ConocoPhillips Down on Downstream
HOUSTON -- ConocoPhillips, the nation's largest refining company as a result of its $15-billion summertime merger, is struggling these days, stunned by a depressed downstream market. While the oil industry is facing weak earnings, the outlook at the world's sixth-largest publicly held integrated oil company is particularly troublesome, The Wall Street Journal reported.
"The downstream is hurting ConocoPhillips, relative to its size," Fadel Gheit, senior oil analyst at Fahnestock & Co told the The Wall Street Journal. "This year is history as far as margins are concerned, and I don't see any meaningful improvements, especially if there's war."
Unlike its rivals, whose businesses tilt toward the upstream - the exploration and production sectors - ConocoPhillips possesses a portfolio still strongly weighted in the downstream segment, despite mandated selloffs imposed as part of the merger between Phillips Petroleum Co. and Conoco Inc.
In its first filing reported this week, company showed net operating income falling $116 million in the third quarter, primarily due to one-time items related to the integration of the Conoco and Phillips organizations. The company is well aware of its challenges.
"We'll grow upstream," ConocoPhillips Chairman Archie Dunham told the newspaper. The company plans to reduce its reliance on refining and marketing. Dunham said ConocoPhillips will ultimately invest 65 percent of its capital spending into upstream businesses and 35 percent in downstream, a complete reversal of the current mix.
ConocoPhillips officials say they will discuss their plans at an analysts' meeting in New York.
"The downstream is hurting ConocoPhillips, relative to its size," Fadel Gheit, senior oil analyst at Fahnestock & Co told the The Wall Street Journal. "This year is history as far as margins are concerned, and I don't see any meaningful improvements, especially if there's war."
Unlike its rivals, whose businesses tilt toward the upstream - the exploration and production sectors - ConocoPhillips possesses a portfolio still strongly weighted in the downstream segment, despite mandated selloffs imposed as part of the merger between Phillips Petroleum Co. and Conoco Inc.
In its first filing reported this week, company showed net operating income falling $116 million in the third quarter, primarily due to one-time items related to the integration of the Conoco and Phillips organizations. The company is well aware of its challenges.
"We'll grow upstream," ConocoPhillips Chairman Archie Dunham told the newspaper. The company plans to reduce its reliance on refining and marketing. Dunham said ConocoPhillips will ultimately invest 65 percent of its capital spending into upstream businesses and 35 percent in downstream, a complete reversal of the current mix.
ConocoPhillips officials say they will discuss their plans at an analysts' meeting in New York.