UPDATE: Occidental 3Q Profits Drop 59%, Production Rises
(Adds CEO and analyst comments, background and updated stock price.)
By Isabel Ordonez
Of DOW JONES NEWSWIRES
HOUSTON -(Dow Jones)- Occidental Petroleum Corp.'s (OXY) said Thursday its
third-quarter earnings fell 59% compared to the same period last year due to
lower oil prices, but that its production increased 7%.
The fourth-largest U.S. oil company by market value posted a profit of $927
million, or $1.14 a share, down from $2.27 billion, or $2.77 a share, a year
earlier. Revenue dropped 42% to $4.1 billion. The results, however, topped
analysts' estimates, which expected the Los Angeles-based company to report
earnings of $1.08 a share on revenue of $4.14 billion.
After a multi-year boom in commodity prices and skyrocketing profits, energy
companies have seen earnings tumble after oil and gas prices collapsed last
year. Oil prices have rebounded from this year's low of $33 a barrel in
February, trading over $81 a barrel Thursday, but they are still below its all
time high over $147 a barrel reached in July of last year. Occidental said
during the third quarter its realized oil price was $62.79 a barrel, compared
with $104.15 a barrel for the same period last year.
However, higher crude oil prices in the third quarter compared to the second
quarter resulted in a 36% increase in Occidental's sequential earnings.
Occidental also said its average quarterly production rose 7%, driven by
output increases in the U.S., the Middle East and North Africa. Occidental Chief
Executive Ray Irani said in a prepared statement the company's recent oil
discovery in Kern County, Calif., made "a significant contribution" to the
production growth.
Since June, Occidental has increased production from its Kern County discovery
by 9,000 barrels of oil equivalent per day to 26,000 barrels of oil equivalent
per day, the company said.
"Occidental is showing positive production growth and capital discipline,
which is all good," said Fadel Gheit, analyst at Oppenheimer & Co. Inc.
Occidental's shares were recently trading down 42 cents, or 0.5%, at $81.15.
In its earnings release the company didn't provide details on its recent
acquisition of Citigroup Inc.'s (C) commodities unit Phibro LLC. But executives
of the company are expected to provide more information during the company's
earnings conference call that will be held at 11:30 a.m. ET.
When the company made the announcement earlier this month, Occidental said at
that time that the Phibro has delivered consistent returns through straight-
forward investments with low leverage - essentially the trading-world equivalent
of the conservative strategy for which Occidental is known.
-By Isabel Ordonez, Dow Jones Newswires; 713-547-9207; isabel.ordonez@
dowjones.com
(END) Dow Jones Newswires
10-22-091039ET
Copyright (c) 2009 Dow Jones & Company, Inc.
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