Occidental Petroleum Corporation
(
OXY
), a major integrated oil and gas exploration and production
company, is scheduled to report its third-quarter 2012 financial
results on October 25, 2012.
Second-Quarter Snapshot
Occidental Petroleum reported its second-quarter 2012 operating
earnings per share of $1.64, down 26.5% year over year from
$2.23. This decline was primarily due to lower product pricing.
However, the quarterly earnings surpassed the Zacks Consensus
Estimate of $1.60 per share.
The company's quarterly revenue decreased 6.6% to $5,768 million
from $6,173 million in the year-ago quarter due to lower
contribution from the Oil and Gas, Chemical and Midstream,
Marketing and Other segments. The top line missed the Zacks
Consensus Estimate of $5,958 million.
Zacks Consensus
The Zacks Consensus Estimate for third-quarter 2012 is $1.68 per
share, lower than $2.18 per share reported in the prior-year
quarter. Currently, the Zacks Consensus Estimate for the
aforementioned period's earning ranges between $1.59 and $2.06 a
share.
For full-year 2012, the Zacks Consensus Estimate stands at $7.06
per share, lower than the prior-year earnings of $8.39 per share.
The current Zacks Consensus Estimate for full-year 2012 ranges
from $6.68 to $7.69 per share.
Estimate Revisions Trend
Agreement
For third-quarter 2012, we have observed that, in last 7 days out
of 15, none of the estimates have moved upwards, while 1 estimate
went in the downward direction. Over the last 30 days, 4
estimates moved upwards whereas 7 estimates moved in the downward
direction.
For full-year 2012, out of 18, 2 estimates followed upward trend
whereas 3 estimates moved downwards in last 7 days. In last 30
days, 6 estimates moved upwards whereas 7 estimates followed
downward trend.
Magnitude
In the last 7 days, the Zacks Consensus Estimate for
third-quarter 2012 earnings per share increased by a penny to
$1.68 from $1.67.
In the last 30 days, the Zacks Consensus Estimate for
third-quarter 2012 earnings per share declined by 2 cents to
$1.68 from $1.70.
In the last 7 days, the Zacks Consensus Estimate for full-year
2012 earnings per share rose by a penny to $7.06 from earlier
projection of $7.05.
In the last 30 days, the Zacks Consensus Estimate for full-year
2012 earnings per share fell by a penny to $7.06 from earlier
projection of $7.07.
Surprise History
With respect to earnings surprises, Occidental Petroleum has
topped the Zacks Consensus Estimate in three quarters out of the
last four quarters. Over the last four quarters, the surprise
ranges from -0.52% to 11.79% with an average of 4.21%.
Our Recommendation
We view Occidental Petroleum as an organization with a strong
balance sheet and liquidity position with a steady capital
investment program. We believe that the company will generate
steady production growth in the forthcoming quarters with its
well-diversified asset base, which is located in different
geographical territories particularly in the Middle East. In
addition, Occidental Petroleum took few cost-cutting measures,
including disposing of loss-making assets, production curtailment
and planned shutdowns of few plants. We believe these steps will
enable the company to improve its operating as well as financial
performance in the forthcoming quarters.
However, Occidental Petroleum's over-dependence on the crude oil
prices movement is an important threat for its future financial
performance. We are also skeptical about political instability,
natural calamities, and risks related to oil exploration and
production infrastructure damages, which might obstruct the
company's operations.
Occidental Petroleum Corporation currently has short-term Zacks
#3 Rank (Hold rating).
Los Angeles-based Occidental Petroleum Corporation along with its
subsidiaries engages in the exploration, development, production
and marketing of crude oil, natural gas liquids and natural gas.
The company has operations in the United States, Middle
East/North Africa and Latin America. With a market capitalization
of $69.27 billion, Occidental has 11,300 full time employees. The
company competes with
ConocoPhillips
(
COP
).
CONOCOPHILLIPS (COP): Free Stock Analysis
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OCCIDENTAL PET (OXY): Free Stock Analysis
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