ConocoPhillips (COP) yesterday released its fourth quarter 2009 interim update. The company sees a loss for Refining and Marketing (R&M) segment due to weak secondary product margins, narrow light-heavy crude differentials and a low utilization due to turnaround activity and economic conditions.

While Conoco’s average worldwide crude oil refining capacity utilization rate for the quarter is anticipated to be in the high 70% range, the domestic and international utilization rates are expected to be in the low 80% range and high 50% range, respectively.

Conoco also expects a fall in its average daily volumes in the quarter in its E&P segment. It anticipates total volumes to be around 1.83 million barrels of oil equivalent per day (MMboe/d), compared to 1.87 MMboe/d in the year-earlier quarter. However, it estimates full-year 2009 volumes will be approximately 1.85 MMboe/d, up 3% from the 2008 level. The LUKOIL Investment segment results will include a $54 million after-tax negative adjustment.

While the company anticipates unimpressive production numbers for the reportable quarter, we believe that this trend will continue for the next few quarters as the company intends to advance only its existing and strategic E&P (exploration and production) projects this year, with a 10% lower capital budget.

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