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UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 8-K
CURRENT REPORT
Pursuant to Section 13 or 15(d) of the Securities Exchange Act of 1934
Date of Report (date of earliest event reported): October 2, 2003
ConocoPhillips
(Exact name of registrant as specified in its charter)
Delaware 000-49987 01-0562944
(State or other jurisdiction of (Commission (I.R.S. Employer
incorporation) File Number) Identification No.)
600 North Dairy Ashford
Houston, Texas 77079
(Address of principal executive offices and zip code)
Registrant's telephone number, including area code: (281) 293-1000
Item 7. Financial Statements and Exhibits
(c) Exhibits
99.1 -- Press release issued by ConocoPhillips on October 2, 2003.
Item 12. Results of Operations and Financial Condition
On October 2, 2003, ConocoPhillips issued a press release providing a
third quarter 2003 interim update. A copy of the press release is furnished
herewith as Exhibit 99.1 and incorporated herein by reference.
2
SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934,
the registrant has duly caused this report to be signed on its behalf by the
undersigned hereunto duly authorized.
CONOCOPHILLIPS
/s/ Rand C. Berney
-------------------------------------------
Rand C. Berney
Vice President and Controller
October 2, 2003
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EXHIBIT INDEX
Exhibit
No. Description
- ------- -----------
99.1 -- Press release issued by ConocoPhillips on October 2, 2003.
Exhibit 99.1
ConocoPhillips Third Quarter 2003 Interim Update
HOUSTON--(BUSINESS WIRE)--Oct. 2, 2003--This update is intended to
give an overview of market and operating conditions experienced by
ConocoPhillips during the third quarter of 2003. The market indicators
and company estimates may differ considerably from the company's
actual results expected to be reported on Oct. 29, 2003.
Highlights - Third Quarter vs. Second Quarter
-- Exploration and Production
-- Higher prices for crude oil.
-- Natural gas prices level with second quarter.
-- BOE production decline of approximately 6 percent, as
anticipated.
-- Refining and Marketing
-- Higher refining margins.
-- Lower marketing margins.
-- Capacity utilization rate in the mid-90 percent range.
-- Midstream/Chemicals
-- Midstream results lower than prior quarter.
-- Lower Chemicals segment results.
-- Corporate
-- Corporate expenses lower than prior quarter.
-- Continued debt reduction.
-- Debt balance of $18.9 billion, including the effect of
accounting changes.
-- Effective tax rate of approximately 50 percent.
Exploration and Production
The table below reflects market indicators for crude oil and
natural gas. The company's actual crude oil and natural gas price
realizations may vary from the market indicators due to quality and
location differentials, as well as the effect of pricing lags.
Market Indicators
3Q 2003 2Q 2003 3Q vs. 2Q 3Q
2003 2002
- --------------------------------- --------- -------- ---------- ------
Dated Brent ($/bbl) $28.41 26.03 2.38 26.94
- --------------------------------- --------- -------- ---------- ------
WTI ($/bbl) 30.18 29.02 1.16 28.31
- --------------------------------- --------- -------- ---------- ------
ANS USWC ($/bbl) 28.83 27.04 1.79 27.31
- --------------------------------- --------- -------- ---------- ------
Henry Hub first of month ($/mcf) 4.97 5.40 (0.43) 3.16
- --------------------------------- --------- -------- ---------- ------
Source: Platt's
Upstream crude oil, natural gas and natural gas liquids production
on a barrel-of-oil-equivalent per day basis for the quarter is
expected to be approximately 6 percent below second quarter levels, as
anticipated. Third quarter production was impacted by normal seasonal
declines and scheduled maintenance activity in the United Kingdom,
Alaska, and Norway, as well as asset dispositions in the Lower 48.
Refining and Marketing
The table below provides market indicators for regions where the
company has significant refining operations. The Weighted U.S. 3:2:1
margin is based on the geographical location of ConocoPhillips' U.S.
refineries. Realized refining margins may differ due to the company's
specific locations, configurations, crude oil slates or operating
conditions.
Market Indicators
3Q 2003 2Q 2003 3Q vs. 2Q 3Q
2003 2002
- --------------------------------- --------- --------- --------- ------
Refining Margins ($/bbl)
- --------------------------------- --------- --------- --------- ------
East Coast WTI 3:2:1 $6.37 3.46 2.91 3.06
- --------------------------------- --------- --------- --------- ------
Gulf Coast WTI 3:2:1 5.38 3.65 1.73 2.79
- --------------------------------- --------- --------- --------- ------
Mid-Continent WTI 3:2:1 8.32 6.96 1.36 5.16
- --------------------------------- --------- --------- --------- ------
West Coast ANS 3:2:1 14.00 11.39 2.61 8.58
- --------------------------------- --------- --------- --------- ------
Weighted U.S. 3:2:1 7.84 5.86 1.98 4.60
- --------------------------------- --------- --------- --------- ------
NW Europe Dated Brent 3.11 3.17 (0.06) 1.70
- --------------------------------- --------- --------- --------- ------
WTI/Maya differential (trading
month) 5.89 7.50 (1.61) 4.90
- --------------------------------- --------- --------- --------- ------
Source: Platt's
The weighted U.S. refining margin for the third quarter is
expected to be higher than the second quarter. Improved refining
margins are expected to be partially offset by lower marketing
margins. The company's average crude oil refining capacity utilization
rate for the third quarter is expected to be in the mid-90 percent
range.
Midstream/Chemicals Businesses Segments
Third quarter Midstream results are expected to be lower than the
second quarter primarily due to lower equity earnings. This segment
reflects ConocoPhillips' 30.3 percent interest in Duke Energy Field
Services, as well as consolidated midstream operations.
Chemicals' third quarter results are expected to decline from the
second quarter primarily due to lower margins, partially offset by
increased volumes.
Corporate
Corporate expenses from continuing operations during the third
quarter are expected to be lower than the previous quarter.
The company's balance sheet debt level at the end of the third
quarter is expected to be $18.9 billion. This reflects debt reductions
of approximately $1.5 billion during the third quarter, as well as
accounting changes that increased balance sheet debt by approximately
$2.9 billion as a result of the adoption of Financial Accounting
Standards Board (FASB) Interpretation No. 46 (FIN 46), "Consolidation
of Variable Interest Entities," and FASB Statement No. 150 (SFAS 150),
"Accounting for Certain Financial Instruments with Characteristics of
Both Liabilities and Equity." FIN 46 was adopted during the third
quarter, with retroactive application as of Jan. 1, 2003, while SFAS
150 was adopted and applied as of July 1, 2003.
The company's effective tax rate is expected to be approximately
50 percent. Second quarter effective tax rates were lower than normal,
primarily due to the impact of one-time international E&P tax
legislation changes.
The company anticipates that its synergy run rate will remain on
track to reach $1.25 billion per year by the end of 2003.
-###-
CAUTIONARY STATEMENT FOR THE PURPOSES OF THE "SAFE HARBOR"
PROVISIONS OF THE PRIVATE SECURITIES LITIGATION REFORM ACT OF 1995
This update contains forward-looking statements within the meaning
of the "safe harbor" provisions of the Private Securities Litigation
Reform Act of 1995. The forward-looking statements are about
ConocoPhillips' business segments: exploration and production;
refining and marketing; midstream; and chemicals manufacturing. There
are also forward-looking statements about ConocoPhillips' expected
crude oil, natural gas and natural gas liquids production; weighted
U.S. refining margins; marketing margins; refinery utilization rates;
midstream results; chemicals results; corporate charges from
continuing operations; reclassified balance sheet debt; the company's
balance sheet debt level; the company's effective tax rate; and
synergy run rates. These statements are based on activity from
operations for the first two months of the third quarter of 2003 and
include estimated results for September, and as such are preliminary
and are estimates. All of the forward-looking data is therefore
subject to change. Actual results, expected to be reported in the
company's earnings release for the third quarter of 2003 on Oct. 29,
2003, may differ materially from the estimates given in this update.
Where in any forward-looking statement, the company expresses an
expectation or belief as to future results, such expectation or belief
is expressed in good faith and believed to have a reasonable basis.
However, there can be no assurance that such expectation or belief
will result or be achieved. The actual results of operations can and
will be affected by a variety of risks and other matters that could
cause the stated expectation or belief to differ materially from that
stated in this update.
CONTACT: ConocoPhillips