x Abu Dhabi, UAESaturday 16 December 2017

War in Libya forces earnings drop for ConocoPhillips

Conflict in Libya has pulled ConocoPhillips' second-quarter earnings down by 19 per cent as the company prepares to split into two.

The interruption of Libyan oil exports because of civil war prompted a large drop in profit for ConocoPhillips in the second quarter.

The third-largest oil company in the US earned US$3.4 billion (Dh12.48bn) in the period from April to June compared with $4.2bn in the same period last year, a decline of 19 per cent.

"We had a solid quarter," said Jim Mulva, the chief executive of ConocoPhillips. "While our production fell, the earnings effect was limited."

The exploration and production unit, which accounted for 80 per cent of the company's profit last year, suffered as the civil war in Libya halted oil exports.

The company has a 16.3 per cent stake in the country's Waha concession, a collection of fields in the Sirte Basin, where it has rights for another two decades-plus.

After conflict broke out in February, ConocoPhillips withdrew its foreign staff and stopped exporting.

Along with other international oil producers, the company has been the subject of inquiries from the US Securities and Exchange Commission over its Libyan operations.

The earnings report was ConocoPhillips's first since it announced a split into two companies, one focused on pumping oil ground and the other on refining it.

Investors have rallied around the spin-off plan, which would create the biggest exploration and production company in the US.

The move, announced this month, brought an end to a 15-year period of mergers and acquisitions that created mammoths such as ExxonMobil, the world's biggest company by market capitalisation. ConocoPhillips, created by a merger less than a decade ago, is nearly halfway through a plan to shed $17bn of assets by the end of next year to make cash available for share buy-backs.

The company has not held any concessions in the UAE since last year's withdrawal from the $10bn Shah sour gas project. Analysts said it could not operate under the emirate's challenging financial terms.

Today its competitors Shell and ExxonMobil are expected to announce a rise in earnings of almost 50 per cent, thanks to high oil prices.