Occidental Profit Soars With Oil Prices

Occidental Petroleum Corp., riding a gusher of soaring oil prices, said Thursday that net profit rose 70% for the third quarter.

The Los Angeles-based company, the fourth-largest oil producer in the U.S., said lower taxes and interest expenses and higher profit from sales of chemicals helped boost earnings.

Net income rose to $758 million, or $1.88 a share, from the year-earlier $446 million, or $1.14 a share. Wall Street had expected $1.77 a share, according to Thomson First Call.

Sales for the third quarter were up 31% to $3 billion from $2.3 billion.

With oil prices at record levels and little expectation that they will fall soon, Occidental should “at least equal and probably exceed its third-quarter results in the fourth quarter,” said analyst Gene Gillespie of brokerage Howard Weil in New Orleans.

Occidental has been able to take full advantage of the run-up in crude oil prices because it doesn’t sign itself to long-term futures contracts with buyers, he said. The increases have been fueled by fears of supply disruptions in the Middle East and Africa as well as by demand from energy-hungry countries including China and the U.S.

The company said it was paid an average of $37.87 a barrel for oil in the third quarter, up 41% from a year earlier. Oil prices recently have soared above $50 a barrel, hitting $55.33 this week, the highest since futures trading began in 1983.

Occidental is dependent on those high prices for its profit because its production was down slightly, largely because of hurricane damage to its Gulf of Mexico facilities, Gillespie said.

Occidental’s shares rose 70 cents Thursday to $57.87 on the New York Stock Exchange.