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Introduction: Some information on the company
ConocoPhillips operates as an integrated energy company worldwide. It operates in six segments:
Exploration and Production (E&P) - explores for, produces, and markets crude oil, natural gas, and natural gas liquids. It also mines deposits of oil sands in Canada to extract the bitumen and upgrade it into a synthetic crude oil
Midstream - gathers, processes, and markets natural gas; and fractionates and markets natural gas liquids in the United States and Trinidad
Refining and Marketing (R&M) - purchases, refines, markets, and transports crude oil and petroleum products, including gasoline, distillates, and aviation fuels primarily in the U.S., Europe, and Asia Pacific.
LUKOIL Investment - consists of 20% interest in OAO LUKOIL, an international integrated oil and gas company.
Chemicals - manufactures and markets petrochemicals and plastics.
Emerging Businesses - develops new technologies and businesses. It focuses on the power generation; development of carbon-to-liquids technology through coal and petroleum coke; and alternative energy and programs, energy conversion technologies, new petroleum-based products, and renewable fuels. It also offers E-Gas, a gasification technology that produces high-value synthetic gas.
76B252250C145C6E5D4745FD0755A033
Original Report on:
COP: Financial Analysis through December 2008 (Update)
GCFR previously analyzed the fourth quarter 2008 results, as reported in this press release, of oil and gas titan ConocoPhillips (NYSE: COP). ConocoPhillips subsequently filed a 10-K report for 2008 with the SEC. We have used the 10-K's Balance Sheet, which had not previously been made available, to update our analysis and gauge scores. This post identifies the changes to the analysis results. Since the 10-K did not change our examination of the fourth-quarter Income Statement, those results are not repeated here.
http://sheet.zoho.com/public/ncarvin/template-income-statement-1?mode=html
For the original analysis, we approximated the Balance Sheet for 31 December 2009 by adjusting the September version to reflect the $34.5 billion asset impairment charges Conoco recorded in the fourth quarter.
Conoco, Inc., and Phillips Petroleum combined in August 2002 to form ConocoPhillips. Burlington Resources, with its extensive natural gas operations, was added to the mix in March 2006. The combination produced a behemoth that is number five, when sorted by annual Revenues, on the Fortune 500 list of the largest U.S. corporations. When stacked up against other global oil and gas major companies, ConocoPhillips has the seventh-most Market Capitalization.
Berkshire Hathaway, Inc. (NYSE: BRK.A), run by super-investor Warren Buffett, and its affiliates owned about 79 million shares of ConocoPhillips on 31 December 2008, up from 17.5 million shares on 31 March 2008. Buffett recently characterized the purchase of these shares, when energy prices were soaring, as his biggest mistake in 2008. ConocoPhillips owns 20 percent of LUKOIL (OTC: LUKOY), which is responsible for more than 18 percent of Russia's oil production. LUKOIL's shrinking market value was responsible for $7.4 billion of the fourth quarter's impairment charges. Note that the Lukoil charge is significantly greater than the one Conoco recorded in 2007, when troubles with the Venezuelan government resulted in a $4.5 billion for expropriated assets. The data in the 10-K led to a one-point increase in the Cash Management gauge and a one-point increase in the Overall gauge, from the levels in the original analysis. The other gauges did not change. The gauges now read as follows:
• Cash Management: 14 of 25 (down from 15 in September)
• Growth: 13 of 25 (down from 23)
• Profitability: 8 of 25 (up from 7)
• Value: 11 of 25 (down from 14)
• Overall: 44 of 100 (down from 52)
The latest Balance Sheet slightly modified the values for some Cash Management metrics.
ConocoPhillips operates as an integrated energy company worldwide. It operates in six segments:
Exploration and Production (E&P) - explores for, produces, and markets crude oil, natural gas, and natural gas liquids. It also mines deposits of oil sands in Canada to extract the bitumen and upgrade it into a synthetic crude oil
Midstream - gathers, processes, and markets natural gas; and fractionates and markets natural gas liquids in the United States and Trinidad
Refining and Marketing (R&M) - purchases, refines, markets, and transports crude oil and petroleum products, including gasoline, distillates, and aviation fuels primarily in the U.S., Europe, and Asia Pacific.
LUKOIL Investment - consists of 20% interest in OAO LUKOIL, an international integrated oil and gas company.
Chemicals - manufactures and markets petrochemicals and plastics.
Emerging Businesses - develops new technologies and businesses. It focuses on the power generation; development of carbon-to-liquids technology through coal and petroleum coke; and alternative energy and programs, energy conversion technologies, new petroleum-based products, and renewable fuels. It also offers E-Gas, a gasification technology that produces high-value synthetic gas.
Original Report on:
COP: Financial Analysis through December 2008 (Update)
GCFR previously analyzed the fourth quarter 2008 results, as reported in this press release, of oil and gas titan ConocoPhillips (NYSE: COP). ConocoPhillips subsequently filed a 10-K report for 2008 with the SEC. We have used the 10-K's Balance Sheet, which had not previously been made available, to update our analysis and gauge scores. This post identifies the changes to the analysis results. Since the 10-K did not change our examination of the fourth-quarter Income Statement, those results are not repeated here.
http://sheet.zoho.com/public/ncarvin/template-income-statement-1?mode=html
For the original analysis, we approximated the Balance Sheet for 31 December 2009 by adjusting the September version to reflect the $34.5 billion asset impairment charges Conoco recorded in the fourth quarter.
Conoco, Inc., and Phillips Petroleum combined in August 2002 to form ConocoPhillips. Burlington Resources, with its extensive natural gas operations, was added to the mix in March 2006. The combination produced a behemoth that is number five, when sorted by annual Revenues, on the Fortune 500 list of the largest U.S. corporations. When stacked up against other global oil and gas major companies, ConocoPhillips has the seventh-most Market Capitalization.
Berkshire Hathaway, Inc. (NYSE: BRK.A), run by super-investor Warren Buffett, and its affiliates owned about 79 million shares of ConocoPhillips on 31 December 2008, up from 17.5 million shares on 31 March 2008. Buffett recently characterized the purchase of these shares, when energy prices were soaring, as his biggest mistake in 2008. ConocoPhillips owns 20 percent of LUKOIL (OTC: LUKOY), which is responsible for more than 18 percent of Russia's oil production. LUKOIL's shrinking market value was responsible for $7.4 billion of the fourth quarter's impairment charges. Note that the Lukoil charge is significantly greater than the one Conoco recorded in 2007, when troubles with the Venezuelan government resulted in a $4.5 billion for expropriated assets. The data in the 10-K led to a one-point increase in the Cash Management gauge and a one-point increase in the Overall gauge, from the levels in the original analysis. The other gauges did not change. The gauges now read as follows:
• Cash Management: 14 of 25 (down from 15 in September)
• Growth: 13 of 25 (down from 23)
• Profitability: 8 of 25 (up from 7)
• Value: 11 of 25 (down from 14)
• Overall: 44 of 100 (down from 52)
The latest Balance Sheet slightly modified the values for some Cash Management metrics.
Cash Management
December 2008 3 months prior 12 months prior
Current Ratio
1.0 1.0 0.9
LTD/Equity
49.1% 23.4% 22.8%
Debt/CFO
1.2 years 0.8 years 0.9 years
Inventory/CGS
N/A N/A N/A
Finished Goods/Inventory
N/A N/A N/A
Days of Sales Outstanding (DSO)
21.3 days 22.5 days 29.7 days
Working Capital/Market Capitalization
-0.9% -0.9% -1.3%
Cash Conversion Cycle Time
-1.1 days -0.2 days -2.1 days
Gauge Score (0 to 25) 14 15 10
Note the doubling of the ratio of Long-Term Debt to Shareholders' Equity. In the fourth quarter of 2008, LTD increased from $21.7 billion to $27.1 billion, and Equity was slashed from $92.9 billion to $55.2 billion.
Most of the debt increase can be attributed to Conoco's decision to issue $4.9 billion of commercial paper in October 2008 to help close a transaction involving the formation of a 50/50 joint venture with Australia's Origin Energy, Ltd., (ASX:ORG ). The new company, named Australia Pacific LNG "will focus on coalbed methane production from the Bowen and Surat basins in Queensland, Australia, and LNG processing and export sales."
The plunge in Shareholders' Equity is a consequence of the $34.5 billion asset impairment charges Conoco recorded in the fourth quarter.
Stock Quote (NYSE: COP) Price: $37.81: Last Trade: 4:02 PM 3/20/2009: Change-0.44 (-1.15%) Close: 38.25: Investor Information
Earnings Actual Estimates Surprise
Q3 2008 $3.32 $3.06 $0.26
Q2 2008 $3.49 $3.45 $0.04
Q1 2008 $2.52 $2.42 $0.10
These are the earnings of the company, showing surprisingly positive actual earnings.
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