Conoco Inc., the fourth largest U.S. energy company and USX-Marathon Group, the sixth largest, bumped up their second quarter profits and met or exceeded analysts’ projections, mostly because of higher energy prices during the period. Houston-based Conoco, which acquired Calgary’s Gulf Canada Resources Ltd. in the quarter, saw earnings rise almost 32%, while its cross-town neighbor USX-Marathon, the energy business of USX Corp., exceeded expectations, with income up 59%.

Strong refining margins and natural gas prices, along with higher production, led to an outstanding quarter for Conoco. Net income before special items for the quarter was $606 million, or 95 cents a share, 32% better than second quarter 2000’s $460 million, or 73 cents per share. Net income increased to $552 million, or 87 cents a share, up 21% from $456 million, or 72 cents per share for the same period last year. Revenue was up 10%, totaling $10.4 billion, up from $9.5 billion last year.

“Not only did we have an excellent quarter financially, but several significant company-shaping events occurred during the period,” said Conoco CEO Archie W. Dunham. “In the single step of acquiring Gulf Canada Resources Ltd., we greatly expanded Conoco’s natural gas production and reserves in North America and solidified Southeast Asia as a major operating area. Importantly, an impressive inventory of long-term growth opportunities was added to our portfolio with the acquisition.”

The Gulf Canada accusation increased Conoco’s worldwide reserves by 40% and production by 32%, including syncrude, and propelled Southeast Asia into core area status. The company also said it would exploit its additional 1.2 billion boe in probable reserves with the acquisition.

The Conoco board also has approved a plan to convert Conoco’s two classes of common stock into a new, single class of common stock. If approved by shareholders, the action “will reduce shareholder confusion and increase liquidity in our common stock, which we believe should translate into stronger investor interest,” Dunham said.

In the third quarter, Conoco expects production to be up about 35%, although Dunham warned that earnings “are not expected to be as strong, as prices and margins have retreated in recent weeks.” He added, however, that he expects year-end earnings to exceed those of 2000.

USX-Marathon surpassed its earnings estimates with income up 59% to $582 million, or $1.88 per diluted share, mostly because of higher profits from upstream commodities prices. Worldwide exploration and production income was up to $459 million from $356 million for the same period in 2000. Revenues were up as well, standing at $9.2 billion from $8.7 billion a year ago.

USX-Marathon overhauled its business, including reducing its upstream workforce by 24% from 1999 levels. It also is selling most of its Canadian oil assets to focus on gas exploration and production in western Canada and offshore Nova Scotia. The corporate structure also has been revamped, as parent USX Corp. has separated its energy and steel businesses to build each independently and solidify its oft-criticized stock structure.

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