Occidental Posts $247-Million Loss

Occidental Petroleum Corp., an oil and natural gas producer and chemical maker, said Monday it had a $247-million loss in the fourth quarter after energy prices fell and it had costs from selling a stake in a chemical company.

The final loss was 66 cents a share, compared with net income of $333 million, or 90 cents, a year earlier. Revenue fell 40% to $2.38billion.

Oil prices last quarter on the New York Mercantile Exchange averaged 36% less than a year earlier, and gas fell 59% as the recession and mild weather cut demand.

The company produces gas in California, where the average price plunged 81% after soaring in 2000 during an electricity crisis.

“The tumble in crude prices had a tremendous impact,” said Fadel Gheit, an analyst with Fahnestock & Co.

“They’re also suffering from the longest and deepest downturn in the chemical industry in history.”

Oil accounts for about 77% of Occidental’s production, and gas the rest, said Gheit, who rates the company’s shares “hold” and doesn’t own any. Natural gas is used to fuel many new power plants.

Shares of Los Angeles-based Occidental fell 66 cents to $25.52 on the New York Stock Exchange.

Occidental had costs last quarter of $282 million. That includes $240million for the planned sale of its 29.5% stake in chemical maker Equistar, as well as expenses for environmental cleanup and idling a Texas chemical plant, spokesman Kenneth Huffman said.

Without those items, profit would have been $35 million, or 9 cents a share.

Occidental was expected to earn 10 cents a share, the average estimate of analysts surveyed by Thomson Financial/First Call.

During the quarter, earnings from oil and gas production fell 78% to $166 million from $763 million.

About $500 million of that decrease was due to lower prices for the commodities, the company said.

Losses in Occidental’s chemicals business narrowed to $4 million from $51 million a year earlier.

Lower chemical prices were partly offset by the reduced prices for natural gas, oil and electricity, which are used as fuel and feedstock in chemicals production, the company said.

When chemical prices rebound, Occidental could earn $1.50 to $2 a share annually from that business, Gheit said. Until then, it is dependent on world oil prices.

“The potential from an upside in chemicals is tremendous,” he said. “Unfortunately, the turnaround won’t happen soon.”