Oil prices touched a 2 1/2-year low last week before closing Friday at US$18.37 a barrel on the New York Mercantile Exchange, down 47 percent from a year earlier. Slowing economies and a drop in travel following the Sept. 11 terrorist attacks in the US have reduced demand.
Falling profits
Natural-gas prices have fallen 55 percent on the NYMEX in the past year, to US$2.64 a million British thermal units, after a surge in drilling boosted supplies.
Phillips said last month that third-quarter profit fell 12 percent to US$374 million, in part because of lower oil and gas prices. Earnings plunged 43 percent at Conoco to US$281 million.
Phillips shares rose US$0.42 to US$51.82 Friday. They've dropped 8.9 percent this year. Conoco fell 10 cents to US$24.30 and is down 16 percent for the year.
DuPont Co, the second-largest US chemical maker, sold about 30 percent of Conoco to the public in October 1998 in a US$4.4 billion offering and later distributed the rest to shareholders. ConocoPhillips will have reserves of 8.7 billion barrels of oil and natural gas, and daily production of 1.7 million barrels. It will operate in the US, Canada, the North Sea, Venezuela, China, the Timor Sea, Indonesia, Vietnam, the Middle East Russia and the Caspian.
Phillips acquired Atlantic Richfield Co's Alaskan oilfields last year for US$6.5 billion.
The new company will run or have stakes in 19 refineries with capacity of 2.6 million barrels a day in the US, UK, Ireland, Germany, the Czech Republic, and Malaysia. Phillips has 12,000 gasoline stations and convenience stores in 46 states. Conoco operates 150 US gas stations and licenses others.
Other oil companies have been able to cut costs through acquisitions.
San Francisco-based ChevronTexaco, the second-biggest in the US, may slash costs by as much as US$2 billion a year, analysts say. Chevron acquired Texaco last month.
Irving, Texas-based Exxon Mobil, the largest publicly traded oil company, expects the 1999 merger of that created it to generate savings of US$4.6 billion a year. BP Plc of the UK forecast US$5.8 billion a year in savings following takeovers of Amoco Corp, Atlantic Richfield and Burmah Castrol Plc.
Morgan Stanley, Credit Suisse First Boston and Salomon Smith Barney were financial advisers to Conoco. Phillips was advised by Goldman, Sachs & Co, JP Morgan Securities Inc and Merrill Lynch.
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