ConocoPhillips Profit Falls

ConocoPhillips COP revealed on Monday that its first-quarter earnings fell 3% from the same time in 2011 thanks in no small part to the fact that lower production and weaker refining margins more than offset higher crude prices. As a result, analyst expectations were missed. COP's profit came in at $2.9 billion, down from $3 billion the previous year. On the plus side, earnings improved to $2.27 from $2.09 per share. Take out the asset-sale gains, partly offset by repositioning costs and write-downs, and earnings were up at $2.02 from $1.82. Those numbers are below analyst expectations of $2.08. Why did COP miss expectations? Well, the main reason seems to be that it suffered lower-than-anticipated profits from its exploration and production segment. That was severely affected by a decline in production from 2011 thanks to asset sales. COP's earnings and production of $2.13 billion were down 3% from this time last year, and 14.5% below Barclays Capital estimates of $2.49 billion. On Monday, Bank of America Merrill Lynch published a research report stating that ConocoPhillips' final quarter as an integrated oil company missed consensus of $2.08 with an adjusted EPS it estimates at $2.01 (ex FX). Earnings were largely in line with BOA's estimates ($1.98), with US E&P production and realizations better than expected but offset by weaker than anticipated International E&P. At 46% the tax rate was in-line. BOA also said that COP bought back 25mm shares in the quarter at a total cost of $1.9bn with the goal of $5bn by end 2q still intact. This should continue to provide some support for the stand alone E&P company following the split planned for April 30th.