Track the companies that matter to you. It's FREE! Click one of these fan favorites to get started: Apple; Google; Ford.



Conoco Leads Off the Big Oil Bandwagon

Watch stocks you care about

The single, easiest way to keep track of all the stocks that matter...

Your own personalized stock watchlist!

It's a 100% FREE Motley Fool service...

Click Here Now

It's sort of like being a kid at Halloween: You can gobble up all of your goodies now, but you'll have a stomachache later. Similarly, the oil companies can enjoy their commodity-inflated results for the third quarter, but what goes up ... well, you know.

The first of the Big Oil trick-or-treaters to report was ConocoPhillips (NYSE: COP  ) , which told us on Wednesday that it had earned $5.18 billion in the third quarter, up 41% from the same quarter of 2007. Revenue climbed 52% for the same period to $70 billion, from $46.1 billion last year.

It probably won't surprise you to know that upstream (exploration and production) net income rose 47% to $3.93 billion, based largely on the increases in oil and gas prices. And there's where the potential tummyache lurks: We know that crude-oil prices have been cut in half from their July highs. Those cuts will be reflected in the coming quarters, and with volumes pretty well fixed, the exploration and production engines of the past few periods stand to be slowed substantially.

The company's daily production averaged 1.75 million barrels of oil equivalent (BOE) in the quarter, a decline from last year's 1.80 million. Part of the slippage reflected a hurricane-induced reduction of about 17,000 BOE per day.

The production figures include its Canadian Syncrude operations, but not its investment in Russia's Lukoil, which it reports separately. Conoco's investment in the Russian company yielded about $438 million in the most recent quarter, up about 13% from the same quarter in 2007.

On the downstream (refining and marketing) side, net income slid about 35%. The decline reflected several factors, including lower refining volumes -- thanks in part to hurricanes Gustav and Ike -- and a change in German tax legislation.

Conoco's third-quarter results will be followed by reports from the other Big Oil companies, including ExxonMobil (NYSE: XOM  ) , Chevron (NYSE: CVX  ) , BP (NYSE: BP  ) , and Royal Dutch Shell (NYSE: RDS-A  ) . However, the key for these companies is what lies ahead -- lower average commodity prices.

On that basis, energy-company buyers should be aware of the income downturn that likely lurks as average crude realizations fall.

Motley Fool CAPS players have anointed ConocoPhillips with a five-star rating. Does that include your assessment?

For related Foolishness:

Fool contributor David Lee Smith doesn't have financial interests in any of the companies listed above. He does welcome your questions, comments, or criticisms. The Fool has a disclosure policy.

Read/Post Comments (0) | Recommend This Article (1)

Comments from our Foolish Readers

Help us keep this a respectfully Foolish area! This is a place for our readers to discuss, debate, and learn more about the Foolish investing topic you read about above. Help us keep it clean and safe. If you believe a comment is abusive or otherwise violates our Fool's Rules, please report it via the Report this Comment Report this Comment icon found on every comment.

Be the first one to comment on this article.

Compare Brokers

Fool Disclosure

Sponsored Links

Leaked: Apple's Next Smart Device
(Warning, it may shock you)
The secret is out... experts are predicting 458 million of these types of devices will be sold per year. 1 hyper-growth company stands to rake in maximum profit - and it's NOT Apple. Show me Apple's new smart gizmo!

DocumentId: 761711, ~/Articles/ArticleHandler.aspx, 10/21/2016 9:55:22 PM

Report This Comment

Use this area to report a comment that you believe is in violation of the community guidelines. Our team will review the entry and take any appropriate action.

Sending report...

Today's Market

updated 39 minutes ago Sponsored by:
DOW 18,145.71 -16.64 -0.09%
S&P 500 2,141.16 -0.18 -0.01%
NASD 5,257.40 15.57 0.30%

Create My Watchlist

Go to My Watchlist

You don't seem to be following any stocks yet!

Better investing starts with a watchlist. Now you can create a personalized watchlist and get immediate access to the personalized information you need to make successful investing decisions.

Data delayed up to 5 minutes

Related Tickers

10/21/2016 4:00 PM
COP $41.54 Up +0.05 +0.12%
ConocoPhillips CAPS Rating: ****
BP $36.25 Up +0.20 +0.55%
BP CAPS Rating: ****
CVX $101.30 Down -0.57 -0.56%
Chevron CAPS Rating: ****
RDS-A $50.82 Down -0.17 -0.33%
Royal Dutch Shell… CAPS Rating: ****
XOM $86.62 Down -0.59 -0.68%
ExxonMobil CAPS Rating: ****