Conoco Inc., the sixth-largest U.S. oil company, painted a bright picture of its third-quarter results, saying higher crude oil and natural gas prices should help it beat analysts' current earnings estimates.
Chief Executive Archie Dunham told
analysts that earnings would be about four to seven cents higher than the consensus of 33 cents a share given by analysts surveyed by First Call/Thomson Financial.
"We are very pleased by these results that reflect continued improvement in the business environment and - more importantly - our own operational success," Dunham said in a meeting with analysts in Houston.
Coupled with continued growth in oil and gas production, Dunham said the company had benefited from the sharp rise in crude oil prices, which have roughly doubled this year to around $25 a barrel.
The upbeat forecast comes less than two months after DuPont Co.
completed its spin-off of Houston-based Conoco, which the chemical giant acquired for $7.6 billion in 1981 to secure supplies for its plants when crude prices were skyrocketing.
The divestment began nearly a year ago with an initial public offering, which raised $4.4 billion, the largest IPO in U.S. history, despite oil prices which were then hovering near 12-year lows.
A stand-alone oil and gas company once again after parting from parent DuPont last October, Conoco is banking on developments in the North Sea, Venezuela, and the Gulf of Mexico to bolster its exploration and production business.
This year, Conoco expects to record production growth of about 10 percent, which matches earlier forecasts, Dunham told analysts.
"Our ongoing goal is to deliver industry-leading production growth, which we estimate to be between four to five percent per year on average," said Rob McKee, Conoco executive vice-president for worldwide upstream
"Between 1998 and 2001, our growth plans will exceed this goal, reaching a total of about 22 percent. For the first nine months of 1999, our early production estimates indicate that our worldwide natural gas production will be up about 23 percent," McKee added.
Conoco also said higher oil and gas prices would help it reduce debt assumed by the company from DuPont. It estimated debt would be down about $300 million in the third quarter from the $5.1 billion of total debt it reported at the end of the second quarter.