Oil and gas producer ConocoPhillips (COP), providing an interim update for the third quarter on Thursday morning announced that worldwide production on a barrel-of-oil equivalent or BOE per day basis, including Syncrude and excluding LUKOIL, is expected to be flat or slightly below the second quarter. The production in the third quarter was impacted by hurricane disruptions.
The Houston, Texas-based company noted that Hurricanes Gustav and Ike caused production disruptions during the third quarter. An estimated decline of about 20 thousand BOE per day in the U.S. Lower 48 due to the hurricanes are included in the worldwide production estimate.
The company expects the third quarter results would be negatively impacted by the decline in crude oil and natural gas prices as well as lower refining margins. This would be partially offset by higher global marketing margins.
Exploration expenses for the third quarter are anticipated to come in at about $275 million before-tax, while turnaround costs are expected to be about $80 million before-tax. Estimated hurricane-related negative impact is about $200 million after-tax.
ConocoPhillips also said that although worldwide refining margins for the third quarter are expected to be lower than the second quarter, the company expects it to be partially offset by higher global marketing margins.
The drop in U.S. distillate refining margins was more than offset an increase in gasoline margins during the quarter. the disproportionate decrease in the distillate spread will negatively impact the company's market capture.
The company said it expects its average U.S. crude oil refining capacity utilization rate for the third quarter to be in the upper-80% range, due to higher down-time in the Gulf Coast region, which was partially offset by lower turnaround activity in the West Coast region.
The company's international crude oil refining capacity utilization rate for the third quarter is expected to be in the mid-70% range, mainly due to continued impact of low hydro-skimming margins.
The company's debt balance is expected to be nearly $22.1 billion at the end of the third quarter. The company anticipates repurchasing about $2.5 billion worth of shares under its current share repurchase program.
ConocoPhillips' asset rationalization efforts are anticipated to realize a net benefit of about $125 million after-tax, which is expected to be largely offset by asset retirement obligations and other accruals.
The company is scheduled to report financial results for the third quarter on October 22, 2008. Analysts expect the company to report third quarter earnings of $3.37 per share, with estimates ranging from $2.98 to $3.70 per share.
In Thursday's regular trading session, COP is trading at $67.62, down $3.08 or 4.36% on a volume of 2.57 million shares. In the past 52-week period, the stock has been trading in a range of $67.31 to $95.96.
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