BP Plc and ConocoPhillips reported disappointing quarterly profits on Wednesday as the big oil companies' crude oil production fell, offsetting the windfall from soaring energy prices.

BP's profits slipped 2 percent from a year ago as costs related to the Gulf of Mexico oil spill last year continued to take a toll, while Conoco's output suffered from the conflict in Libya and pipeline problems in North America.

Crude oil prices rose 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.

BP shares traded in New York fell less than 1 percent, while Conoco shares were down 2.7 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.

BP's first-quarter profit fell 2 percent while Conoco's profit rose 44 percent. Results at both companies fell short of analysts' forecasts.


Conoco and Italy's oil and gas group Eni said lost production because of the turmoil in Libya would cut into the year's output.

Houston-based Conoco recorded a 7 percent decline in oil and gas output to 1.7 million barrels oil equivalent (BOE) per day because the of Libya shutdown and the outage of the Trans Alaska Pipeline system in January, as well as its own asset sales.

With no end in sight for the unrest in Libya, Conoco lowered its current production outlook by as much as 50,000 BOE per day. The company could not provide any details about the state of its operations in that country.

We just don't have communication channels, Chief Financial Officer Jeff Sheets told Reuters.

In Libya, Conoco holds a 16.3 interest in the Waha concessions, where net oil production averaged 46,000 barrels per day last year.

Eni 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 shares about 1.7 percent.

Shares of U.S.-based oil and gas producer and refiner Hess Corp rose more than 5 percent before pulling back after the company said a key prospect in Ghana had shown significant resources.

Analysts were awaiting news of Hess' drilling program at the Paradise offshore prospect, and the discovery overshadowed a lower-than-expected 73 percent rise 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.

Exxon , the world's largest publicly traded oil company, is due to report earnings on Thursday.

(Additional reporting by Stephen Jewkes in Milan, Tom Bergin in London and Anna Driver in Houston. Editing by Derek Caney and Robert MacMillan)