It's the sort of thing that was bound to result from that strange phenomenon of oil and gas frequently being found beneath the lands overseen by unstable governments. On Wednesday, ConocoPhillips (NYSE:COP), the third-largest U.S. oil and gas company, reported its second-quarter results. As expected, they included a financial hit relating to the company's thumbing its nose at Venezuelan President Hugo Chavez.

That stance, which was also taken by ExxonMobil (NYSE:XOM), involved a turndown of Chavez's invitation to the companies to continue producing in Venezuela after he had removed them as operators in his Orinoco basin. The result, for Conoco, was a $4.5 billion charge in the quarter to write off its Venezuelan assets. Other companies affected by the Chavez mandate included Chevron (NYSE:CVX) and Italy's Eni (NYSE:E).

Obviously, there are two ways to look at Conoco's most recent quarterly results: with the charge or without. Whichever approach you choose, let's keep it as simple as possible. With the charge, net income fell 94% to $301 million, from $5.19 billion last year. However -- and I think this is the more advisable way to adjust the company's results -- without the Venezuelan impairment charge, the company earned $4.81 billion, versus that same $5.19 billion in 2006. Revenue reached $47.4 billion in the most recent quarter, versus $47.1 billion in the second quarter of 2006.

The company's exploration earnings, adjusted for Venezuela, were $2.1 billion, down 36% on lower crude oil prices. Production for the quarter was 1.9 million barrels of oil equivalent daily, versus 2.1 million daily barrels last year. The lower production apparently stemmed largely from normal field declines, outages for maintenance in the North Sea, and the company's exit from Dubai. Conversely, higher global margins led to the contribution from refining and marketing coming in at $2.4 billion, compared to $1.7 billion.

So Conoco's quarter was a laboratory example of several items that can affect big oil companies meaningfully. These items would include declining production from aging fields, the effects of normal maintenance downtime, fluctuations in commodities prices, and the progressively more frequent occurrence of one's fate being affected by the caprice of tinhorn governments.

Further, it's important for Fools watching Conoco to recognize that its Venezuelan affair will result in lower production -- and likely earnings -- in the September quarter. Nevertheless, this is an otherwise extremely solid oil and gas company, one that Fools who invest in energy should keep well within their sights.

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Fool contributor David Lee Smith can't stop writing about the companies mentioned long enough to acquire shares in them. He welcomes your questions, comments, or other communiques. The Motley Fool has a disclosure policy.

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