Thursday, October 28, 2010

ConocoPhillips (NYSE:COP) Drops on Lower Production in Third Quarter

ConocoPhillips (NYSE:COP) beat earnings estimates for the third quarter but still got punished on lower production, generating questions on future

For the quarter, earnings per share rose to $1.50, beating Street estimates by 5 cents a share, and doubling last year's earnings in the same quarter.

Earnings for the quarter rose to $3.06 billion, or $2.05 a share. Last year they generated earnings of $1.5 billion, or 97 cents a share.

Lowering costs and higher commodity prices drove the performance for Conoco in the quarter, but lower production could weigh on shares and performance, as there is only so low costs can be lowered, and no guarantees as to prices going forward.

Production would need to rise to build confidence in the future performance of the energy giant.

CEO Jim Mulva commented on the quarterly results, saying, “We had a good
quarter and operated as expected. Our plans to improve returns through
disciplined capital spending, reducing debt and repurchasing shares are on

As far as natural gas production, that's not necessarily a negative situation, as lower natural gas prices would cause Conoco to decrease margins and earnings.

Oil exploration and production dropped to 1.72 million barrels a day, which is more concerning for shareholders and potential investors.

Revenue for the latest quarter increased to $49.5 billion, beating estimates of $45.59 billion, and the $41.27 billion in revenue last year.

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