ConocoPhillips Earnings Preview

ConocoPhillips

, the third-largest U.S. oil company, reports fourth-quarter results before the bell on Wednesday and analysts are expecting a profit of $1.78 per share on revenues of $40.56 billion. A year earlier, Conoco earned $1.32 a share on revenue of $51.37 billion and in the third quarter, the company earned $1.91 a share. Current EPS estimates range from $1.64-$2.17. The consensus estimate has trended down from $2.01 two months ago and $2.02 30 days ago. A week ago, the consensus estimate was $1.90. On Tuesday evening, Conoco and Cnooc

, China's largest offshore oil producer, announced they will pay $159 million to settle claims from oil spills last year in Bohai Bay off China's northeastern coast. The agreement fulfills the objectives of the compensation fund announced in September 2011 by ConocoPhillips, the company said in a statement. What to Watch for: Refining margins could loom large on Conoco's quarterly numbers as they have with other major integrated oil firms. To that end, analysts and investors will want an update on the company's plans to spin-off its downstream operations later this year. Refining isn't the only thing. Conoco's reserve replacement ratio and efforts to boost oil production as natural gas prices are plummeting will also be key issues. Conoco has been a voracious seller of assets in recent years, helping the company to $7.2 billion in free cash flow at the end of 2011, but the Street needs more than asset sales to be appeased when it comes to oil companies. To that end, an update on Conoco's asset sales plans, which could reach $17 billion in the next few years, would also be helpful. Divesting some natural gas assets could please investors. The dividend: Conoco is probably good for another dividend increase this year and it did raise its payout 20% in the first quarter of 2011 so its possible another hike is on the way soon. If not, it will happen later this year. The company also repurchased at least $10.6 billion of its own shares last year, so comments from management on 2012 share repurchases would be constructive.