ConocoPhillips Sees Profits Skyrocket

ConocoPhillips (COP Quote), the world's fourth-largest publicly traded oil company, announced Wednesday that its second-quarter earnings topped expectations and surged from the year-ago period.

Profits rose to $5.44 billion, or $3.50 a share, a 31.4% increase over last quarter and handily ahead of analyst estimates of $3.33.

The results clearly demonstrate to investors that Conoco has fully recovered from its nightmare second quarter in 2007, during which Venezuela expropriated $2.1 billion worth of its assets. The oil company was ultimately left with a dismal $301 million in net income, or 18 cents a share, in the year-ago-period.

Second-quarter revenue soared to $71.4 billion, compared with $51 billion last quarter and $43.3 billion in the same quarter last year.

Conoco's balance sheet has a heavier percentage of exploration-and-production assets than most other integrated supermajors, and its E&P segment kicked into high gear in the quarter, capitalizing on soaring global prices for crude oil and natural gas.

Net operating income from E&P activities were just under $4 billion, beating its first-quarter E&P results by 39%. Its E&P segment recorded a $2.4 billion loss during the same period last year.

A massive increase in Conoco's average realized sales prices for crude oil and natural gas were largely responsible for its E&P bonanza. The company earned an average of $123.98 a barrel on its sales of crude oil domestically, up from $97.94 a barrel in the first quarter and $64.89 a barrel a year ago.

Conoco's average realized price for oil in international markets was $119.24 a barrel during the period. It also averaged $10.94 per million cubic feet of natural gas in the recent period, up from $8.03 per MMCF last quarter and $7.55 per MMCF a year ago.