Houston-based company said Wednesday profits rose to $5.44 billion for the April-June period, from $301 million in the year-ago quarter. A year ago, Conoco incurred a $4.5 billion charge related to its former assets in Venezuela.

Triple-digit oil prices helped push second-quarter revenue to $71.4 billion from $47.4 billion a year ago.

The profits exceeded the average expectations of Wall Street analysts surveyed by Thomson Financial.

Conoco shares fell $2.48, or 2.9 percent, to $81.83 on the New York Stock Exchange. They have traded in a range of $67.85 to $95.96 in the past year.

Conoco said its profits from Alaska production totaled $700 million during the quarter, up from $535 million a year earlier.

Brian Youngberg, an analyst with Edward Jones, said overall results were decent, but he noted production volumes again were below the prior-year period -- a disturbing pattern for the past several quarters related to maturing fields, planned and unplanned maintenance and other factors.

Conoco, the third-largest U.S. oil company, is the first of the oil majors to report second-quarter profits. It is the largest oil producer in Alaska.

Conoco's one-time charge in the year-ago quarter was linked to its refusal to sign deals last spring with the Venezuelan government to keep pumping oil under tougher terms posed by President Hugo Chavez's government.

Excluding that impairment, earnings from the most-recent quarter easily topped those of a year ago, driven by profits from its exploration and production arm.

As expected, however, spiking crude prices in the second quarter were a drain on earnings at Conoco's refining and marketing operations.

The company said net income from its E&P sector amounted to $4 billion, about 85 percent higher than adjusted profits from a year ago. Far higher prices for crude and natural gas lifted results, which were somewhat offset by higher production taxes, lower volumes and increased operating costs.

Oil prices have retreated in recent trading sessions to below $130 after climbing above $147 a barrel earlier this month. Still, prices remain about 70 percent above where they were a year ago and up about 35 percent from the start of the year.

Conoco's daily production in the most-recent quarter averaged 1.75 million barrels of oil equivalent a day, down from 1.91 million barrels a year ago. The company attributed the decline to the expropriation of its Venezuelan oil projects last year and normal field decline.

Production results include Conoco's Canadian Syncrude operations but not its Russian Lukoil business.

Alaska production oil and liquids production averaged 261,000 barrels a day, down from 285,000 a day during the same three months last year.

Exploration expenses before taxes amounted to $288 million in the second quarter, up from $259 million in the year-ago period.

Profits for the first six months of 2008 was $9.6 billion, versus $3.85 billion a year ago, including the Venezuelan charge. Revenue rose to $126 billion from $88.7 billion.

The Anchorage Daily News contributed to this article.

Conoco Phillips' Alaska numbers -- 2nd quarter each year

EXPLORATION, PRODUCTION PROFITS

2008: $700 million

2007: $535 million

OIL AND CONDENSATE PRODUCTION

2008: 244,000 barrels a day

2007: 267,000 barrels a day

AVERAGE PRICE

2008: $112.23 per barrel

2007: $56.31 per barrel

NATURAL GAS LIQUIDS PRODUCTION

2008: 17,000 barrels a day

2007: 18,000 barrels a day

NATURAL GAS LIQUIDS PRICE

2008: $117.24 per barrel

2007: $63.52 per barrel

NATURAL GAS PRODUCTION

2008: 98 million cubic feet a day

2007: 100 million cubic feet a day

NATURAL GAS PRICE

2008: $3.81 per thousand cubic feet

2007: $4.04 per thousand cubic feet

KENAI LIQUEFIED NATURAL GAS

2008 volume: 72 million cubic feet

2007 volume: 72 million cubic feet

KENAI LNG PRICE

2008: $7.15 per thousand cubic feet

2007: $5.86 per thousand cubic feet

Source: Conoco Phillips

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