Conoco Confirms Bad News (COP, XOM, CVX)

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By Douglas A. McIntyre Updated Published

Oil_well_imageConcocoPhillips Corporation (NYSE:COP) confirmed today its week-ago operations update that the company would take a $34 billion non-cash impairment charge in the fourth quarter of 2008. Adjusted earnings, after the charge, were $1.9 billion (EPS of $1.28), compared with $4.1 billion (EPS of $2.55) for the same quarter a year ago.

Conoco won’t be alone in its impairment charges. Exxon MobilCorporation (NYSE:XOM) and Chevron Corporation (NYSE:CVX) will bothneed to evaluate their reserves based on prices for crude on December31st. Compared with December 31, 2007, the price of crude has fallenabout 50%. Because petroleum reserves account for such a large portionof these companies’ assets, the impairment charges are sure to be huge.

We covered Conoco’s interim report last week, so today’sreport is not really a surprise. The company did beat revised estimatesof $1.22 EPS and revenues of $36.27 billion for the quarter, and thatseems to be enough to put a little air into the share price, which isup about 1% in early trading. The thinking must be that at least Conocobeat something.

Paul Ausick
January 28, 2009

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About the Author Douglas A. McIntyre →

Douglas A. McIntyre is the co-founder, chief executive officer and editor in chief of 24/7 Wall St. and 24/7 Tempo. He has held these jobs since 2006.

McIntyre has written thousands of articles for 24/7 Wall St. He is an expert on corporate finance, the automotive industry, media companies and international finance. He has edited articles on national demographics, sports, personal income and travel.

His work has been quoted or mentioned in The New York Times, The Wall Street Journal, Los Angeles Times, The Washington Post, NBC News, Time, The New Yorker, HuffPost USA Today, Business Insider, Yahoo, AOL, MarketWatch, The Atlantic, Bloomberg, New York Post, Chicago Tribune, Forbes, The Guardian and many other major publications. McIntyre has been a guest on CNBC, the BBC and television and radio stations across the country.

A magna cum laude graduate of Harvard College, McIntyre also was president of The Harvard Advocate. Founded in 1866, the Advocate is the oldest college publication in the United States.

TheStreet.com, Comps.com and Edgar Online are some of the public companies for which McIntyre served on the board of directors. He was a Vicinity Corporation board member when the company was sold to Microsoft in 2002. He served on the audit committees of some of these companies.

McIntyre has been the CEO of FutureSource, a provider of trading terminals and news to commodities and futures traders. He was president of Switchboard, the online phone directory company. He served as chairman and CEO of On2 Technologies, the video compression company that provided video compression software for Adobe’s Flash. Google bought On2 in 2009.

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