Occidental Petroleum Corporation
) reported second quarter 2012 operating earnings of $1.64 per
share, down 26.5% year over year from $2.23 per share in the
year-ago quarter. This decline was primarily due to lower product
pricing. Quarterly earnings, however, surpassed the Zacks Consensus
Estimate of $1.60 per share.
Occidental's quarterly revenue decreased 6.6% to $5,768 million
from $6,173 million in the year-ago quarter. Revenue decreased due
to lower contribution from the
Oil and Gas
Midstream, Marketing and Other
segments. The top line fell short of the Zacks Consensus Estimate
of $5,958 million.
Quarterly Production, Sales and Realized Price
Occidental's average daily production volumes touched 766 thousand
barrels of oil equivalents ("MBOE") in second quarter 2012, up 7%
year over year. The steady volume growth was driven by strong
production from domestic operations and increase in production from
North African and Middle Eastern operations.
Occidental's daily oil and gas sales volumes during the quarter
were 759 MBOE, up 7.7% from 705 MBOE in the year-ago period.
Occidental's realized price for crude oil decreased 3.7% to $99.34
per barrel from the prior-year level of $103.12 per barrel.
Realized natural gas liquids ("NGL") prices were down 27% to $42.06
per barrel from the prior-year quarter level of $57.67 per barrel.
In the quarter under review, domestic gas prices also declined 51%
to $2.09 per thousand cubic feet ("MCF") from $4.27 per MCF in the
In second quarter 2012, consolidated segment earnings were $2,314
million versus $3,064 million in the year-ago quarter. Earnings
declined due to weak performance across all the segments.
Oil & Gas:
Quarterly earnings from this segment were $2,043 million, down
22.1% from $2,624 million reported in the year-ago quarter. This
was due to a decline in oil and gas prices, higher operating costs
and rise in depreciation, depletion and amortization ("DD&A")
rates. These negatives were partially offset by growth in volumes.
Segment earnings were $194 million versus $253 million in the
second quarter 2011. The year-over-year decline was due to decrease
in domestic and export caustic volumes, weak export-demand of vinyl
chloride monomer ("VCM"), and lower VCM and polyvinyl chloride
export prices. These were partially offset by lower cost of
ethylene and natural gas.
Midstream, Marketing and Other:
Quarterly segment earnings were $77 million compared with $187
million in the year-ago quarter. The significant decline in
earnings was primarily due to lower margins in the marketing and
trading businesses and the gas processing businesses. However,
these were partially offset by higher income from pipeline
Cash from operations during the first half of 2012 totaled $6
billion, up 7.1% from year ago period of $5.6 billion.
Occidental's capital expenditure for second quarter 2012 was $2,713
million, compared with $1,633 million in the year-ago quarter. The
rise in capital expenditure was due to growth in development
expenses at its Oil & Gas, Chemicals and Midstream, marketing
and other segments.
Total debt as of June 30, 2012 was $7,620 million compared with
$5,871 million as of December 31, 2011. The company's total
debt-to-capitalization ratio at quarter end was 16% compared with
13% at the end of fiscal 2011.
Occidental Petroleum's competitor
) announced second quarter 2012 adjusted earnings of $1.22 per
share compared with $1.64 per share in the year-ago quarter.
Quarterly earnings surpassed the Zacks Consensus Estimate of $1.17
ConocoPhillips' second quarter 2012 revenue was $15,166 million
versus $17,668 million in the prior-year quarter. The reported
revenue beat the Zacks Consensus Estimate of $9,883 million.
Occidental's second quarter earnings beat the Zacks Consensus
Estimate though revenues fell short of the mark. The company also
failed to surpass the year-ago numbers. Lower pricing of natural
gas, NGL and oil prices pulled back the company's reported result.
We have, however, observed a few offsetting factors, which might
fuel Occidental's near-term growth. The company's strong presence
in the Middle East along with its mature domestic properties is
expected to act as near-term positive catalysts.
We are mainly concerned about pricing pressure across the product
line. In addition, political instability and natural calamities
always pose challenges for Occidental's international operations
primarily in Latin America and Libya.
These factors hamper oil exploration activities and cause damage
to production infrastructure. The company also faces cost overruns,
interruption in development activities and equipment failures.
CONOCOPHILLIPS (COP): Free Stock Analysis
OCCIDENTAL PET (OXY): Free Stock Analysis
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Occidental Petroleum Corporation currently retains a Zacks #4 Rank,
which translates into a short-term Sell 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.