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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 3, 2007
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 October 3, 2007, ConocoPhillips issued a press release providing a
third-quarter 2007 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
(d) Exhibits
99. -- Press release issued by ConocoPhillips on October 3, 2007.
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 3, 2007
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EXHIBIT INDEX
Exhibit
No. Description
- --- -----------
99. -- Press release issued by ConocoPhillips on October 3, 2007.
4
EXHIBIT 99
ConocoPhillips Third-Quarter 2007 Interim Update
HOUSTON--(BUSINESS WIRE)--Oct. 3, 2007--This update is intended to
give an overview of market and operating conditions experienced by
ConocoPhillips (NYSE:COP) during the third quarter of 2007. The market
indicators and company estimates may differ considerably from the
company's actual results scheduled to be reported on October 24, 2007.
Highlights - Third-Quarter 2007 vs. Second-Quarter 2007
- -- Exploration and Production
-- Higher crude oil prices.
-- Lower U.S. natural gas prices.
-- Lower worldwide production, as previously communicated.
- -- Refining and Marketing
-- Significantly lower worldwide refining margins.
-- Worldwide refining capacity utilization rate similar to the
second quarter.
- -- Midstream, Chemicals and LUKOIL Investment
-- Midstream results expected to be similar to the previous
quarter.
-- Chemicals results anticipated to be higher than the previous
quarter.
-- LUKOIL Investment results negatively impacted due to alignment
of ConocoPhillips' second-quarter estimate to LUKOIL's actual
earnings.
- -- Corporate and Other
-- Corporate expenses anticipated to be higher than the previous
quarter.
-- Debt balance of approximately $21.9 billion.
-- Third-quarter net benefit associated with asset disposition
program.
Exploration and Production (E&P)
The table below provides market price indicators for crude oil and
natural gas. The company's actual crude oil and natural gas price
realizations may vary from these market indicators due to quality and
location differentials, as well as the effect of pricing lags.
Market Indicators
- ----------------------------------------------------------------------
3Q 2007 2Q 2007 3Q 2007 vs. 3Q 2006
2Q 2007
- ----------------------------------------------------------------------
Dated Brent ($/bbl) $74.87 $68.76 $6.11 69.49
- ----------------------------------------------------------------------
WTI ($/bbl) 75.48 64.89 10.59 70.38
- ----------------------------------------------------------------------
ANS USWC ($/bbl) 76.49 65.76 10.73 68.95
- ----------------------------------------------------------------------
Henry Hub first of month
($/mmbtu) 6.16 7.55 (1.39) 6.58
- ----------------------------------------------------------------------
Source: Platts
As previously communicated, third-quarter production on a
barrel-of-oil equivalent (BOE) per day basis, including Syncrude and
excluding LUKOIL, is anticipated to be approximately 180,000 BOE per
day lower than the previous quarter. This reduction is primarily due
to expropriation of the company's Venezuela oil projects, unplanned
downtime in the United Kingdom as a result of damage and repairs on a
third-party pipeline, and planned downtime in the Timor Sea and
Alaska. Exploration expenses are expected to be approximately $240
million before-tax for the quarter.
Refining and Marketing (R&M)
The table below provides market indicators for regions where the
company has significant refining operations. The Weighted U.S. 3:2:1
margin is based on the geographical location and capacity of
ConocoPhillips' U.S. refineries. Realized refining margins may differ
due to the company's specific locations, configurations, crude oil
slates or operating conditions. The company's refining configuration
generally yields somewhat higher distillate volumes and lower gasoline
volumes than those implied by the market indicators shown below. In
addition, marketing margins may differ significantly from the U.S.
wholesale gasoline marketing indicator due to the product mix,
distribution channel and location of the company's refined product
sales.
Market Indicators ($/bbl)
- ----------------------------------------------------------------------
3Q 2007 2Q 2007 3Q 2007 vs. 3Q 2006
2Q 2007
- ----------------------------------------------------------------------
Refining Margins
- ----------------------------------------------------------------------
East Coast WTI 3:2:1 $11.73 $22.57 $(10.84) $10.54
- ----------------------------------------------------------------------
Gulf Coast WTI 3:2:1 11.74 24.28 (12.54) 11.00
- ----------------------------------------------------------------------
Mid-Continent WTI 3:2:1 20.92 31.26 (10.34) 17.75
- ----------------------------------------------------------------------
West Coast ANS 3:2:1 16.22 34.32 (18.10) 21.70
- ----------------------------------------------------------------------
Weighted U.S. 3:2:1 14.74 27.56 (12.82) 14.86
- ----------------------------------------------------------------------
NW Europe Dated Brent
3:1:2 13.37 15.56 (2.19) 14.18
- ----------------------------------------------------------------------
WTI/Maya Differential
(trading month) 12.41 9.58 2.83 14.87
- ----------------------------------------------------------------------
WTI/Brent Differential
(trading month) 0.61 (3.87) 4.48 0.88
- ----------------------------------------------------------------------
U.S. Wholesale Gasoline
Marketing 0.66 2.09 (1.43) 5.75
- ----------------------------------------------------------------------
Source: Platts, Lundberg Survey and OPIS
Worldwide refining margins for the third quarter are expected to
be significantly lower than the second quarter, as indicated in the
table above. The company's average crude oil refining capacity
utilization rate for the third quarter is expected to be similar to
the second quarter, including the impact of the economic shutdown of
the Wilhelmshaven, Germany, refinery during a portion of the third
quarter. Third-quarter turnaround costs are expected to be
approximately $35 million before-tax.
LUKOIL Investment
The third-quarter results for the company's LUKOIL Investment
segment are expected to be negatively impacted by approximately $85
million after-tax, reflecting the alignment of ConocoPhillips'
estimate of second-quarter LUKOIL results to the actual results
published by LUKOIL on September 12, 2007.
Corporate and Other
The net third-quarter benefit from the company's asset
rationalization efforts is expected to be approximately $300 million
after-tax.
During the third quarter, Germany enacted legislation lowering
income tax rates effective January 1, 2008. As a result,
ConocoPhillips expects to recognize a third-quarter benefit of
approximately $140 million in the R&M segment related to the
revaluation of deferred taxes. In addition, Corporate segment results
are expected to include approximately $50 million of deferred tax
expense related to foreign currency impacts.
The company also expects to recognize a net after-tax benefit of
approximately $90 million in the E&P segment and net after-tax
interest expense of $15 million in the Corporate segment related to
the implementation of retroactive adjustments to compensation for
crude oil quality differentials shipped in the Trans-Alaska Pipeline
System.
ConocoPhillips' debt balance is expected to be approximately $21.9
billion at the end of the third quarter. The company anticipates
third-quarter purchases under the share repurchase program to be
approximately $2.5 billion. The number of weighted-average diluted
shares outstanding during the third quarter is expected to be
approximately 1,645 million.
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 Section 27A of the Securities Act of 1933, as amended and Section
21E of the Securities Exchange Act of 1934, as amended, which are
intended to be covered by the safe harbors created thereby.
Forward-looking statements relate to future events and anticipated
results of operations, business strategies, and other aspects of our
operations or operating results. In many cases you can identify
forward-looking statements by terminology such as "anticipate,"
"estimate," "believe," "continue," "could," "intend," "may," "plan,"
"potential," "predict," "should," "will," "expect," "objective,"
"projection," "forecast," "goal," "guidance," "outlook," "effort,"
"target" and other similar words. However, the absence of these words
does not mean that the statements are not forward-looking. The
statements in this update are based on activity from operations for
the first two months of the third quarter of 2007 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, which will be reported in the company's
earnings release for the third quarter of 2007 on October 24, 2007,
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 including,
but not limited to, crude oil and natural gas prices; refining and
marketing margins; potential failure to achieve, and potential delays
in achieving expected reserves or production levels from existing and
future oil and gas development projects due to operating hazards,
drilling risks, and the inherent uncertainties in interpreting
engineering data relating to underground accumulations of oil and gas;
unsuccessful exploratory drilling activities; lack of exploration
success; potential disruption or unexpected technical difficulties in
developing new products and manufacturing processes; potential failure
of new products to achieve acceptance in the market; unexpected cost
increases or technical difficulties in constructing or modifying
company manufacturing or refining facilities; unexpected difficulties
in manufacturing, transporting or refining synthetic crude oil;
international monetary conditions and exchange controls; potential
liability for remedial actions under existing or future environmental
regulations; potential liability resulting from pending or future
litigation; general domestic and international economic and political
conditions, as well as changes in tax and other laws applicable to our
business. Other factors that could cause actual results to differ
materially from those described in the forward-looking statements
include other economic, business, competitive and/or regulatory
factors affecting our business generally as set forth in our filings
with the Securities and Exchange Commission (SEC). 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.
CONTACT: ConocoPhillips