ConocoPhillips (COP) filed Quarterly Report for the period ended 2009-09-30.
ConocoPhillips is a major international integrated energy company with operations in some 49 countries. Conocophillips has a market cap of $75.26 billion; its shares were traded at around $50.75 with a P/E ratio of 13.7 and P/S ratio of 0.3. The dividend yield of Conocophillips stocks is 3.9%. Conocophillips had an annual average earning growth of 19% over the past 10 years.
Highlight of Business Operations:
The energy industry continued to be characterized by economic volatility during the third quarter and first nine months of 2009. The price of West Texas Intermediate (WTI) benchmark crude oil peaked during mid-2008 at almost $150 per barrel, and fell sharply throughout the remainder of the year to the low-$30-per-barrel range. Since the end of 2008, crude oil prices have trended upward, with WTI averaging $68.19 per barrel in the third quarter of 2009, or $8.65 higher than the second quarter of 2009. The improvement in crude oil prices during 2009 was influenced by expectations of stabilization and eventual recovery of the world economy.
In the United States, industry natural gas prices for Henry Hub decreased during the third quarter of 2009, averaging $3.39 per million British thermal units, down $0.12 compared with the second quarter of 2009, and down $6.86 compared with the third quarter of 2008. Domestic natural gas prices trended downward mostly due to continued strong natural gas production in the Lower 48, primarily as a result of unconventional natural gas production, and lower demand due to the U.S. recession. As a result of the changes in supply and demand, natural gas storage levels are higher than both the five-year average and the levels at the end of the third quarter of 2008.
Against this economic backdrop, our Exploration and Production (E&P) segment had earnings of $978 million in the third quarter of 2009. This compares with E&P earnings of $725 million in the second quarter of 2009 and $3,928 million in the third quarter of 2008.
Global refining margins remained weak in the third quarter of 2009, as demand, particularly for distillates, continued to be suppressed by the global economic slowdown. In addition, the compressed differential in prices for high-quality crude oil, compared with those of lower-quality crude oil, reduced margins for those refineries configured to capitalize on the ability to process lower-quality crudes. Weak refining margins significantly impacted our Refining and Marketing (R&M) segment, which reported earnings of $99 million in the third quarter of 2009, compared with a loss of $52 million in the second quarter of 2009 and earnings of $849 million in the third quarter of 2008.
Our LUKOIL Investment segment had earnings of $545 million in the third quarter of 2009, compared with $682 million in the second quarter of 2009, and $438 million in the third quarter of 2008. For the nine-month periods, our equity earnings from LUKOIL were $1,275 million in 2009, compared with $1,922 million in 2008. These results indicate LUKOIL was also negatively impacted by lower commodity prices and refining margins.
Earnings were $1,503 million in the third quarter of 2009, compared with $5,188 million in the third quarter of 2008. For the nine-month periods ended September 30, 2009 and 2008, earnings were $3,641 million and $14,766 million, respectively. The decrease from both 2008 periods was primarily the result of:
COP is in the portfolios of Warren Buffett of Berkshire Hathaway, Michael Price of MFP Investors LLC, Donald Yacktman of Yacktman Asset Management Co., Tweedy Browne of Tweedy Browne CO LLC, Donald Yacktman of Yacktman Asset Management Co., Richard Snow of Snow Capital Management, L.P., Chris Davis of Davis Selected Advisers, David Williams of Columbia Value and Restructuring Fund, David Dreman of Dreman Value Management, Jean-Marie Eveillard of Arnhold & S. Bleichroeder Advisers, LLC, Kenneth Fisher of Fisher Asset Management, LLC, Wallace Weitz of Weitz Wallace R & Co, NWQ Managers of NWQ Investment Management Co, Brian Rogers of T Rowe Price Equity Income Fund, Brian Rogers of T Rowe Price Equity Income Fund, PRIMECAP Management, Third Avenue Management, Dodge & Cox, Kenneth Fisher of Fisher Asset Management, LLC, Ruane Cunniff of Ruane & Cunniff & Goldfarb Inc.
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