ConocoPhillips profit rises on asset sale and new output

BRADLEY OLSON

HOUSTON (Bloomberg) -- ConocoPhillips reported rising profits in the face of falling oil prices as an asset sale in Nigeria and higher output in Texas and North Dakota boosted returns.

Third-quarter net income rose to $2.7 billion, or $2.17 a share, from $2.48 billion, or $2, a year earlier, Houston-based ConocoPhillips said Oct. 30 in a statement. Excluding one-time items, per-share profit of $1.29 was 8 cents more than the $1.21 average of 20 analysts’ estimates compiled by Bloomberg.

ConocoPhillips Chairman and Chief Executive Officer Ryan Lance has helped transform the one-time energy conglomerate, which spun off its refining business and has sold $10 billion assets in the past two years to fund dividends and expansion in North America.

That strategy coincided with an oil market slump that has seen U.S. prices fall four consecutive months to $82.20/bbl Oct. 29, prompting some to question the longevity of North American drilling prospects. ConocoPhillips is among producers poised to weather the oil slump due to its low drilling costs in emerging fields.

"They have plenty of places to put capital, and they can take the time to make sure that when they drill an unconventional well, they are successful and realize a high margin," James Sullivan, a New York-based analyst at Alembic Global Advisors, said today in a telephone interview.

Shell Profits

Earlier today, Royal Dutch Shell Plc also reported higher third-quarter profits as earnings from refining and natural gas offset the impact of lower crude prices.

ConocoPhillips boosted production 33 percent to the equivalent of 212,000 boed day in North Dakota’s Bakken and Texas’s Eagle Ford formations, two of the fastest-growing U.S. oil fields. That follows a 41% output increase in the second quarter.

ConocoPhillips also completed a sale of its interest in Nigeria for proceeds of $1.4 billion.

The third-largest U.S. oil company has gone from a small player in fast-growing U.S. shale regions to a dominant force able to turn a profit at an oil price of $40/bbl.

Profits rose as oil futures traded in New York averaged $97.25/bbl in the third quarter, 8.1 percent lower than a year earlier.

Benchmark U.S. natural gas futures jumped 11% to an average of $3.949 per million British thermal units during the third quarter.

ConocoPhillips, which has 17 buy, 9 hold and one sell recommendations from analysts, closed at $70.75 in New York trading yesterday.