Let's start off with an opinion: It could have been far worse. Based on its status as a major refiner and a large natural gas producer, ConocoPhillips' (NYSE:COP) results could have fallen far more than they did in the past quarter.

For the quarter, the company earned $3.67 billion, or $2.23 per share, compared to $3.88 billion, or $2.31 a share, in the third quarter of 2006. Total revenue slipped to $46.1 billion, from $48.1 billion a year ago.

Conoco is the first of the major U.S.-based integrated companies to report its quarterly results. It did follow London-based BP (NYSE:BP), which recorded a significant earnings decline for a variety of reasons. But ConocoPhillips' lower downstream earnings and higher upstream results make for a theme that will almost certainly be repeated by the likes of fellow domestic majors ExxonMobil (NYSE:XOM) and Chevron (NYSE:CVX) when they report their September results in the next week.

Of course, the upstream-downstream flip-flop for the integrated companies relates to a climb in crude oil prices throughout this year, to the point that it's now floating near $90 a barrel -- up from $50 earlier in the year. Gasoline prices have risen by a much lower percentage, thereby crimping refining margins.

In ConocoPhillips' case, upstream -- exploration and production -- income increased by 9.3%, while refining and marketing income decreased 10.7% year over year. But it fell about 45% from the second quarter, when refining margins were much higher.

Also, according to ConocoPhillips, Russian oil company LUKOIL -- in which Conoco has a 20% ownership stake -- probably saw its profit fall about 26% sequentially on lower product prices and higher costs. This capitalism shtick can be rough.

My expectation going forward is that gasoline prices will begin to rise to reflect higher crude costs, which, for now, appear to have found a home in the $80s. The result could be a convergence of strength in both the upstream and downstream sectors. On that basis, and although I generally prefer ExxonMobil as a proxy for the big companies, I'm not about to turn up my nose at the other majors, including ConocoPhillips.

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