UPDATE: ConocoPhillips Gives Glimpse Of Last Quarter Before Split

HOUSTON (DOW JONES)--ConocoPhillips (COP) said Thursday its preliminary first-quarter average production was about 1.62 million barrels of oil equivalent a day, in line with expectations, and that its refining operations could be affected by weaker profit margins.

The information was part of an interim operational update the company released ahead of the split of its refining business, to be called Phillips 66, expected by the end of the month.

ConocoPhillips said it expects its refining operations to see mostly improved crack spreads, though the segments results are expected to be negatively affected by weaker spreads between crudes, among other things.

At its chemicals and midstream business, the company projects improved results, mostly on higher ethylene margins, which it said were among the highest in the past 20 years. Higher natural-gas liquids are expected to boost its midstream results.

ConocoPhillips said it expects to post an after tax write-down of about $525 million related to a pipeline and gathering-system project with three other energy companies in northern Canada as its co-ventures decided to suspend funding amid deteriorating market conditions.

The cancellation of the project, in which Exxon Mobil Corp. (XOM), Royal Dutch Shell PLC (RDSA) and Imperial Oil are also partners, was not a surprise because the vast new resources of shale gas in the U.S. have made other sources of gas unattractive and too expensive, said Mornigstar analyst Allan Good.

Conoco also said it spent $1.9 billion in share repurchases in the first quarter.

The company also anticipates an after-tax gain of about $940 million related to the recent sale of its Vietnam business, part of a broader asset-sale plan that aimed to raise $10 billion last year. The company said other asset sales in the North Sea and North America are set to close in the current quarter and third quarter.

Conoco expects to make a final decision on the second train of its Australia Pacific LNG Project in the current quarter, and expects to post a second-quarter after-tax loss of about $135 million related to the resulting dilution of interest.

Conoco expects to release first-quarter financial results on April 23.

-By Tess Stynes and Isabel Ordonez,Dow Jones Newswires; 212-416-2481;Tess.Stynes@dowjones.com

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