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The New York Times: ConocoPhillips Profit Leaps by Nearly Two-Thirds

Published: July 26, 2006

ConocoPhillips, the first major American oil company to report results for the second quarter, said today that its profits leapt by nearly two-thirds, a windfall it owes largely to soaring world oil prices.

The company, based in Houston, said it earned $5.19 billion in the second quarter, compared with $3.13 billion in the comparable period in 2005. Nearly all its businesses, which include offshore oil drilling, natural gas exploration and operating oil refineries, reported considerable growth.

Conoco’s results are expected to set the pace for what oil analysts predict will be another round of soaring profit reports from the industry.

Its exploration and production business earned $3.3 billion, accounting for 65 percent of the company’s overall gain in net income for the quarter. The company stepped up output of oil and natural gas by 38 percent, taking advantage of new production capacity it gained by acquiring Burlington Resources for $35.6 billion in December. The deal made Conoco the largest natural gas producer in the United States.

The company’s refining profits rose as well, though not as sharply.

Conoco’s 2006 results are far outpacing the record profits the company posted in 2005, when it had $13.53 billion in net income. ExxonMobil, the largest American oil company, earned $36.1 billion in profit last year; its second-quarter results are expected later this week, as are those of Chevron and Shell.

BP, the global energy group, was first out of the gate on Tuesday, reporting $7.27 billion in profit, up 30 percent from the second quarter a year ago.

All of the oil giants are expected to post robust results from exploration and production, on the strength of crude prices driven to record highs by roaring global demand and by turmoil in the Middle East and other oil-producing areas. By BP’s reckoning, an average barrel of oil fetched $69.59 in the second quarter, and benchmark grades of crude have been trading in the mid-$70’s this week.

Though not quite as spectacular as the production side, Conoco’s refining and marketing division also posted large gains in the quarter, earning $1.71 billion compared with $1.1 billion a year earlier. The company said it increased both volume and margins at its refineries, which helped offset a loss in the marketing unit.

Conoco’s earnings, equivalent to $3.09 a share, far surpassed the $2.81 a share that analysts had forecast on average, according to a survey by Thompson Financial.

Shares of Conoco, the nation’s third-largest oil company, rose on the news today, trading just under $70 a share in the early afternoon, a gain of 3 percent from Tuesday’s close.

But the company warned that its profits in the third quarter could be slowed by a number of factors, including the cost of maintaining facilities in Alaska and Venezuela and an expected $400 million charge from higher taxes in Britain. and its sister non-profit websites,,,,,, and are owned by John Donovan. There is also a Wikipedia feature.

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