"We had a good quarter and operated as expected," said Jim Mulva, chairman and chief executive officer. "Our plans to improve returns through disciplined capital spending, reducing debt and repurchasing shares are on track. Considerable free cash flow should enable us to execute our capital program to organically [image-nocss] convert resources to reserves and annually increase dividends while repurchasing shares."
He added, "Our R&M business ran well, as our refining business delivered utilization rates in line with expectations."
Compared with the third quarter of 2009, Refining& Marketing (R&M) benefited from an increase in realized refining margins, primarily from a 15% increase in global refining market crack spreads and increased premium coke production. The increase in the global crack spread was primarily driven by stronger distillate market cracks.
Third-quarter 2010 R&M earnings were negatively impacted by approximately $75 million from inventory effects, which the company expects to recover in the fourth quarter.
In addition, compared with the third quarter of 2009, tax and foreign exchange impacts improved R&M earnings by almost $100 million. These improvements were partially offset by lower realized marketing margins, which were approximately $80 million less than in the same period in 2009, primarily due to market conditions.
Third-quarter 2010 adjusted earnings were $2.2 billion, or $1.50 per share, compared with adjusted earnings of $1.4 billion, or $0.95 per share, for the same period in 2009. Adjusted earnings increased versus the prior year, primarily due to the impact of higher commodity prices and U.S. refining margins, partially offset by higher taxes and lower production volumes. For the third quarter of 2010, ConocoPhillips reported earnings of $3.1 billion, or $2.05 per share, compared with earnings of $1.5 billion, or $0.97 per share, for the same period in 2009.
ConocoPhillips' adjusted earnings for the first nine months of 2010 were $6.9 billion, compared with adjusted earnings of $3.1 billion in the corresponding period of 2009. Adjusted earnings for 2010 were higher than 2009, primarily due to higher commodity prices and global refining margins, partially offset by higher taxes and lower production volumes. Nine-month 2010 earnings were $9.3 billion, compared with $3.1 billion for the same period of 2009.
During the third quarter of 2010, the company generated $10.6 billion in cash, $4.3 billion in cash from operations and $6.3 billion in cash proceeds from asset dispositions. This cash was used to pay $2.7 billion of debt, fund a $2.5 billion capital program, repurchase $0.9 billion of ConocoPhillips common stock and pay $0.8 billion in dividends. The company had a cash balance of $8 billion at quarter end, a significant portion of which is expected to be used for additional share repurchases. As of September 30, 2010, debt was $23.6 billion and the debt-to-capital ratio was 25%.
ConocoPhillips is an integrated energy company with interests around the world. Headquartered in Houston, the company had approximately 29,800 employees, $155 billion of assets, and $184 billion of annualized revenues as of September 30, 2010.
Members help make our journalism possible. Become a CSP member today and unlock exclusive benefits, including unlimited access to all of our content. Sign up here.