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): July 28, 2004
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 July 28, 2004.
99.2 -- Financial and operational tables.
99.3 -- Supplemental financial information.
Item 12. Results of Operations and Financial Condition
On July 28, 2004, ConocoPhillips issued a press release announcing the
company's financial and operating results for the quarter ended June 30, 2004. A
copy of the press release is furnished as Exhibit 99.1 hereto and incorporated
herein by reference. Additional financial and operating information about the
quarter is furnished as Exhibits 99.2 and 99.3 to this report and incorporated
by reference herein.
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
July 28, 2004
3
EXHIBIT INDEX
Exhibit
No. Description
- ------- -----------
99.1 -- Press release issued by ConocoPhillips on July 28, 2004.
99.2 -- Financial and operational tables.
99.3 -- Supplemental financial information.
4
Exhibit 99.1
ConocoPhillips Reports Second Quarter Net Income of $2.1 Billion;
Balance Sheet Strengthened by Reduction in Debt
HOUSTON--(BUSINESS WIRE)--July 28, 2004--ConocoPhillips
(NYSE:COP):
Earnings at a glance
Second Quarter Six Months
- ----------------------------------------------------------------------
2004 2003 2004 2003
- ----------------------------------------------------------------------
Income from
continuing
operations $2,013 million 1,096 million $3,616 million 2,359 million
Income from
discontinued
operations $ 62 91 $ 75 144
Cumulative
effect of
changes in
accounting
principles $ - - $ - (95)
Net income $2,075 1,187 $3,691 2,408
- ----------------------------------------------------------------------
Diluted income
per share
Income from
continuing
operations $ 2.88 1.60 $5.19 3.45
Net income $ 2.97 1.73 $5.30 3.52
- ----------------------------------------------------------------------
Revenues $ 31.9 billion 25.6 billion $62.1 billion 52.6 billion
- ----------------------------------------------------------------------
ConocoPhillips (NYSE:COP) today reported second quarter net income
of $2,075 million, or $2.97 per share, compared with $1,187 million,
or $1.73 per share, for the same quarter in 2003. Total revenues were
$31.9 billion, versus $25.6 billion a year ago. Income from continuing
operations for the second quarter was $2,013 million, or $2.88 per
share, compared with $1,096 million, or $1.60 per share, for the same
period a year ago.
"Overall, our operating performance for the quarter was good, but
there were opportunities to do better," said Jim Mulva, president and
chief executive officer. "Due to unscheduled downtime, we did not
realize the full potential of our assets in a high price and high
margin environment.
"We made further progress in strengthening our balance sheet, with
our debt-to-capital ratio declining from 32 percent to 29 percent
during the quarter. In addition to operating cash flows of $2.3
billion, we received proceeds of $905 million from asset sales. This
brings the company's total proceeds realized from all asset
dispositions since the merger to approximately $4.7 billion. Cash
generation during the quarter allowed us to invest $1.6 billion in
capital projects, pay $296 million in dividends and reduce balance
sheet debt by approximately $1.5 billion."
For the first six months of 2004, net income was $3,691 million,
or $5.30 per share, versus $2,408 million, or $3.52 per share, for
2003. Income from continuing operations was $3,616 million, or $5.19
per share, compared with $2,359 million, or $3.45 per share, for the
same period a year ago. Total revenues were $62.1 billion, versus
$52.6 billion a year ago.
The results of ConocoPhillips' business segments follow.
Exploration & Production (E&P)
Second quarter financial results: E&P income from continuing
operations in the second quarter was $1,354 million, up from $1,257
million in the first quarter of 2004 and up from $1,077 million in the
second quarter of 2003. The increase from the first quarter was
primarily the result of higher realized crude oil prices, partially
offset by lower volumes, lower gains related to first quarter asset
sales, higher leasehold impairments, and higher operating costs
associated with regulated tariffs in Alaska and the production ramp up
at Bayu-Undan in the Timor Sea. Improved results from the second
quarter of 2003 were primarily due to higher realized crude oil and
natural gas prices, partially offset by lower volumes, reduced
benefits from tax law changes, and higher leasehold impairment and dry
hole costs.
ConocoPhillips' daily production for the quarter averaged 1.56
million BOE per day, including Canadian Syncrude. This was achieved
despite production being negatively impacted 18,000 BOE per day due to
the first quarter sale of Petrovera and 15,000 BOE per day from
unscheduled downtime at the Britannia field in the U.K. North Sea and
in Alaska. When compared with the first quarter, increased output from
Bayu-Undan during the second quarter was more than offset by the
impact of scheduled maintenance, normal seasonal declines and the
impact of asset sales. When compared with the second quarter of 2003,
volumes were lower primarily due to asset sales.
ConocoPhillips' second quarter 2004 average worldwide crude oil
sales price was $34.00 per barrel, up from $30.35 in the first quarter
of 2004. The company's U.S. Lower 48 and worldwide natural gas prices
averaged $5.36 and $4.43 per thousand cubic feet, respectively,
compared with $4.91 and $4.48 in the first quarter of 2004.
Six months financial results: E&P income from continuing
operations for the first six months of 2004 was $2,611 million, up
from $2,202 million in 2003, primarily due to higher realized
worldwide crude oil and natural gas prices, partially offset by lower
volumes largely associated with asset sales, reduced benefits from tax
law changes, and higher leasehold impairment and dry hole costs.
ConocoPhillips' average worldwide crude oil price was $32.14 per
barrel for the first six months of 2004, compared with $27.82 for
2003. The company's U.S. Lower 48 and worldwide natural gas prices
averaged $5.13 and $4.46 per thousand cubic feet, respectively, versus
$5.10 and $4.21 in 2003.
Midstream
Second quarter financial results: Midstream income from continuing
operations was $42 million, down from $55 million in the first quarter
of 2004 and up from $25 million in the second quarter of 2003. The
decrease from the prior quarter was mainly the result of asset sales
in the company's consolidated operations, as gains on dispositions
were more than offset by lower volumes associated with the disposed
assets. The increase over the second quarter of 2003 was primarily due
to higher natural gas liquids prices for Duke Energy Field Services,
LLC (DEFS).
Six months financial results: Midstream operating results
increased to $97 million, from $56 million in 2003. The increase was
primarily the result of higher natural gas liquids prices in both DEFS
and the company's consolidated operations.
Refining and Marketing (R&M)
Second quarter financial results: R&M income from continuing
operations was $818 million, up from $464 million in the previous
quarter and $321 million in the second quarter of 2003. The increase
in second quarter R&M earnings, compared with the first quarter of
2004, was primarily driven by higher U.S. refining margins.
The company's domestic facilities ran at 98 percent crude oil
capacity utilization, however realized margins were negatively
impacted due to lower clean product yield as a result of unplanned
cracking unit downtime at the Trainer (Pa.) refinery and an extended
cracking unit turnaround at the Alliance (La.) refinery. This
unplanned downtime also resulted in higher maintenance costs. U.S.
marketing results were lower due to unfavorable inventory impacts, the
timing of certain expenses and lower trading results.
The international crude oil capacity utilization rate was 62
percent, compared with 84 percent in the prior quarter, largely due to
turnarounds at most of the company's international refineries and a
longer-than-planned, 43-day turnaround at the Humber refinery in the
United Kingdom. Turnaround costs, after tax, were $25 million higher
than those of the previous quarter. Additionally, the company
experienced improved realized international marketing margins and
higher marketing volumes.
Overall, the company's second quarter refinery crude oil capacity
utilization rate averaged 92 percent, compared with 95 percent last
quarter. Turnaround costs, before tax, were $78 million during the
second quarter compared with $59 million in the first quarter of 2004.
The improved results over the second quarter of 2003 were
primarily the result of higher worldwide refining margins, partially
offset by lower global marketing margins and higher turnaround and
maintenance costs.
Six months financial results: R&M income from continuing
operations for the first six months of 2004 increased to $1,282
million, compared with $710 million in the first half of 2003. The
increased earnings were driven by higher worldwide refining margins,
partially offset by lower global marketing margins and higher
turnaround and maintenance costs.
Chemicals
Second quarter financial results: The Chemicals segment, which
includes the company's 50 percent interest in Chevron Phillips
Chemical Company LLC (CPChem), reported income from continuing
operations of $46 million, compared with $39 million in the first
quarter of 2004 and $12 million in the second quarter of 2003. The
improvement from the first quarter was the result of a gain on a
property settlement by ConocoPhillips. Results from CPChem, however,
were lower than the first quarter as improvements in the aromatics and
styrenics business line were more than offset by higher turnaround
costs in the olefins business line. The increase from the second
quarter of 2003 reflects higher volumes by CPChem, particularly in the
olefins business line.
Six months financial results: During the first six months of 2004,
the Chemicals segment had income from continuing operations of $85
million, compared with a loss of $11 million for the same period a
year ago. Contributing to the improvement were higher margins in the
olefins and polyolefins, aromatics and styrenics business units, as
well as improved olefins and polyolefins volumes.
Emerging Businesses
The Emerging Businesses segment had a loss from continuing
operations of $29 million in the second quarter of 2004, compared with
losses of $22 million in the first quarter of 2004 and $23 million in
the second quarter of 2003. The higher losses from both the first
quarter of 2004 and the second quarter of 2003 were primarily
attributable to increased operating costs as a result of the initial
commissioning of the Immingham combined heat and power plant in the
United Kingdom.
Corporate and Other
Second quarter after-tax Corporate expenses from continuing
operations were $218 million, compared with $190 million in the
previous quarter and $316 million in the second quarter of 2003. The
increase over the first quarter was primarily driven by higher net
interest expense and orphan site remediation costs. The decrease from
the second quarter of 2003 was primarily the result of reduced
merger-related costs and net interest expense, partially offset by
lower currency exchange gains.
Total debt at the end of the second quarter was $15.6 billion,
$1.5 billion lower than the end of the previous quarter and $2.2
billion below year-end 2003. At the end of the second quarter, the
company's debt-to-capital ratio was 29 percent, down from 32 percent
at the end of the first quarter.
The company's second quarter effective tax rate of 42 percent was
lower than that of the first quarter, primarily due to higher income
from global R&M operations relative to that of the company's
higher-taxed international upstream operations.
Discontinued Operations
Second quarter 2004 earnings from discontinued operations were $62
million, compared with $13 million in the first quarter. The
improvement was primarily related to gains on asset sales, partially
offset by lower volumes.
Outlook
Mr. Mulva concluded:
"Our operating performance, combined with above-average crude oil
and natural gas prices and strong refining margins, contributed to
strong earnings, cash flows and continued debt reduction. The company
continues to grow its asset base through disciplined capital spending
while controlling our operating costs and improving our financial
flexibility.
"Liquids production from the Bayu-Undan project continues to ramp
up toward the expected net peak production rate of 62,000 BOE per day.
In addition, startup of the Hamaca upgrader later this year is
progressing on schedule. Although we expect third quarter production
to be below that of the second quarter due to scheduled maintenance
and seasonality, we still anticipate full-year daily production to
average 1.56 million BOE.
"With respect to downstream, we are in year two of a five-year, $2
billion clean fuels program. While we expect a strong margin
environment in the near term, we will maintain our focus on continuous
improvement."
ConocoPhillips is an integrated petroleum company with interests
around the world. Headquartered in Houston, the company had
approximately 35,800 employees, $86 billion of assets, and $124
billion of annualized revenues as of June 30, 2004. For more
information, go to www.conocophillips.com.
ConocoPhillips' quarterly conference call is scheduled for noon
Central today.
To listen to the conference call and to view related presentation
materials, go to www.conocophillips.com and click on the "Second
Quarter Earnings" link.
For financial and operational tables, go to
www.conocophillips.com/news/nr/earnings/highlights/2q04earnings.html.
For detailed supplemental information, go to
www.conocophillips.com/news/nr/earnings/detail/2q04summary.xls.
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, such as "the
company continues to grow its asset base through disciplined capital
spending while controlling our operational costs and improving our
financial flexibility"; "liquids production from the Bayu-Undan
project continues to ramp up toward the expected net peak production
rate of 62,000 BOE per day"; "startup of the Hamaca upgrader later
this year is progressing on schedule"; "although we expect third
quarter production to be below that of the second quarter due to
scheduled maintenance and seasonality, we still anticipate full-year
daily production to average 1.56 million BOE"; and "while we expect a
strong margin environment in the near term, we will maintain our focus
on continuous improvement" involve certain risks, uncertainties and
assumptions that are difficult to predict. Further, certain
forward-looking statements are based on assumptions as to future
events that may not prove to be accurate. Therefore, actual outcomes
and results may differ materially from what is expressed or forecast
in such forward-looking statements. Economic, business, competitive
and regulatory factors that may affect ConocoPhillips' business are
generally as set forth in ConocoPhillips' filings with the Securities
and Exchange Commission (SEC). ConocoPhillips is under no obligation
(and expressly disclaims any such obligation) to update or alter its
forward-looking statements whether as a result of new information,
future events or otherwise.
Cautionary Note to U.S. Investors -- The SEC permits oil and gas
companies, in their filings with the SEC, to disclose only proved
reserves that a company has demonstrated by actual production or
conclusive formation tests to be economically and legally producible
under existing economic and operating conditions. Production is
distinguished from oil and gas production because SEC regulations
define Syncrude as mining-related and not part of conventional oil and
natural gas reserves. We use certain terms in this release, such as
"including Canadian Syncrude" that the SEC's guidelines strictly
prohibit us from including in filings with the SEC. U.S. investors are
urged to consider closely the disclosure in the company's periodic
filings with the SEC, available from the company at 600 North Dairy
Ashford Road, Houston, Texas 77079. This information can also be
obtained from the SEC by calling 1-800-SEC-0330.
CONTACT: ConocoPhillips
Kristi DesJarlais, 281-293-4595 (media)
or
Clayton Reasor, 212-207-1996 (investors)
Exhibit 99.2
ConocoPhillips
Houston, Texas 77079
Preliminary
FINANCIAL HIGHLIGHTS
Millions of Dollars
Three Months Ended Six Months Ended
June 30 June 30
2004 2003** 2004 2003**
Revenues
Sales and other operating revenues* $31,515 25,321 61,315 52,261
Equity in earnings of affiliates 322 156 591 205
Other income 49 97 197 176
--------- ----------- --------- -----------
31,886 25,574 62,103 52,642
--------- ----------- --------- -----------
Costs and expenses
Purchased crude oil and products 20,363 16,368 40,098 34,058
Production and operating expenses 1,843 1,848 3,512 3,500
Selling, general and administrative expenses 513 603 977 1,050
Exploration expenses 163 142 306 258
Depreciation, depletion and amortization 912 857 1,830 1,716
Property impairments 20 146 51 174
Taxes other than income taxes* 4,428 3,624 8,542 7,046
Accretion on discounted liabilities 41 35 77 68
Interest and debt expense 159 218 304 457
Foreign currency transaction gains (33) (26) (49) (20)
Minority interests 7 6 21 13
--------- ----------- --------- -----------
28,416 23,821 55,669 48,320
--------- ----------- --------- -----------
Income from continuing operations before income
taxes and subsidiary equity transactions 3,470 1,753 6,434 4,322
Gain on subsidiary equity transactions - 28 - 28
--------- ----------- --------- -----------
Income from continuing operations before income 3,470 1,781 6,434 4,350
taxes
Provision for income taxes 1,457 685 2,818 1,991
--------- ----------- --------- -----------
Income from continuing operations 2,013 1,096 3,616 2,359
Income from discontinued operations 62 91 75 144
--------- ----------- --------- -----------
Income before cumulative effect of changes in
accounting principles 2,075 1,187 3,691 2,503
Cumulative effect of changes in accounting
principles - - - (95)
--------- ----------- --------- -----------
Net income $2,075 1,187 3,691 2,408
========= =========== ========= ===========
Income per share of common stock
Basic
Continuing operations $2.92 1.62 5.26 3.47
Discontinued operations 0.09 0.13 0.11 0.21
Before cumulative effect of changes in
accounting principles 3.01 1.75 5.37 3.68
Cumulative effect of changes in accounting
principles - - - (0.14)
Net income $3.01 1.75 5.37 3.54
Diluted
Continuing operations $2.88 1.60 5.19 3.45
Discontinued operations 0.09 0.13 0.11 0.21
Before cumulative effect of changes in
accounting principles 2.97 1.73 5.30 3.66
Cumulative effect of changes in accounting
principles - - - (0.14)
Net income $2.97 1.73 5.30 3.52
Average common shares outstanding (in thousands)
Basic 689,690 680,028 687,894 679,784
Diluted 699,011 684,188 696,764 683,867
*Includes excise taxes on petroleum products
sales: $4,172 3,387 7,994 6,535
**Restated for adoption of FIN 46 and reclassified to conform to current
year presentation.
1-1
ConocoPhillips
Houston, Texas 77079
Preliminary
SELECTED FINANCIAL DATA
Millions of Dollars
Three Months Ended Six Months Ended
June 30 June 30
2004 2003 2004 2003
INCOME/(LOSS) FROM CONTINUING OPERATIONS
E&P
United States $671 517 1,306 1,195
International 683 560 1,305 1,007
---------- ----------- ---------- -----------
Total E&P 1,354 1,077 2,611 2,202
---------- ----------- ---------- -----------
Midstream 42 25 97 56
---------- ----------- ---------- -----------
R&M
United States 734 248 1,137 523
International 84 73 145 187
---------- ----------- ---------- -----------
Total R&M 818 321 1,282 710
---------- ----------- ---------- -----------
Chemicals 46 12 85 (11)
Emerging Businesses (29) (23) (51) (57)
Corporate and other (218) (316) (408) (541)
---------- ----------- ---------- -----------
Consolidated $2,013 1,096 3,616 2,359
========== =========== ========== ===========
CUMULATIVE EFFECT OF CHANGES IN
ACCOUNTING PRINCIPLES
E&P
United States $- - - 142
International - - - -
---------- ----------- ---------- -----------
Total E&P - - - 142
---------- ----------- ---------- -----------
Midstream - - - -
---------- ----------- ---------- -----------
R&M
United States - - - (125)
International - - - -
---------- ----------- ---------- -----------
Total R&M - - - (125)
---------- ----------- ---------- -----------
Chemicals - - - -
Emerging Businesses - - - -
Corporate and other - - - (112)
---------- ----------- ---------- -----------
Consolidated $- - - (95)
========== =========== ========== ===========
INCOME FROM DISCONTINUED OPERATIONS
Corporate and other 62 91 75 144
SUMMARY OF NET INCOME/(LOSS)
E&P
United States $671 517 1,306 1,337
International 683 560 1,305 1,007
---------- ----------- ---------- -----------
Total E&P 1,354 1,077 2,611 2,344
---------- ----------- ---------- -----------
Midstream 42 25 97 56
---------- ----------- ---------- -----------
R&M
United States 734 248 1,137 398
International 84 73 145 187
---------- ----------- ---------- -----------
Total R&M 818 321 1,282 585
---------- ----------- ---------- -----------
Chemicals 46 12 85 (11)
Emerging Businesses (29) (23) (51) (57)
Corporate and other (156) (225) (333) (509)
---------- ----------- ---------- -----------
Net income $2,075 1,187 3,691 2,408
========== =========== ========== ===========
1-2
ConocoPhillips
Houston, Texas 77079
Preliminary
SELECTED FINANCIAL DATA
Three Months Ended Six Months Ended
June 30 June 30
2004 2003 2004 2003
INCOME/(LOSS) FROM CONTINUING
OPERATIONS
Effective tax rate % 42.0 % 38.5 43.8 45.8
Millions of Dollars
FOREIGN CURRENCY GAINS/(LOSSES)
AFTER-TAX
E&P $14 (24) 19 (14)
Midstream - - - -
R&M 5 10 6 11
Chemicals - - - -
Emerging Businesses 1 1 1 -
Corporate and other - 18 6 19
---------- ----------- ---------- -----------
$20 5 32 16
========== =========== ========== ===========
CASH FLOWS FROM OPERATING ACTIVITIES
Income from continuing operations $2,013 1,096 3,616 2,359
Depreciation, depletion and amortization 912 857 1,830 1,716
Property impairments 20 146 51 174
Dry hole costs and leasehold impairment 105 54 192 94
Accretion on discounted liabilities 41 35 77 68
Deferred taxes 310 10 670 253
Undistributed equity earnings (97) (66) (278) (48)
Net gain on asset dispositions (6) (28) (88) (84)
Other 65 (94) 135 (38)
Working capital changes (1,101) 16 (1,878) 652
---------- ----------- ---------- -----------
Net cash provided by continuing
operations 2,262 2,026 4,327 5,146
Net cash provided by discontinued
operations 14 120 22 120
---------- ----------- ---------- -----------
Net cash provided by operating
activities $2,276 2,146 4,349 5,266
========== =========== ========== ===========
CAPITAL EXPENDITURES AND INVESTMENTS
E&P
United States $308 381 614 707
International 931 786 1,835 1,472
---------- ----------- ---------- -----------
1,239 1,167 2,449 2,179
Midstream 2 2 5 4
R&M 278 245 493 448
Chemicals - - - -
Emerging Businesses 27 98 55 164
Corporate and other* 38 45 63 70
---------- ----------- ---------- -----------
$1,584 1,557 3,065 2,865
========== =========== ========== ===========
*Excludes discontinued operations
OTHER
At June 30, 2004 At December 31, 2003
Total debt $15,619 17,780
Common stockholders' equity $37,826 34,366
1-3
ConocoPhillips
Houston, Texas 77079
Preliminary
OPERATING HIGHLIGHTS
BY SEGMENT
Three Months Ended Six Months Ended
June 30 June 30
2004 2003 2004 2003
Thousands of Barrels Daily
E&P
Crude oil produced
United States
Alaska 307 331 314 334
Lower 48 52 57 52 58
--------- ---------- ---------- ---------
359 388 366 392
Norway 212 214 213 220
United Kingdom 64 82 66 85
Canada 25 31 26 32
China 28 27 30 25
Indonesia 14 17 15 19
Vietnam 31 15 31 16
Timor Sea 15 3 10 3
Other 61 73 61 73
--------- ---------- ---------- ---------
Total consolidated 809 850 818 865
Equity affiliates 104 117 109 86
--------- ---------- ---------- ---------
Total Worldwide 913 967 927 951
========= ========== ========== =========
Syncrude 20 19 22 18
========= ========== ========== =========
Natural gas liquids produced
United States
Alaska* 23 23 25 24
Lower 48 26 26 25 24
--------- ---------- ---------- ---------
49 49 50 48
Norway 8 7 8 8
Canada 10 11 10 11
Other 12 5 10 4
--------- ---------- ---------- ---------
Total Worldwide 79 72 78 71
========= ========== ========== =========
*Includes reinjected volumes sold lease-to-
lease. 15 14 15 14
Millions of Cubic Feet Daily
Natural gas produced*
United States
Alaska 147 162 166 175
Lower 48 1,226 1,311 1,229 1,324
--------- ---------- ---------- ---------
1,373 1,473 1,395 1,499
Norway 303 273 312 289
United Kingdom 821 952 850 977
Canada 437 424 432 430
Timor Sea 32 61 36 61
Indonesia 237 246 243 235
Vietnam 15 - 16 -
Other 81 56 73 54
--------- ---------- ---------- ---------
Total consolidated 3,299 3,485 3,357 3,545
Equity affiliates 4 11 6 11
--------- ---------- ---------- ---------
Total Worldwide 3,303 3,496 3,363 3,556
========= ========== ========== =========
*Represents quantities available for sale. Excludes gas equivalent of NGL
shown above.
Liquefied natural gas sales 82 91 100 111
1-4
ConocoPhillips
Houston, Texas 77079
Preliminary
OPERATING HIGHLIGHTS
Three Months Ended Six Months Ended
June 30 June 30
2004 2003 2004 2003
E&P (continued)
Per Unit
Average sales prices
Crude oil (per barrel)
United States
Alaska $36.53 27.19 34.68 29.32
Lower 48 34.39 27.34 33.11 29.44
Total U.S. 36.22 27.21 34.45 29.34
International 34.58 25.62 33.02 28.30
Total consolidated 35.32 26.33 33.68 28.76
Equity affiliates 24.30 16.85 21.33 18.02
Total Worldwide 34.00 25.19 32.14 27.82
Natural gas-lease (per MCF)
United States
Alaska 2.23 1.88 2.39 1.92
Lower 48 5.36 4.72 5.13 5.10
Total U.S. 5.22 4.58 5.00 4.96
International 3.92 3.47 4.10 3.70
Total consolidated 4.44 3.92 4.46 4.21
Equity affiliates 0.31 4.89 3.14 4.85
Total Worldwide 4.43 3.93 4.46 4.21
Midstream
Thousands of Barrels Daily
Natural gas liquids extracted
Consolidated
United States 24 53 38 52
International 33 35 40 41
Equity affiliates
United States* 112 110 111 112
International 9 11 11 11
---------- ----------- ---------- -----------
178 209 200 216
========== =========== ========== ===========
*Represents 30.3 percent interest in Duke Energy Field Services LLC
(DEFS).
Per Barrel
U.S. product prices
Weighted average NGL**
Consolidated $26.42 20.99 26.05 23.29
DEFS 25.61 20.53 25.21 22.53
**Prices are based on index prices from the Mont Belvieu and Conway market hubs that are weighted
by natural-gas-liquids component and location mix.
1-5
ConocoPhillips
Houston, Texas 77079
Three Months Ended Six Months Ended
June 30 June 30
2004 2003 2004 2003
Thousands of Barrels Daily
R&M
United States
Crude oil capacity 2,168 2,168 2,168 2,168
Crude oil runs 2,119 2,128 2,112 2,068
Refinery production 2,300 2,357 2,273 2,305
International*
Crude oil capacity 447 442 447 442
Crude oil runs 276 376 325 386
Refinery production 318 407 364 421
U.S. Petroleum products outside sales
Gasoline 1,328 1,381 1,321 1,356
Distillates 538 590 554 595
Aviation fuels 191 164 185 164
Other products 573 493 545 501
---------- ----------- ---------- -----------
2,630 2,628 2,605 2,616
International 440 448 472 438
---------- ----------- ---------- -----------
3,070 3,076 3,077 3,054
========== =========== ========== ===========
Per Gallon
U.S. Average sales prices**
Automotive gasoline-wholesale $1.40 1.01 1.28 1.06
Automotive gasoline-retail 1.61 1.34 1.47 1.36
Distillates-wholesale 1.17 0.85 1.09 0.95
*Includes ConocoPhillips' share of equity
affiliates.
**Excludes excise taxes.
1-6
Exhibit 99.3
SUMMARY OF NET INCOME (LOSS) BY SEGMENT
Millions of Dollars
------------------------------------------------------------------------------
2003 2004
------------------------------------------------------------------------------
1st Qtr 2nd Qtr 3rd Qtr 4th Qtr YTD 1st Qtr 2nd Qtr 3rd Qtr 4th Qtr YTD
------------------------------------------------------------------------------
Income (Loss) from Continuing Operations
Before Accounting Changes
U.S. E&P 678 517 546 491 2,232 635 671 1,306
International E&P 447 560 421 500 1,928 622 683 1,305
- ------------------------------------------------------------------------------------------------------------------------
Total E&P 1,125 1,077 967 991 4,160 1,257 1,354 2,611
- ------------------------------------------------------------------------------------------------------------------------
Midstream 31 25 31 43 130 55 42 97
- ------------------------------------------------------------------------------------------------------------------------
U.S. R&M 275 248 416 176 1,115 403 734 1,137
International R&M 114 73 69 26 282 61 84 145
- ------------------------------------------------------------------------------------------------------------------------
Total R&M 389 321 485 202 1,397 464 818 1,282
- ------------------------------------------------------------------------------------------------------------------------
Chemicals (23) 12 7 11 7 39 46 85
Emerging Businesses (34) (23) (18) (24) (99) (22) (29) (51)
Corporate and Other (225) (316) (223) (238) (1,002) (190) (218) (408)
- ------------------------------------------------------------------------------------------------------------------------
Consolidated 1,263 1,096 1,249 985 4,593 1,603 2,013 3,616
========================================================================================================================
Cumulative Effect of Accounting Changes
U.S. E&P 142 - - - 142 - - -
International E&P - - - - - - - -
- ------------------------------------------------------------------------------------------------------------------------
Total E&P 142 - - - 142 - - -
- ------------------------------------------------------------------------------------------------------------------------
Midstream - - - - - - - -
- ------------------------------------------------------------------------------------------------------------------------
U.S. R&M (125) - - - (125) - - -
International R&M - - - - - - - -
- ------------------------------------------------------------------------------------------------------------------------
Total R&M (125) - - - (125) - - -
- ------------------------------------------------------------------------------------------------------------------------
Chemicals - - - - - - - -
Emerging Businesses - - - - - - - -
Corporate and Other (112) - - - (112) - - -
- ------------------------------------------------------------------------------------------------------------------------
Consolidated (95) - - - (95) - - -
========================================================================================================================
Income (Loss) from Discontinued Operations
Corporate and Other 53 91 57 36 237 13 62 75
========================================================================================================================
Net Income (Loss)
U.S. E&P 820 517 546 491 2,374 635 671 1,306
International E&P 447 560 421 500 1,928 622 683 1,305
- ------------------------------------------------------------------------------------------------------------------------
Total E&P 1,267 1,077 967 991 4,302 1,257 1,354 2,611
- ------------------------------------------------------------------------------------------------------------------------
Midstream 31 25 31 43 130 55 42 97
- ------------------------------------------------------------------------------------------------------------------------
U.S. R&M 150 248 416 176 990 403 734 1,137
International R&M 114 73 69 26 282 61 84 145
- ------------------------------------------------------------------------------------------------------------------------
Total R&M 264 321 485 202 1,272 464 818 1,282
- ------------------------------------------------------------------------------------------------------------------------
Chemicals (23) 12 7 11 7 39 46 85
Emerging Businesses (34) (23) (18) (24) (99) (22) (29) (51)
Corporate and Other (284) (225) (166) (202) (877) (177) (156) (333)
- ------------------------------------------------------------------------------------------------------------------------
Consolidated 1,221 1,187 1,306 1,021 4,735 1,616 2,075 3,691
========================================================================================================================
Page 1 of 10
INCOME FROM CONTINUING OPERATIONS BEFORE INCOME TAXES
Millions of Dollars
-----------------------------------------------------------------------------
2003 2004
-----------------------------------------------------------------------------
1st Qtr 2nd Qtr3rd Qtr4th Qtr YTD 1st Qtr 2nd Qtr 3rd Qtr 4th Qtr YTD
-----------------------------------------------------------------------------
Income from Continuing Operations
Before Income Taxes
U.S. E&P 1,050 803 853 757 3,463 987 1,049 2,036
International E&P 1,260 967 1,029 941 4,197 1,410 1,360 2,770
- ------------------------------------------------------------------------------------------------------------------------
Total E&P 2,310 1,770 1,882 1,698 7,660 2,397 2,409 4,806
- ------------------------------------------------------------------------------------------------------------------------
Midstream 51 42 50 70 213 86 66 152
- ------------------------------------------------------------------------------------------------------------------------
U.S. R&M 453 396 639 279 1,767 636 1,149 1,785
International R&M 150 94 86 16 346 79 111 190
- ------------------------------------------------------------------------------------------------------------------------
Total R&M 603 490 725 295 2,113 715 1,260 1,975
- ------------------------------------------------------------------------------------------------------------------------
Chemicals (44) 15 10 14 (5) 49 56 105
Emerging Businesses (51) (34) (29) (36) (150) (34) (42) (76)
Corporate and Other (300) (502) (328) (364)(1,494) (249) (279) (528)
- ------------------------------------------------------------------------------------------------------------------------
Consolidated 2,569 1,781 2,310 1,677 8,337 2,964 3,470 6,434
========================================================================================================================
Income from Continuing Operations
Effective Tax Rates
U.S. E&P 35.4% 35.6% 36.0% 35.1% 35.5% 35.7% 36.0% 35.9%
International E&P 64.5% 42.1% 59.1% 46.9% 54.1% 55.9% 49.8% 52.9%
- ------------------------------------------------------------------------------------------------------------------------
Total E&P 51.3% 39.2% 48.6% 41.6% 45.7% 47.6% 43.8% 45.7%
- ------------------------------------------------------------------------------------------------------------------------
Midstream 39.2% 40.5% 38.0% 38.6% 39.0% 36.0% 36.4% 36.2%
- ------------------------------------------------------------------------------------------------------------------------
U.S. R&M 39.3% 37.4% 34.9% 36.9% 36.9% 36.6% 36.1% 36.3%
International R&M 24.0% 22.3% 19.8% -62.5% 18.5% 22.8% 24.3% 23.7%
- ------------------------------------------------------------------------------------------------------------------------
Total R&M 35.5% 34.5% 33.1% 31.5% 33.9% 35.1% 35.1% 35.1%
- ------------------------------------------------------------------------------------------------------------------------
Chemicals 47.7% 20.0% 30.0% 21.4% 240.0% 20.4% 17.9% 19.0%
Emerging Businesses 33.3% 32.4% 37.9% 33.3% 34.0% 35.3% 31.0% 32.9%
Corporate and Other 25.0% 37.1% 32.0% 34.6% 32.9% 23.7% 21.9% 22.7%
- ------------------------------------------------------------------------------------------------------------------------
Consolidated 50.8% 38.5% 45.9% 41.3% 44.9% 45.9% 42.0% 43.8%
========================================================================================================================
Page 2 of 10
CERTAIN ITEMS INCLUDED IN INCOME FROM CONTINUING OPERATIONS (AFTER-TAX)
Millions of Dollars
-----------------------------------------------------------------------------
2003 2004
-----------------------------------------------------------------------------
1st Qtr 2nd Qtr3rd Qtr4th Qtr YTD 1st Qtr 2nd Qtr 3rd Qtr 4th Qtr YTD
-----------------------------------------------------------------------------
U.S. E&P
Gain (loss) on asset sales - 16 65 - 81 - - -
Property impairments - (14) (10) (18) (42) (3) - (3)
Pending claims and settlements - (20) - - (20) - - -
- ------------------------------------------------------------------------------------------------------------------------
Total - (18) 55 (18) 19 (3) - (3)
- ------------------------------------------------------------------------------------------------------------------------
International E&P
Gain (loss) on asset sales - - 33 - 33 56 (13) 43
Property impairments (12) (32) - (18) (62) - - -
Canada tax law change - - - 95 95 - 31 31
Norway Removal Grant Act (1986) repeal* - 87 - - 87 - - -
Bayu-Undan ownership realignment - 51 - - 51 - - -
Angola leasehold impairment, net of taxes - - - 12 12 - - -
- ------------------------------------------------------------------------------------------------------------------------
Total (12) 106 33 89 216 56 18 74
- ------------------------------------------------------------------------------------------------------------------------
Total E&P (12) 88 88 71 235 53 18 71
- ------------------------------------------------------------------------------------------------------------------------
Midstream
Property impairments - - - - - (12) (10) (22)
- ------------------------------------------------------------------------------------------------------------------------
Total - - - - - (12) (10) (22)
- ------------------------------------------------------------------------------------------------------------------------
U.S. R&M
Gain (loss) on asset sales - - - - - - - -
Property impairments - - - (1) (1) (5) - (5)
Other - - - - - - - -
- ------------------------------------------------------------------------------------------------------------------------
Total - - - (1) (1) (5) - (5)
- ------------------------------------------------------------------------------------------------------------------------
International R&M
Gain (loss) on asset sales - - - - - - - -
Property impairments - - - - - - - -
Other - - - - - - - -
- ------------------------------------------------------------------------------------------------------------------------
Total - - - - - - - -
- ------------------------------------------------------------------------------------------------------------------------
Total R&M - - - (1) (1) (5) - (5)
- ------------------------------------------------------------------------------------------------------------------------
Chemicals
- - - - - - - -
- ------------------------------------------------------------------------------------------------------------------------
Total - - - - - - - -
- ------------------------------------------------------------------------------------------------------------------------
Emerging Businesses
- - - - - - - -
- ------------------------------------------------------------------------------------------------------------------------
Total - - - - - - - -
- ------------------------------------------------------------------------------------------------------------------------
Corporate and Other
Insurance demutualization benefits 34 - - - 34 - - -
Property impairments - (3) - - (3) - - -
Merger-related expenses (27) (115) (41) (40) (223) (14) - (14)
Premium on early debt retirement (10) (9) - (34) (53) - - -
Other - - - - - - - -
- ------------------------------------------------------------------------------------------------------------------------
Total (3) (127) (41) (74) (245) (14) - (14)
- ------------------------------------------------------------------------------------------------------------------------
Total Company (15) (39) 47 (4) (11) 22 8 30
========================================================================================================================
* Net of $21 million of property impairments.
Page 3 of 10
CASH FLOW INFORMATION
Millions of Dollars
-----------------------------------------------------------------------------
2003 2004
-----------------------------------------------------------------------------
1st Qtr 2nd Qtr3rd Qtr4th Qtr YTD 1st Qtr 2nd Qtr 3rd Qtr 4th Qtr YTD
-----------------------------------------------------------------------------
Cash Flows from Operating Activities
Income from continuing operations 1,263 1,096 1,249 985 4,593 1,603 2,013 3,616
DD&A and property impairments 887 1,003 876 971 3,737 949 932 1,881
Dry hole costs and leasehold impairments 40 54 75 131 300 87 105 192
Accretion on discounted liabilities 33 35 39 38 145 36 41 77
Deferred taxes 243 10 80 68 401 360 310 670
Undistributed equity earnings 18 (66) (143) 132 (59) (181) (97) (278)
Net (gain) loss on asset dispositions (56) (28) (142) 15 (211) (82) (6) (88)
Other 56 (94) (88) (202) (328) 70 65 135
Net working capital changes 636 16 51 (114) 589 (777) (1,101) (1,878)
Discontinued operations - 120 61 8 189 8 14 22
- ------------------------------------------------------------------------------------------------------------------------
Net Cash Provided by
Operating Activities 3,120 2,146 2,058 2,032 9,356 2,073 2,276 4,349
- ------------------------------------------------------------------------------------------------------------------------
Cash Flows from Investing Activities
Capital expenditures and investments:
E&P (1,012) (1,167)(1,109)(1,220)(4,508) (1,210) (1,239) (2,449)
Midstream (2) (2) (2) (4) (10) (3) (2) (5)
R&M (203) (245) (302) (429)(1,179) (215) (278) (493)
Chemicals - - - - - - - -
Emerging Businesses (66) (98) (60) (60) (284) (28) (27) (55)
Corporate and Other (25) (45) (47) (71) (188) (25) (38) (63)
- -------------------------------------------------------------------------------------------------------------------------
Total capital expend. & investments (1,308) (1,557)(1,520)(1,784)(6,169) (1,481) (1,584) (3,065)
Acquisitions, net of cash acquired - - - - - - - -
Acquisitions - adoption of FIN 46 225 - - - 225 - - -
Proceeds from asset dispositions 125 466 913 1,155 2,659 449 905 1,354
Long-term advances to affiliates and
other investments (28) (8) 38 21 23 (44) 9 (35)
Discontinued operations (26) (5) (28) (177) (236) (1) (1) (2)
- -------------------------------------------------------------------------------------------------------------------------
Net Cash Used for Investing Activities (1,012) (1,104) (597) (785) (3,498) (1,077) (671) (1,748)
- -------------------------------------------------------------------------------------------------------------------------
Cash Flows from Financing Activities
Net issuance (repayment) of debt (1,569) (709)(1,514)(1,019)(4,811) (722) (1,361) (2,083)
Issuance of stock 19 14 20 55 108 112 95 207
Dividends (271) (272) (272) (292)(1,107) (294) (296) (590)
Other (8) 19 64 36 111 89 94 183
- -------------------------------------------------------------------------------------------------------------------------
Net Cash Provided by (Used for)
Financing Activities (1,829) (948) (1,702)(1,220)(5,699) (815) (1,468) (2,283)
- -------------------------------------------------------------------------------------------------------------------------
Effect of Exchange Rate Changes 57 13 (26) (20) 24 (12) 8 (4)
- -------------------------------------------------------------------------------------------------------------------------
Net Change in Cash
and Cash Equivalents 336 107 (267) 7 183 169 145 314
Cash and cash equivalents
at beginning of period 307 643 750 483 307 490 659 490
- -------------------------------------------------------------------------------------------------------------------------
Cash and Cash Equivalents
at End of Period 643 750 483 490 490 659 804 804
=========================================================================================================================
Page 4 of 10
TOTAL E&P
2003 2004
-----------------------------------------------------------------------------
1st Qtr 2nd Qtr3rd Qtr4th Qtr YTD 1st Qtr 2nd Qtr 3rd Qtr 4th Qtr YTD
-----------------------------------------------------------------------------
E&P Net Income ($ Millions) 1,267 1,077 967 991 4,302 1,257 1,354 2,611
========================================================================================================================
Production
Total, Including Equity Affiliates
and Canadian Syncrude (MBOE/D) 1,626 1,641 1,561 1,611 1,609 1,611 1,563 1,588
- ------------------------------------------------------------------------------------------------------------------------
Crude Oil and Condensate (MB/D)
Consolidated 880 850 793 806 832 828 809 818
Equity affiliates 55 117 120 116 102 113 104 109
- ------------------------------------------------------------------------------------------------------------------------
Total 935 967 913 922 934 941 913 927
========================================================================================================================
Sales of crude oil produced (MB/D) 911 996 917 921 936 928 891 909
- ------------------------------------------------------------------------------------------------------------------------
Natural Gas Liquids (MB/D) 71 72 62 72 69 76 79 78
- ------------------------------------------------------------------------------------------------------------------------
Natural Gas (MMCF/D)
Consolidated 3,605 3,485 3,373 3,581 3,510 3,415 3,299 3,357
Equity affiliates 12 11 11 12 12 9 4 6
- ------------------------------------------------------------------------------------------------------------------------
Total 3,617 3,496 3,384 3,593 3,522 3,424 3,303 3,363
========================================================================================================================
Canadian Syncrude (MB/D) 17 19 22 18 19 23 20 22
- ------------------------------------------------------------------------------------------------------------------------
Industry Prices (Platt's)
Crude Oil ($/bbl)
WTI spot 34.06 29.02 30.18 31.17 31.11 35.23 38.31 36.77
Brent dated 31.51 26.03 28.41 29.42 28.84 31.95 35.36 33.66
Natural Gas--Henry Hub 1st of month ($/mcf) 6.58 5.40 4.97 4.60 5.39 5.69 6.00 5.84
- ------------------------------------------------------------------------------------------------------------------------
Average Realized Prices
Crude Oil and Condensate ($/bbl)
Consolidated 31.27 26.33 28.15 28.43 28.54 32.08 35.32 33.68
Equity affiliates 20.97 16.85 19.90 17.86 18.58 18.68 24.30 21.33
Total 30.73 25.19 27.00 27.24 27.47 30.35 34.00 32.14
- ------------------------------------------------------------------------------------------------------------------------
Natural Gas Liquids ($/bbl) 24.65 19.73 20.10 23.36 21.95 25.43 26.71 26.08
- ------------------------------------------------------------------------------------------------------------------------
Natural Gas ($/mcf)
Consolidated 4.49 3.92 3.80 4.07 4.07 4.48 4.44 4.46
Equity affiliates 4.82 4.89 4.12 3.96 4.44 3.91 0.31 3.14
Total 4.49 3.93 3.80 4.07 4.07 4.48 4.43 4.46
- ------------------------------------------------------------------------------------------------------------------------
Exploration Charges ($ Millions)
Dry Holes 20 30 39 78 167 67 42 109
Lease Impairments 20 24 36 53 133 20 63 83
- ------------------------------------------------------------------------------------------------------------------------
Total Non-Cash Charges 40 54 75 131 300 87 105 192
Other (G&G and Lease Rentals) 76 88 57 80 301 56 58 114
- ------------------------------------------------------------------------------------------------------------------------
Total Exploration Charges 116 142 132 211 601 143 163 306
========================================================================================================================
Depreciation, Depletion and
Amortization ($ Millions) 662 652 653 695 2,662 704 720 1,424
- ------------------------------------------------------------------------------------------------------------------------
Page 5 of 10
U.S. E&P
2003 2004
----------------------------------------------------------------------
1st Qtr 2nd Qtr 3rd Qtr 4th Qtr YTD 1st Qtr 2nd Qtr 3rd 4th YTD
Qtr Qtr
----------------------------------------------------------------------
U.S. E&P Net Income ($ Millions) 820 517 546 491 2,374 635 671 1,306
=============================================================================================================================
Alaska ($ Millions) 508 302 302 333 1,445 403 397 800
- -----------------------------------------------------------------------------------------------------------------------------
Lower 48 ($ Millions) 312 215 244 158 929 232 274 506
- -----------------------------------------------------------------------------------------------------------------------------
Production
Total U.S. (MBOE/D) 700 683 651 664 674 659 637 649
- -----------------------------------------------------------------------------------------------------------------------------
Crude Oil and Condensate (MB/D)
Alaska 337 331 314 318 325 320 307 314
Lower 48 60 57 51 50 54 53 52 52
- -----------------------------------------------------------------------------------------------------------------------------
Total 397 388 365 368 379 373 359 366
=============================================================================================================================
Sales of crude oil produced (MB/D) 391 389 369 372 380 373 354 363
- -----------------------------------------------------------------------------------------------------------------------------
Natural Gas Liquids (MB/D)*
Alaska 26 23 19 24 23 26 23 25
Lower 48 22 26 25 27 25 24 26 25
- -----------------------------------------------------------------------------------------------------------------------------
Total 48 49 44 51 48 50 49 50
=============================================================================================================================
*Includes reinjection volumes sold lease-to-lease: 15 14 13 16 15 16 15 15
- -----------------------------------------------------------------------------------------------------------------------------
Natural Gas (MMCF/D)
Alaska 189 162 180 205 184 185 147 166
Lower 48 1,338 1,311 1,271 1,264 1,295 1,233 1,226 1,229
- -----------------------------------------------------------------------------------------------------------------------------
Total 1,527 1,473 1,451 1,469 1,479 1,418 1,373 1,395
=============================================================================================================================
Average Realized Prices
Crude Oil and Condensate ($/bbl)
Alaska
North Slope 25.95 21.70 22.82 23.17 23.41 28.00 31.69 29.78
- -----------------------------------------------------------------------------------------------------------------------------
West Coast 31.47 27.19 28.31 28.51 28.87 32.93 36.53 34.68
- -----------------------------------------------------------------------------------------------------------------------------
Lower 48 31.48 27.34 27.94 28.02 28.76 31.86 34.39 33.11
- -----------------------------------------------------------------------------------------------------------------------------
Total U.S. 31.47 27.21 28.26 28.45 28.85 32.78 36.22 34.45
- -----------------------------------------------------------------------------------------------------------------------------
Natural Gas Liquids ($/bbl)
Alaska 31.32 27.24 28.42 28.82 29.04 32.93 36.38 34.45
- -----------------------------------------------------------------------------------------------------------------------------
Lower 48 22.13 17.77 19.71 20.81 20.02 24.19 25.82 25.02
- -----------------------------------------------------------------------------------------------------------------------------
Total U.S. 24.96 20.25 21.31 22.85 22.30 26.80 28.38 27.58
- -----------------------------------------------------------------------------------------------------------------------------
Natural Gas ($/mcf)
Alaska 1.97 1.88 1.33 1.88 1.76 2.54 2.23 2.39
- -----------------------------------------------------------------------------------------------------------------------------
Lower 48 5.47 4.72 4.56 4.27 4.76 4.91 5.36 5.13
- -----------------------------------------------------------------------------------------------------------------------------
Total U.S. 5.34 4.58 4.41 4.13 4.62 4.79 5.22 5.00
- -----------------------------------------------------------------------------------------------------------------------------
Kenai, Alaska LNG Sales
Volume (MMCF/D) 130 91 121 140 121 118 82 100
- -----------------------------------------------------------------------------------------------------------------------------
Sales price per MCF 4.38 4.56 4.46 4.44 4.45 4.51 4.80 4.62
- -----------------------------------------------------------------------------------------------------------------------------
U.S. Exploration Charges ($ Millions)
Dry Holes 16 3 9 48 76 32 32 64
Lease Impairments 13 12 10 12 47 11 11 22
- -----------------------------------------------------------------------------------------------------------------------------
Total Non-Cash Charges 29 15 19 60 123 43 43 86
Other (G&G and Lease Rentals) 28 22 23 8 81 15 19 34
- -----------------------------------------------------------------------------------------------------------------------------
Total U.S. Exploration Charges 57 37 42 68 204 58 62 120
=============================================================================================================================
Alaska Only 25 10 11 9 55 17 43 60
- -----------------------------------------------------------------------------------------------------------------------------
Depreciation, Depletion and
Amortization ($ Millions)
Alaska 124 135 130 127 516 119 125 244
Lower 48 151 150 156 134 591 146 145 291
- -----------------------------------------------------------------------------------------------------------------------------
Total U.S. 275 285 286 261 1,107 265 270 535
=============================================================================================================================
Page 6 of 10
INTERNATIONAL E&P
2003 2004
----------------------------------------------------------------------
1st Qtr 2nd Qtr 3rd Qtr 4th Qtr YTD 1st Qtr 2nd Qtr 3rd 4th YTD
Qtr Qtr
----------------------------------------------------------------------
International E&P
Net Income ($ Millions) 447 560 421 500 1,928 622 683 1,305
=============================================================================================================================
Production
Total, Including Equity Affiliates
and Canadian Syncrude (MBOE/D) 926 958 910 947 935 952 926 939
- -----------------------------------------------------------------------------------------------------------------------------
Crude Oil and Condensate (MB/D)
Consolidated
Norway 226 214 207 205 213 215 212 213
United Kingdom 87 82 67 72 77 67 64 66
Canada 33 31 29 28 30 27 25 26
China 23 27 25 28 26 32 28 30
Indonesia 21 17 16 10 16 15 14 15
Vietnam 16 15 11 22 16 31 31 31
Timor Sea 3 3 3 3 3 5 15 10
Other 74 73 70 70 72 63 61 61
Equity affiliates 55 117 120 116 102 113 104 109
- -----------------------------------------------------------------------------------------------------------------------------
Total 538 579 548 554 555 568 554 561
=============================================================================================================================
Sales of crude oil produced (MB/D) 520 607 548 549 556 555 537 546
- -----------------------------------------------------------------------------------------------------------------------------
Natural Gas Liquids (MB/D)
Norway 8 7 7 8 7 9 8 8
Canada 11 11 9 10 10 10 10 10
Other 4 5 2 3 4 7 12 10
- -----------------------------------------------------------------------------------------------------------------------------
Total 23 23 18 21 21 26 30 28
=============================================================================================================================
Natural Gas (MMCF/D)
Consolidated
Norway 305 273 216 307 275 319 303 312
United Kingdom 1,002 952 853 954 940 879 821 850
Canada 436 424 448 431 435 428 437 432
Timor Sea 61 61 61 56 60 40 32 36
Indonesia 224 246 275 275 255 248 237 243
Vietnam - - - 12 3 17 15 16
Other 50 56 69 77 63 66 81 73
Equity affiliates 12 11 11 12 12 9 4 6
- -----------------------------------------------------------------------------------------------------------------------------
Total 2,090 2,023 1,933 2,124 2,043 2,006 1,930 1,968
=============================================================================================================================
Canadian Syncrude (MB/D) 17 19 22 18 19 23 20 22
- -----------------------------------------------------------------------------------------------------------------------------
Average Realized Prices
Crude Oil and Condensate ($/bbl)
Consolidated
Norway 32.72 26.28 29.08 29.08 29.24 32.13 34.72 33.38
United Kingdom 30.11 24.34 28.32 28.29 27.70 31.27 34.19 32.79
Canada 28.40 23.61 24.15 23.71 25.06 28.95 30.58 29.72
China 28.87 26.51 26.38 28.56 27.55 29.91 33.02 31.42
Indonesia 29.35 24.54 26.32 26.52 26.88 32.21 36.20 34.34
Vietnam 30.26 27.54 27.12 30.88 29.21 31.76 36.42 33.99
Timor Sea 32.43 27.38 28.25 29.75 29.37 35.49 37.32 36.97
Other 30.16 25.44 27.42 27.94 27.68 30.89 34.87 32.80
Equity affiliates 20.97 16.85 19.90 17.86 18.58 18.68 24.30 21.33
Total 30.17 23.90 26.15 26.42 26.53 28.71 32.53 30.59
- -----------------------------------------------------------------------------------------------------------------------------
Natural Gas Liquids ($/bbl)
Norway 21.85 18.13 18.50 22.96 20.27 24.34 24.22 24.28
Canada 26.11 20.78 23.55 25.27 23.93 26.38 28.58 27.46
Other 23.40 16.73 14.18 25.13 16.48 18.43 21.24 20.10
Total 24.22 18.96 18.23 24.35 21.39 23.53 24.69 24.14
- -----------------------------------------------------------------------------------------------------------------------------
Natural Gas ($/mcf)
Consolidated
Norway 3.66 3.86 4.21 4.09 3.94 4.37 3.99 4.18
United Kingdom 3.55 3.17 2.88 4.48 3.54 4.43 3.72 4.08
Canada 5.42 4.34 4.17 4.02 4.48 4.88 5.01 4.95
Timor Sea 0.43 0.42 0.45 0.42 0.43 0.43 0.45 0.44
Indonesia 4.66 4.16 4.35 4.21 4.33 4.38 4.28 4.33
Vietnam - - - 1.04 1.04 1.10 0.99 1.04
Other 0.54 0.54 0.54 0.68 0.58 0.66 0.59 0.62
Equity affiliates 4.82 4.89 4.12 3.96 4.44 3.91 0.31 3.14
Total 3.92 3.48 3.38 4.03 3.71 4.28 3.91 4.10
- -----------------------------------------------------------------------------------------------------------------------------
International Exploration Charges ($ Millions)
Dry Holes 4 27 30 30 91 35 10 45
Lease Impairments 7 12 26 41 86 9 52 61
- -----------------------------------------------------------------------------------------------------------------------------
Total Non-Cash Charges 11 39 56 71 177 44 62 106
Other (G&G and Lease Rentals) 48 66 34 72 220 41 39 80
- -----------------------------------------------------------------------------------------------------------------------------
Total International Exploration Charges 59 105 90 143 397 85 101 186
=============================================================================================================================
Depreciation, Depletion and
Amortization ($ Millions) 387 367 367 434 1,555 439 450 889
- -----------------------------------------------------------------------------------------------------------------------------
Page 7 of 10
R&M
2003 2004
----------------------------------------------------------------------
1st Qtr 2nd Qtr 3rd Qtr 4th Qtr YTD 1st Qtr 2nd Qtr 3rd 4th YTD
Qtr Qtr
----------------------------------------------------------------------
R&M Net Income ($ Millions) 264 321 485 202 1,272 464 818 1,282
=============================================================================================================================
United States ($ Millions) 150 248 416 176 990 403 734 1,137
- -----------------------------------------------------------------------------------------------------------------------------
International ($ Millions) 114 73 69 26 282 61 84 145
- -----------------------------------------------------------------------------------------------------------------------------
Market Indicators
U.S. East Coast Crack Spread ($/bbl) 6.16 3.46 6.37 4.98 5.24 6.87 9.14 8.01
U.S. Gulf Coast Crack Spread ($/bbl) 5.64 3.65 5.38 3.72 4.60 6.36 9.17 7.77
U.S. Group Central Crack Spread ($/bbl) 6.12 6.96 8.32 5.34 6.69 6.91 11.65 9.28
U.S. West Coast Crack Spread ($/bbl) 12.79 11.39 14.00 11.44 12.41 16.10 24.13 20.12
U.S. Weighted 3:2:1 Crack Spread ($/bbl) 6.99 5.86 7.84 5.67 6.59 8.39 12.60 10.49
NW Europe Crack Spread ($/bbl) 5.68 3.17 3.11 3.20 3.79 2.56 5.13 3.85
Singapore 3:2:1Crack Spread ($/bbl) 8.16 4.65 5.64 7.12 6.39 10.33 9.48 9.91
U.S. Wholesale Gasoline Mktg Mrgn ($/bbl) 1.53 2.36 2.15 1.45 1.87 0.69 1.83 1.26
- -----------------------------------------------------------------------------------------------------------------------------
Realized Margins
Refining Margin ($/bbl)
U.S.* 6.46 5.34 6.39 5.56 5.93 7.12 9.88 8.51
International 6.00 3.67 4.38 3.61 4.44 5.51 7.24 6.19
- -----------------------------------------------------------------------------------------------------------------------------
Marketing Margin ($/bbl)
U.S. 1.86 2.62 2.17 1.75 2.10 1.08 1.49 1.29
International 7.09 9.06 7.82 6.41 7.59 6.50 8.20 7.38
- -----------------------------------------------------------------------------------------------------------------------------
Depreciation, Depletion and
Amortization ($ Millions) 167 174 174 174 689 186 172 358
- -----------------------------------------------------------------------------------------------------------------------------
Turnaround Expense ($ Millions) 60 38 19 63 180 59 78 137
- -----------------------------------------------------------------------------------------------------------------------------
Eastern U.S.
Crude Oil Charge Input (MB/D) 415 435 428 421 425 413 375 394
Total Charge Input (MB/D) 466 488 468 442 466 440 421 430
Crude Oil Capacity Utilization (%) 97% 101% 100% 98% 99% 96% 87% 92%
Clean Product Yield (%) 88% 84% 86% 88% 86% 87% 84% 85%
- -----------------------------------------------------------------------------------------------------------------------------
U.S. Gulf Coast
Crude Oil Charge Input (MB/D) 668 702 708 680 690 699 709 704
Total Charge Input (MB/D) 771 797 803 782 788 774 789 781
Crude Oil Capacity Utilization (%) 93% 98% 99% 95% 96% 97% 99% 98%
Clean Product Yield (%) 82% 78% 80% 78% 79% 79% 75% 77%
- -----------------------------------------------------------------------------------------------------------------------------
Central U.S.
Crude Oil Charge Input (MB/D) 573 632 556 584 586 601 638 620
Total Charge Input (MB/D) 601 654 584 614 613 636 673 655
Crude Oil Capacity Utilization (%) 91% 101% 88% 93% 93% 96% 102% 99%
Clean Product Yield (%) 84% 82% 81% 86% 83% 83% 83% 83%
- -----------------------------------------------------------------------------------------------------------------------------
Western U.S.
Crude Oil Charge Input (MB/D) 352 359 391 389 373 392 397 394
Total Charge Input (MB/D) 365 374 408 410 390 409 419 414
Crude Oil Capacity Utilization (%) 90% 91% 100% 99% 95% 100% 101% 100%
Clean Product Yield (%) 82% 81% 83% 83% 82% 81% 81% 81%
- -----------------------------------------------------------------------------------------------------------------------------
TOTAL UNITED STATES
Crude Oil Charge Input (MB/D) 2,008 2,128 2,083 2,074 2,074 2,105 2,119 2,112
Total Charge Input (MB/D) 2,203 2,313 2,263 2,248 2,257 2,259 2,302 2,280
Crude Oil Capacity Utilization (%) 93% 98% 96% 96% 96% 97% 98% 97%
Clean Product Yield (%) 84% 81% 82% 83% 82% 82% 80% 81%
- -----------------------------------------------------------------------------------------------------------------------------
Refined Products Production (MB/D)
Gasoline 1,060 1,077 1,070 1,061 1,067 1,059 1,043 1,051
Distillates 590 615 591 591 597 604 591 598
Aviation Fuel 190 173 200 195 189 167 177 172
Other 414 492 461 423 448 415 489 452
- -----------------------------------------------------------------------------------------------------------------------------
Total 2,254 2,357 2,322 2,270 2,301 2,245 2,300 2,273
=============================================================================================================================
Petroleum Products Sales (MB/D)
Gasoline 1,331 1,381 1,398 1,365 1,369 1,315 1,328 1,321
Distillates 600 590 580 530 575 570 538 554
Aviation Fuel 164 164 197 193 180 178 191 185
Other 509 493 497 474 492 517 573 545
- -----------------------------------------------------------------------------------------------------------------------------
Total 2,604 2,628 2,672 2,562 2,616 2,580 2,630 2,605
=============================================================================================================================
*2003 and the first quarter of 2004 restated to include certain processing fees.
Page 8 of 10
R&M (continued)
2003 2004
----------------------------------------------------------------------
1st Qtr 2nd Qtr 3rd Qtr 4th Qtr YTD1st Qtr 2nd Qtr 3rd 4th YTD
Qtr Qtr
----------------------------------------------------------------------
International - Consolidated - United Kingdom and Ireland
Crude Oil Charge Input (MB/D) 262 244 258 253 254 254 164 209
Total Charge Input (MB/D) 301 286 296 280 291 299 216 258
Crude Oil Capacity Utilization (%) 86% 80% 84% 83% 83% 82% 53% 68%
Clean Product Yield (%) 84% 83% 84% 84% 84% 84% 81% 83%
- -----------------------------------------------------------------------------------------------------------------------------
International - Equity Affiliates - Net Share*
Crude Oil Charge Input (MB/D) 134 132 129 128 131 120 112 116
Total Charge Input (MB/D) 137 135 134 131 134 121 113 117
Crude Oil Capacity Utilization (%) 98% 97% 95% 94% 96% 87% 81% 84%
Clean Product Yield (%) 82% 83% 81% 82% 82% 82% 83% 83%
- -----------------------------------------------------------------------------------------------------------------------------
TOTAL INTERNATIONAL
Crude Oil Charge Input (MB/D) 396 376 387 381 385 374 276 325
Total Charge Input (MB/D) 438 421 430 411 425 420 329 375
Crude Oil Capacity Utilization (%) 90% 85% 88% 86% 87% 84% 62% 73%
Clean Product Yield (%) 83% 83% 83% 84% 83% 84% 82% 83%
- -----------------------------------------------------------------------------------------------------------------------------
Refined Products Production (MB/D)
Gasoline 142 132 139 125 134 124 109 117
Distillates 183 177 185 154 175 181 136 158
Aviation Fuel 24 15 19 21 20 24 16 20
Other 87 83 70 95 83 81 57 69
- -----------------------------------------------------------------------------------------------------------------------------
Total 436 407 413 395 412 410 318 364
=============================================================================================================================
Petroleum Products Sales (MB/D)
Gasoline 202 190 181 171 186 185 180 183
Distillates 181 199 192 172 186 228 184 206
Aviation Fuel 5 7 14 7 8 6 9 8
Other 40 52 54 53 50 82 67 75
- -----------------------------------------------------------------------------------------------------------------------------
Total 428 448 441 403 430 501 440 472
=============================================================================================================================
Worldwide - Including Net Share of Equity Affiliates
Crude Oil Charge Input (MB/D) 2,404 2,504 2,470 2,455 2,459 2,479 2,395 2,437
Total Charge Input (MB/D) 2,641 2,734 2,693 2,659 2,682 2,679 2,631 2,655
Crude Oil Capacity Utilization (%) 92% 96% 95% 94% 94% 95% 92% 93%
Clean Product Yield (%) 84% 81% 82% 83% 83% 82% 80% 81%
- -----------------------------------------------------------------------------------------------------------------------------
Refined Products Production (MB/D)
Gasoline 1,202 1,209 1,209 1,186 1,201 1,183 1,152 1,168
Distillates 773 792 776 745 772 785 727 756
Aviation Fuel 214 188 219 216 209 191 193 192
Other 501 575 531 518 531 496 546 521
- -----------------------------------------------------------------------------------------------------------------------------
Total 2,690 2,764 2,735 2,665 2,713 2,655 2,618 2,637
=============================================================================================================================
Petroleum Products Sales (MB/D)
Gasoline 1,533 1,571 1,579 1,536 1,555 1,500 1,508 1,504
Distillates 781 789 772 702 761 798 722 760
Aviation Fuel 169 171 211 200 188 184 200 193
Other 549 545 551 527 542 599 640 620
- -----------------------------------------------------------------------------------------------------------------------------
Total 3,032 3,076 3,113 2,965 3,046 3,081 3,070 3,077
=============================================================================================================================
* Represents 18.75 percent interest in a refinery complex at Karlsruhe, Germany; 16.33 percent interest in two
refineries in Kralupy and Litvinov, Czech Republic; and 47 percent interest in a refinery at Melaka, Malaysia.
Page 9 of 10
MIDSTREAM
2003 2004
----------------------------------------------------------------------
1st Qtr 2nd Qtr 3rd Qtr 4th Qtr YTD 1st Qtr 2nd Qtr 3rd 4th YTD
Qtr Qtr
----------------------------------------------------------------------
Midstream Net Income ($ Millions) 31 25 31 43 130 55 42 97
=============================================================================================================================
U.S. Equity Affiliate ($ Millions)* 13 23 18 18 72 33 33 66
- -----------------------------------------------------------------------------------------------------------------------------
Natural Gas Liquids Extracted (MB/D)
Consolidated
United States 51 53 50 54 52 54 24 38
International 47 35 47 50 45 46 33 40
Equity Affiliates
United States* 114 110 111 110 111 109 112 111
International 10 11 12 11 11 12 9 11
- -----------------------------------------------------------------------------------------------------------------------------
Total 222 209 220 225 219 221 178 200
=============================================================================================================================
* Represents 30.3 percent interest in Duke Energy Field Services, LLC (DEFS).
Natural Gas Liquids Fractionated (MB/D)
United States* 168 158 172 168 167 158 144 151
International 59 49 60 62 57 63 43 53
- -----------------------------------------------------------------------------------------------------------------------------
Total 227 207 232 230 224 221 187 204
=============================================================================================================================
* Excludes DEFS.
Product Prices
Weighted Average NGL ($/bbl)*
Consolidated 25.59 20.99 20.94 23.14 22.67 25.68 26.42 26.05
DEFS 24.53 20.53 20.67 22.76 22.12 24.81 25.61 25.21
- -----------------------------------------------------------------------------------------------------------------------------
* Prices are based on index prices from the Mont Belvieu and Conway market hubs that are weighted by natural gas liquids
component and location mix.
Depreciation, Depletion and
Amortization ($ Millions) 14 14 13 13 54 13 9 22
- -----------------------------------------------------------------------------------------------------------------------------
EMERGING BUSINESSES
2003 2004
----------------------------------------------------------------------
1st Qtr 2nd Qtr 3rd Qtr 4th Qtr YTD 1st Qtr 2nd Qtr 3rd 4th YTD
Qtr Qtr
----------------------------------------------------------------------
Emerging Businesses
Net Income (Loss) ($ Millions) (34) (23) (18) (24) (99) (22) (29) (51)
=============================================================================================================================
Detail of Net Income (Loss) ($ Millions)
Technology Solutions (5) (6) (5) (4) (20) (4) (4) (8)
Gas-to-Liquids (20) (13) (7) (10) (50) (9) (7) (16)
Power 1 (1) (3) (2) (5) (4) (16) (20)
Other (10) (3) (3) (8) (24) (5) (2) (7)
- -----------------------------------------------------------------------------------------------------------------------------
Total (34) (23) (18) (24) (99) (22) (29) (51)
=============================================================================================================================
CORPORATE AND OTHER
2003 2004
----------------------------------------------------------------------
1st Qtr 2nd Qtr 3rd Qtr 4th Qtr YTD 1st Qtr 2nd Qtr 3rd 4th YTD
Qtr Qtr
----------------------------------------------------------------------
Corporate and Other
Net Income (Loss) ($ Millions) (284) (225) (166) (202) (877) (177) (156) (333)
=============================================================================================================================
Detail of Net Income (Loss) ($ Millions)
Net interest expense (190) (145) (134) (163) (632) (104) (119) (223)
Corporate overhead (30) (43) (33) (67) (173) (55) (54) (109)
Discontinued operations 53 91 57 36 237 13 62 75
Merger-related costs (27) (115) (41) (40) (223) (14) - (14)
Accounting change (112) - - - (112) - - -
Other 22 (13) (15) 32 26 (17) (45) (62)
- -----------------------------------------------------------------------------------------------------------------------------
Total (284) (225) (166) (202) (877) (177) (156) (333)
=============================================================================================================================
Before-Tax Net Interest Expense ($ Millions)
Interest and financing expense (339) (306) (314) (287) (1,246) (279) (283) (562)
Capitalized interest 73 78 98 77 326 115 104 219
Interest revenue 29 31 27 17 104 34 31 65
Premium on early debt retirement (12) (11) - (45) (68) - - -
- -----------------------------------------------------------------------------------------------------------------------------
(249) (208) (189) (238) (884) (130) (148) (278)
=============================================================================================================================
Debt
Total Debt ($ Millions) 21,007 20,254 18,739 17,780 17,780 17,109 15,619 15,619
Debt-to-Capital Ratio 40% 38% 36% 34% 34% 32% 29% 29%
- -----------------------------------------------------------------------------------------------------------------------------
Page 10 of 10