HOUSTON -- ConocoPhillips said Wednesday it expects to charge $1.3 billion against earnings in the fourth quarter to cover costs associated with shedding a "substantial portion'' of its service stations and pulling out of certain geographic markets.
Phillips is the nation's third larget oil company and the largest oil producer in Alaska. The company did not specify how many stations would be shed or where they may be. It has 3,700 stations worldwide, including 2,500 in the United States.
The move to dispose of retail sites was expected as part its plan to consolidate refining and marketing assets after the August merger of Conoco and Phillips, said Fadel Gheit, a petroleum analyst with Fahnestock & Co.
"That is part of what the company indicated they would do because of the merger,'' Gheit said. "They have to write off some things acquired from Phillips.''
The company said its worldwide crude oil sales price for the fourth quarter is expected to be lower than in the previous quarter, while the realized average price for natural gas liquids sales will be higher.
Daily production for the quarter is expected to be in line with the previously stated target of 1.62 million barrels-of-oil-equivalent, despite any negative impact from the ongoing labor strike in Venezuela, the company said.
ConocoPhillips said its debt at the end of the fourth quarter is expected to be about $19.8 billion, versus $20.5 billion at the end of the third quarter.
Several major petroleum companies attributed third-quarter losses last year to lower profit margins in refining and marketing businesses, and Gheit said ConocoPhillips' outlook is in line with analyst expectations.
"A general trend in the industry is improvement in refining and marketing margins that were weak in the third quarter, as well as the last quarter of 2001,'' he said.
But the industry is more focused on the global picture _ particularly the threat of war with Iraq _ and oil and gas prices than company-by-company performance, Gheit said.
ConocoPhillips expects to release fourth-quarter earnings Jan. 29, which will be the first baseline quarter for the new company. Analysts dismissed third-quarter comparisons as meaningless because they included two months' activity for Phillips and one month for ConocoPhillips.
"This is the first real look at the company as a unit,'' Gheit said. "Now we can take it from there.''
In midday trading on the New York Stock Exchange, ConocoPhillips shares were down 34 cents at $48.10.
