ConocoPhillips, the third-largest U.S. oil producer, said second-quarter net income rose after gains in crude prices made up for a drop in the value of an idled German refinery that the company may sell.
Profit rose to $4.16 billion, or $2.77 a share, from $859 million, or 57 cents, a year earlier, Houston-based ConocoPhillips said today in a Business Wire statement. The company said last week that it would record after-tax costs of $1.1 billion to reflect a drop in the value of its Wilhelmshaven refinery, which may be sold or converted to a fuel terminal.
ConocoPhillips and other oil companies benefited as a recovering global economy spurred gains in crude prices. New York oil futures traded 31 percent higher than a year earlier, averaging $78.05 a barrel. The company, which is in the middle of a $10 billion divestiture program, canceled plans to upgrade the Wilhelmshaven plant and this year pulled out of a refining project in Saudi Arabia and an Abu Dhabi natural-gas venture.
“Although you hate to see them take these big write-offs, it’s better than throwing good money after bad to try to save face,” said Philip Weiss, an analyst at Argus Research in New York who has a “buy” rating on ConocoPhillips shares and owns none. “I think that they’re making the right moves.”
The earnings statement was issued before the opening of regular trading on U.S. markets. ConocoPhillips rose 1 cent to $54.44 yesterday in New York Stock Exchange composite trading. The stock has climbed 6.6 percent this year.
ConocoPhillips is first among the major U.S. oil companies to report second-quarter earnings. Exxon Mobil Corp. of Irving, Texas, is scheduled to announce its results tomorrow, and San Ramon, California-based Chevron Corp. plans to report earnings July 30.
ConocoPhillips said in March that it plans to cut in half its 20 percent stake in Russia’s OAO Lukoil in two years. In June, the company completed the sale of its 9 percent stake in oil-sands producer Syncrude Canada Ltd. for $4.65 billion.
“Their restructuring seems to be proceeding very well,” said Brian Youngberg, an analyst at Edward Jones in St. Louis who has a “buy” rating on ConocoPhillips shares and doesn’t own any. “They realize they do not have to be as big as Chevron or Exxon Mobil to be an attractive stock to investors.”
ConocoPhillips posted its biggest loss on record in 2008 on about $34 billion in writedowns of assets that dropped in value. The company agreed to buy gas producer Burlington Resources Inc. in 2005, the day before futures prices hit an all-time high.