By Matt Daily
NEW YORK (Reuters) - BP Plc <BP.L> and ConocoPhillips <COP.N> reported disappointing quarterly earnings on Wednesday as both oil giants' crude oil production declined, offsetting the windfall from soaring energy prices.
BP's profits slipped 2 percent because of costs related to the disastrous Gulf of Mexico oil spill last year, while Conoco's output suffered from the conflict in Libya and pipeline problems in North America.
Crude oil prices surged nearly 40 percent in the quarter from the previous year, and margins to turn oil into gasoline and diesel have fattened, raising expectations that world's biggest oil companies would see profits skyrocket.
Shares in BP slipped early in the day, but rebounded to sit near unchanged at midday, while Conoco shares were down 3 percent.
"Energy stocks in general are off today. The sector has been one of the better-performing groups, so I think people are taking the opportunity to take a few profits," said Mike Breard, oil analyst at Hodges Capital in Dallas.
BP's oil and gas production tumbled 11 percent as it sold assets to pay the billions of dollars in liability it faces for the April 2010 oil spill at its Macondo well.
Houston-based Conoco recorded a 7 percent decline in oil and gas output to 1.7 million barrels per day because of the Libya shutdown and the outage of the Trans Alaska Pipeline system in January, as well as its own assets sales.
Meanwhile, Italian oil and gas group Eni <ENI.MI> said the Libyan turmoil would cut its full-year production after a drop of nearly 9 percent in the first quarter.
Since April, production in Libya has been about 50,000 to 55,000 barrels of oil equivalent per day (boepd), down from the 280,000 boepd expected before the uprising against leader Muammar Gaddafi erupted in February, Eni said.
Eni's adjusted net profit rose nearly 22 percent, topping analysts' forecasts and lifting the company's share about 1.7 percent.
U.S.-based oil and gas producer and refiner Hess Corp's <HES.N> shares jumped more than 5 percent before pulling back after the company said a key prospect in Ghana had shown significant resources.
Analysts had been awaiting news of Hess' drilling program at the Paradise offshore prospect, and the discovery overshadowed a lower-than-expected 73 percent jump in first quarter profits.
"They've gone for a little while without a big discovery," said Stephen Davis, associate portfolio manager with Alpine Mutual Funds. "It's nice to see the exploration program back on track."
(Addiional reporting by Stephen Jewkes in Milan, Tom Bergin in London and Anna Driver in Houston; Editing by Derek Caney)