ConocoPhillips , the third-largest U.S. oil company, reported a 150 percent increase in underlying quarterly profit, in a dramatic bounceback of its volatile refining business.

Italy's Eni also reported a big increase in second-quarter profit on Wednesday thanks to higher oil and gas prices and firmer refining margins.

Conoco and Eni shares held steady on Wednesday as a result, even while the sector was weakened by a further drop in crude oil prices due to wider economic concerns.

That was not the case for Britain's BG Group Plc , which produces mostly gas and does not own refineries. BG's underlying profit grew 19 percent, better than what analysts expected, but its shares still fell 2 percent.

Results on Thursday from Exxon Mobil Corp , the largest U.S. refiner, will show whether the refining turnaround is as broad-based as numbers this week from Valero Energy Corp and others have indicated.

Conoco's adjusted profit growth of 150 percent in the second quarter is likely to set the bar for the industry as the Houston-based company has one of the heaviest refining weightings of any integrated oil major. Its earnings per share exceeded analysts' forecasts.

We know the refining and marketing made the day, said Fadel Gheit, analyst with Oppenheimer & Co. I think all refiners will do the same, have much stronger numbers than what we thought.

Shares of Conoco, which announced it would sell its entire stake in Russia's Lukoil , were unchanged at $54.44.

They don't need to be wedded, if you will, to each other, Gheit said of Conoco and LUKOIL. They didn't think this binding agreement was necessary anymore.

The company has so far raised $5.8 billion from asset sales, including a stake in Canadian oil sands venture Syncrude to China's Sinopec Group <600028.SS><0386.HK> and its interest in a truck stop joint venture to Pilot Travel Centers.

Conoco, which is now auctioning some North American natural gas properties, said on a call with analysts it expects to end the year having sold up to $8 billion in assets.

Proceeds from the LUKOIL share sale are not included in that total, the company said.

Eni said its adjusted profit, comparable to Conoco's since it excludes one-offs and non-cash charges ignored under U.S. accounting rules, rose 80 percent to 1.63 billion euros ($2.1 billion) and also beat estimates. Eni shares rose 0.1 percent.

BP Plc , which pumped more than any other non-government controlled oil company last year, said on Tuesday underlying profits rose 77 percent in the quarter, although a $32 billion charge to clean up its oil spill in the Gulf of Mexico created a big headline loss.

Conoco CEO Jim Mulva said his company would consider investing in the Gulf of Mexico, but no move would be made until new U.S. regulations governing drilling there are known.

Conoco's overall oil and gas production fell 8 percent to 1.73 million barrels of oil equivalent per day (boepd) in the second quarter, as new finds failed to keep up with natural field decline.

BG said output fell 2 percent to 623,000 boepd, while Eni's production was flat compared with the same period last year at 1.76 million boepd.

Western oil companies face a challenge increasing production as countries with the richest resources, like Russia, Venezuela and Saudi Arabia, restrict investment in their energy sectors.

U.S. crude prices were 30 percent higher in the quarter than a year before, averaging $77.81 a barrel, while global refining margins rose 10 percent, according to BP.

Along with Exxon on Thursday, its nearest private-sector rival, Royal Dutch Shell Plc , will post earnings, followed on Friday by Chevron Corp , the world's third-largest non-government-controlled oil company by value.

(Reporting by Tom Bergin in London, Braden Reddall in San Francisco, and Anna Driver and Kristen Hays in Houston; Editing by Mike Nesbit and Steve Orlofsky)

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