This is a summary of the fourth quarter fiscal 2006 earnings call conducted by ConocoPhillips Inc (COP) on January 24, 2007
Management:
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Chairman and CEO: Jim Mulva
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EVP of Finance and CFO: John Carrig
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GM of Investor Relations: Gary Russell
Key Investors Issues:
- Revenue dropped 19% from $51.3 billion in the previous year to $41.5 billion.
- ConocoPhillips paid $593 million in dividends and repurchased 250 million shares,
Full Year Highlights
- ConocoPhillips funded $16.3 billion for the capital program, reduced debt by $5.1 billion subsequent to the Burlington Resources acquisition.
- The firm paid $2.3 billion in dividends, and repurchased $925 million of outstanding ConocoPhillips common stock.
- Net income was $15,550 million, or $9.66 per share and revenues were $183.7 billion.
Fourth Quarter Highlights
Net income dropped 13.5% to $3.2 billion or $1.91 a share from $3.7 billion or $2.61 a share in 2005 as results were negatively impacted 17 cents per share by two previously disclosed impairments.
- Refining and Marketing results were impacted by an after-tax impairment of $192 million related to certain domestic marketing assets held for sale.
- Exploration and Production results included an after-tax asset impairment of $93 million due to declining well performance and drilling results in the Canadian Rockies Foothills area.
- Higher volumes in E&P sales improved fourth quarter net income by 153 million.
- ConocoPhillips reduced debt to capital ratio to 24%.
E&P net income was $2,087 million, up from $1,904 million in the third quarter of 2006 and down from $2,426 million in the fourth quarter of 2005.
- The increase from the previous quarter primarily was due to the negative impact of tax legislation on third-quarter results, higher crude oil sales volumes, and lower depreciation, depletion and amortization (DD&A) expense.
- This increase was partially offset by lower crude oil prices, increased exploration expense, and the Canadian asset impairment.
Duke Energy Field Services, LLC (DEFS), changed its name to DCP Midstream, LLC.
- Midstream net income was $89 million, down from $169 million in the previous quarter and $147 million in the fourth quarter of 2005.
- The decrease from the previous quarter primarily was due to lower natural gas liquids prices and the impact of a third-quarter 2006 tax adjustment for assets sold in 2005.
-The decrease from the fourth quarter of 2005 primarily was due to lower natural gas liquids prices.
- R&M net income was $919 million, down from $973 million in 2005 due to lower worldwide refining and domestic marketing margins and the 2006 impairment.
LUKOIL Investment segment net income was $302 million, down from $487 million in the previous quarter and up from $189 million in the fourth quarter of 2005.
- The decrease from the previous quarter primarily was due to lower estimated commodity prices, partially offset by a net benefit from alignment of the company''s estimate of net income to LUKOIL''s reported results.
- The increase from the fourth quarter of 2005 primarily was due to ConocoPhillips'' increased equity ownership, higher estimated volumes, and a net benefit from alignment of the company’s estimate of net income to LUKOIL''s reported results.
- ConocoPhillips equity ownership interest in LUKOIL at the end of the fourth quarter was 20 % of LUKOIL''s 851 million authorized and issued shares and 20.6 % based on an estimated 826 million shares outstanding.
The Chemicals segment, reported net income of $98 million, compared with $142 million in the third quarter of 2006 and $114 million in the fourth quarter of 2005.
- The decrease from the third quarter primarily was attributed to lower olefins and polyolefins margins and volumes and a $16 million asset retirement, partially offset by an increased business interruption insurance benefit.
- The decrease from the fourth quarter of 2005 was largely due to lower olefins and polyolefins margins and the asset retirement, partially offset by lower utility costs and a business interruption insurance benefit.
The Emerging Businesses segment had net income of $8 million in the fourth quarter of 2006, compared with $11 million in the third quarter of 2006 and a net loss of $5 million in the fourth quarter of 2005.
