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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): January 5, 2006
ConocoPhillips
(Exact name of registrant as specified in its charter)
Delaware 001-32395 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
Check the appropriate box below if the Form 8-K filing is intended to
simultaneously satisfy the filing obligation of the registrant under any of the
following provisions (see General Instruction A.2. below):
|_| Written communications pursuant to Rule 425 under the Securities Act (17
CFR 230.425)
|_| Soliciting material pursuant to Rule 14a-12 under the Exchange Act (17 CFR
240.14a-12)
|_| Pre-commencement communications pursuant to Rule 14d-2(b) under the
Exchange Act (17 CFR 240.14d-2(b))
|_| Pre-commencement communications pursuant to Rule 13e-4(c) under the
Exchange Act (17 CFR 240.13e-4(c))
Item 2.02 Results of Operations and Financial Condition
On January 5, 2006, ConocoPhillips issued a press release providing a
fourth quarter 2005 interim update. A copy of the press release is furnished
herewith as Exhibit 99 and incorporated herein by reference.
Item 9.01 Financial Statements and Exhibits
(c) Exhibits
99. -- Press release issued by ConocoPhillips on January 5, 2006.
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/ John A. Carrig
-------------------------------------------
John A. Carrig
Executive Vice President, Finance,
and Chief Financial Officer
January 5, 2006
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EXHIBIT INDEX
Exhibit
No. Description
- --- -----------
99. -- Press release issued by ConocoPhillips on January 5, 2006.
4
Exhibit 99
ConocoPhillips Fourth-Quarter 2005 Interim Update
HOUSTON--(BUSINESS WIRE)--Jan. 5, 2006--This update is intended to
give an overview of market and operating conditions experienced by
ConocoPhillips (NYSE:COP) during the fourth quarter of 2005. The
market indicators and company estimates may differ considerably from
the company's actual results scheduled to be reported on Jan. 25,
2006.
Highlights - Fourth-Quarter 2005 vs. Third-Quarter 2005
-- Exploration and Production
-- Lower crude oil prices.
-- Higher natural gas prices.
-- Higher worldwide production, as expected.
-- Significantly higher exploration expenses.
-- Refining and Marketing
-- Lower worldwide refining margins.
-- Higher U.S. and international marketing margins.
-- Lower worldwide capacity utilization rate in the high
80-percent range, including hurricane impacts.
-- Increased turnaround activity and hurricane-related
maintenance costs.
-- LUKOIL Investment
-- Ownership of 16.1 percent at year end.
-- Midstream / Chemicals
-- Midstream results expected to be higher than previous
quarter, including a gain from Duke Energy Field Services'
formation of a master limited partnership.
-- Chemicals results anticipated to be higher than previous
quarter.
-- Corporate
-- Debt balance of approximately $12.5 billion.
Exploration and Production (E&P)
The table below provides market price indicators for crude oil and
natural gas. The company's actual crude oil and natural gas price
realizations may vary from these market indicators due to quality and
location differentials, as well as to the effect of pricing lags.
During the fourth quarter, the domestic gas differentials between the
company's primary production areas and the Henry Hub market indicator
widened.
Market Indicators
4Q vs. 3Q
4Q 2005 3Q 2005 2005 4Q 2004
- ---------------------------------------------------------------------
Dated Brent ($/bbl) $56.90 61.54 (4.64) 44.00
- ---------------------------------------------------------------------
WTI ($/bbl) 59.99 63.05 (3.06) 48.29
- ---------------------------------------------------------------------
ANS USWC ($/bbl) 57.87 60.79 (2.92) 42.61
- ---------------------------------------------------------------------
Henry Hub first of month
($/mcf) 13.00 8.53 4.47 7.07
- ---------------------------------------------------------------------
Source: Platts
The company expects fourth-quarter crude oil and natural gas
production to be 1.6 million barrels of oil equivalent (BOE) per day
and full-year 2005 production to be 1.56 million BOE per day. These
production estimates include Syncrude, but exclude LUKOIL.
Fourth-quarter production will be higher than that of the previous
quarter as a result of maintenance completed during the third quarter
in the North Sea, as well as the prior quarter impact of unplanned
downtime and seasonality in Alaska.
The partner-operated Ursa field currently is producing at
approximately 80 percent of pre-Hurricane Katrina production levels,
or 15,000 net barrels per day. The company-operated Green Canyon field
remains shut-in for hurricane-related repairs, with minimal production
impact of approximately 1,000 barrels per day. Both fields are
expected to return to normal production levels in the first quarter of
2006.
Fourth-quarter exploration expenses are expected to be
approximately $220 million, primarily due to increased dry-hole costs,
leasehold impairments and other exploration activity. Full-year
exploration expenses are anticipated to be about $650 million.
Refining and Marketing (R&M)
The table below provides market indicators for regions where the
company has significant refining operations. The Weighted U.S. 3:2:1
margin is based on the geographical location and capacity of
ConocoPhillips' U.S. refineries. Realized refining margins may differ
due to the company's specific locations, configurations, crude oil
slates or operating conditions. In addition, the company's refining
configuration generally yields somewhat higher distillate volumes and
lower gasoline volumes than those implied by the market indicators
shown below.
Market Indicators ($/bbl)
4Q vs. 3Q
4Q 2005 3Q 2005 2005 4Q 2004
- ---------------------------------------------------------------------
Refining Margins
- ---------------------------------------------------------------------
East Coast WTI 3:2:1 $ 9.32 14.81 (5.49) 5.73
- ---------------------------------------------------------------------
Gulf Coast WTI 3:2:1 10.27 17.42 (7.15) 4.09
- ---------------------------------------------------------------------
Mid-Continent WTI 3:2:1 11.93 17.06 (5.13) 5.52
- ---------------------------------------------------------------------
West Coast ANS 3:2:1 16.29 26.61 (10.32) 17.25
- ---------------------------------------------------------------------
Weighted U.S. 3:2:1 11.69 18.51 (6.82) 7.24
- ---------------------------------------------------------------------
NW Europe Dated Brent 3:1:2 13.68 16.53 (2.85) 15.24
- ---------------------------------------------------------------------
WTI/Maya differential (trading
month) 16.75 15.48 1.27 15.99
- ---------------------------------------------------------------------
U.S. Wholesale Gasoline
Marketing 3.98 0.42 3.56 1.97
- ---------------------------------------------------------------------
Source: Platts
Worldwide refining margins for the fourth quarter are expected to
be significantly lower than the third quarter, as indicated in the
table above. Despite continued strong heavy-light crude oil
differentials, refining margins decreased below pre-hurricane levels.
Worldwide marketing margins improved over those in the third quarter.
Turnaround costs are expected to be approximately $90 million
before-tax. Hurricane-related maintenance expenditures for the quarter
are estimated to be $100 million before-tax, excluding insurance
accruals discussed below.
The company's average crude-oil refining capacity utilization rate
for the fourth quarter is expected to be lower, in the high 80-percent
range, primarily as a result of the impact of Hurricanes Katrina and
Rita on the company's Gulf Coast refining capacity.
ConocoPhillips' 247,000-barrel-per-day Alliance refinery located
in Belle Chasse, La., has begun the restart process, with partial
operations expected in late January and full operations around the end
of the first quarter.
Corporate/Other
The company's debt balance at the end of the fourth quarter is
expected to be approximately $12.5 billion. The average diluted shares
outstanding during the fourth quarter is expected to be 1,407 million
shares.
Other items affecting the quarter include approximately $55
million in environmental and legal accruals. Increased mutual
insurance premiums incurred during the quarter are expected to be
substantially offset by insurance recoveries recognized in the same
period. The majority of these expenses will be reported in the
operating segment results.
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' main business segments: exploration and production,
refining and marketing, midstream and chemicals. There also are
forward-looking statements about the impact of Hurricanes Katrina and
Rita on ConocoPhillips' main business segments; ConocoPhillips'
expected crude oil, natural gas and natural gas liquids production and
prices; expected exploration expenses; weighted worldwide refining
margins; worldwide marketing margins; refinery utilization rates;
turnaround costs; balance sheet debt level; average diluted shares
outstanding; and insurance, legal and environmental accruals. These
statements are based on activity from operations for the first two
months of the fourth quarter of 2005 and include estimated results for
December, and as such are preliminary and are estimates. All of the
forward-looking data is therefore subject to change. Actual results,
which will be reported in the company's earnings release for the
fourth quarter of 2005 on Jan. 25, 2006, 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, as set forth
in the company's filings with the Securities and Exchange Commission,
that could cause the stated expectation or belief to differ materially
from that stated in this update. Unless legally required,
ConocoPhillips undertakes no obligation to update publicly any
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. The company uses certain terms in this release,
such as "includes 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 and the company's Web site at
www.conocophillips.com/investor/sec. This information also can be
obtained from the SEC by calling 1-800-SEC-0330.
CONTACT: ConocoPhillips