- The Washington Times - Friday, April 25, 2008

HOUSTON (AP) — Setting the tone expected for the world’s big oil companies, ConocoPhillips said yesterday that its first-quarter earnings benefited mightily from record crude prices, although those same high levels squeezed results at its refining operations.

The third-largest U.S. oil company said its average global sales price for a barrel of crude in the first quarter was a hefty $92.88, up from $53.38 a year ago. Crude prices have risen roughly 80 percent since this time last year, nearly reaching $120 a barrel this week.

ConocoPhillips made out better on natural gas sales too, thanks to a 26 percent increase in prices from a year earlier.

The smaller Occidental Petroleum, which does not have refining operations, posted a 52 percent increase in earnings for the January-March period. Italian company Eni SpA said that its first-quarter profits rose 28 percent.

Looking ahead, ConocoPhillips said it expects high crude prices to continue to crimp refining margins in the current quarter. It also predicts output from exploration and production will fall in the second quarter versus the first because of scheduled maintenance.

ConocoPhillips said net income rose to $4.14 billion ($2.62 a share) from $3.55 billion ($2.12) a year earlier.

On average, analysts surveyed by Thomson Financial had expected earnings per share of $2.42.

Revenue rose to $54.9 billion from $41.3 billion a year ago.

The Houston-based company said earnings from its exploration and production arm rose nearly 24 percent to $2.89 billion, as higher commodity prices offset lower volumes and higher taxes.

But earnings fell sharply on the refining and marketing side, to $502 million from $1.14 billion, a decline that ConocoPhillips said earlier this month was expected.

The root of the problem was refining margins, which were squeezed by higher crude prices. Those margins reflect the difference between the cost of crude and what the company makes on refined products such as gasoline.

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