When ConocoPhillips (NYSE: COP ) reports its 2012 fourth-quarter results on Wednesday, it'll be yet another period wherein the company has become a veritable shadow of its former self. Management has been shedding assets at a breakneck pace, and so year-over-year -- or even sequential -- comparisons of the company's operating and financial results become relatively meaningless.
Conoco's biggest reduction during the year occurred on May 1, when its refining and marketing operations were spun off to form Phillips 66 (NYSE: PSX ) , whose assets include 15 refineries, 10,000 branded marketing outlets, and 15,000 pipeline miles. It's worth noting that, from its close on its "birthday" until the cessation of trading on Tuesday, the shares of the newly separate company have seen their value increase by a whopping 76%.
Perhaps that's one reason why Murphy Oil (NYSE: MUR ) is in the process of shedding its own downstream operations. And, as recently as Monday, Hess (NYSE: HES ) disclosed that it has similar plans in the works.
All we know is that they'll be lower.
But back to ConocoPhillips. With assets flying out the door as from a spring garage sale, analysts who follow the company have arrived at a per-share earnings consensus of $1.42 for the fourth quarter, 30% below the $2.02 chalked up in the previous year's comparable quarter (as if there were comparable quarters with Conoco). And with far fewer properties contributing to its efforts, Conoco is expected to announce revenues of about $13.31 billion, a plummet of sufficient magnitude from last year's $62.4 billion that management just might conduct the company's post-release call adorned in parachutes.
Operating results are also impossible to predict. Obviously, the company's slimming down affected its production for the quarter, but beyond that, it followed the lead of U.S. natural gas producer Chesapeake in reducing its North American gas output in the face of moribund prices for the commodity.
A serious slimming
Announcements of other operating pullbacks or asset sales began early in the fourth quarter and have continued on virtually uninterrupted. In early October, ConocoPhillips announced a decision not to pursue further exploration activities in a pair of blocks in Peru and to forgo the next exploration phase in the area. The decision followed the completion of two rounds of seismic exploration activities in the two blocks.
Next, in late November, the company informed authorities in Kazakhstan, along with its "co-venturers," of its intent to sell its 8.4% interest in the North Caspian Sea Production Sharing Agreement (Kashagan). Assuming that the necessary approvals are forthcoming, the new owner of the interest will be ONGC Videsh Limited, the international arm of Oil and Natural Gas Corp. Limited, India. The transfer is expected to occur during the first half of this year.
During the second half of December, Conoco announced that it had entered into an agreement to sell its Nigerian business unit, which is comprised of several separate entities, for $1.79 billion. The proposed buyer of the properties, which yielded average 2012 production of 43,000 barrels per day through October, is Oando PLC, a Pan-African multinational energy corporation in Lagos, Nigeria.
Following the close of the quarter, ConocoPhillips said that it had reached an agreement with Plano, Texas-based Denbury Resources (NYSE: DNR ) for the sale of 86,000 net acres in the Cedar Creek Anticline for a total of $1.05 billion. While the properties are located in southwestern North Dakota and eastern Montana, the transaction will not include any of Conoco's 626,000 net acres in the Bakken Formation, which is located in the same general geographic area.
The Foolish bottom line
ConocoPhillips' earnings release and subsequent conference call will likely fill a number of the holes in our current knowledge about the status of the company. Included likely will be information about ongoing plans for additional asset sales and the company's thoughts about the current turmoil in Algeria, where it has a significant presence (although its Algerian unit is also awaiting the consummation of a sale).
Given these gaps in our information, along with the rapid transformation of the company's structure and asset base, I urge Fools to be attentive to the information provided by both the release of quarterly and annual results and management's call thereafter.