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ConocoPhillips's (COP) second-quarter earnings fell 76% amid sharply lower prices from a year earlier, when the sector was in the midst of an unprecedented boom.

Its refining segment also swung to a loss on lower volumes and margins.

Oil exploration and production companies also have been coping with falling demand as consumers and industry cut back on consumption. The waning demand has led to a fuel glut, which has pressured the margins for diesel and gasoline.

The company reported a profit of $1.3 billion, or 87 cents a share, down from $5.4 billion, or $3.50 a share, a year earlier. The latest period included a $192 million gain related to its 20% stake in Russian oil giant OAO Lukoil Holdings (LUKOY).

Revenue tumbled 50% to $35.4 billion.

Analysts polled by Thomson Reuters most recently were looking for earnings of 85 cents on revenue of $39.08 billion.

Even though, Conoco beat the consensus, analyst Mark Flannery of Credit Suisse questioned the quality of the beat based on the fact that the exploration and production side's performance wasn't as good as expected.

"The less impressive result in international exploration and production will likely attract more attention than the big number in the LUKOIL segment," Flannery wrote to clients Wednesday morning.

Conoco's production rose 7%, though profit was off by 81% mostly owing to lower prices. The company is more exposed to lower natural gas prices than rivals.

Its refining and marketing business posted a $52 million loss, in part, due to narrowing light-heavy crude spreads.

ConocoPhillips is among a number of refiners that invested in pricey equipment to process lower-cost "heavy crude" to boost margins, only to see the strategy backfire as supplies dwindled and the cost advantage over lighter crude evaporate.

The poor margin environment has caused refiners to cut back the amount of crude they process. However, Conoco's U.S. refineries maintained a relatively high utilization rate of 93%, compared to the rest of sector. Across the country, the average rate was in the mid to low 80s during the second quarter, according to the Energy Information Agency.

However, the oil giant has been considering cutting crude processing at a New Jersey refinery because of a looming storage problem cause by the overhang of refined products.

Conoco can afford to run at higher rates because it is one of the premier refiners, said Brian Youngberg, a senior energy analyst with Edward Jones in St. Louis.

"They run their plants very well. Just given that refining margins are down 50% globally to keep it at a modest loss is not that bad," Youngberg said.

Conoco's international refineries, which performed worse than their domestic counterparts, ran at a 72% utilization rate, significantly lower than the same period last year.

Shares traded down 2.63% at $43.26 Wednesday morning. The stock has lost nearly half its value in the past year.

-By Susan Daker and Tess Stynes, Dow Jones Newswires; 713-547-9208; susan.daker@dowjones.com