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ConocoPhillips Sees Output Down

Third-quarter production will probably fall 5% from the second quarter.


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said its third-quarter production will probably decline 5% from the second quarter, in large part because of the problems at Alaska's Prudhoe Bay oil field in recent weeks.

The forecast, measured in barrels of oil equivalent a day, includes Syncrude, but excludes Conoco's stake in Russia's



More than half of the decrease was associated with

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shutdown of Prudhoe Bay earlier in the quarter. Planned seasonal maintenance in the U.K. and Venezuela also contributed to the drop.

The company said it will likely report significantly lower worldwide refining margins for the third quarter compared with the second quarter, while marketing margins should be much higher sequentially.

Turnaround activity fell in the third quarter, with costs expected to be roughly $40 million before taxes, the oil major said Tuesday. The company's average oil-refining capacity utilization rate for the third quarter is likely to be in the mid-90% range.

Although Conoco continues to expect its planned asset-selling program to produce an overall net gain, its refining and marketing division will record an impairment charge of around $250 million after taxes in the third quarter related to assets held for sale.

Crude oil prices will be similar to the second quarter, but U.S. natural gas prices will be lower. Additionally, the company said the results from its midstream and chemicals operations should improve from the second quarter.