Occidental Earnings Increase 74% on Surging Oil and Gas Prices

Occidental Petroleum Corp. said Tuesday that its first-quarter profit soared 74% from a year earlier on the heels of surging oil and gas prices.

The Westwood-based energy concern also said it stood to reap an after-tax profit of $360 million, or 90 cents a share, from Valero Energy Corp.’s planned acquisition of another major refiner, Premcor Inc. Occidental owns a 10% stake in Premcor, which agreed Monday to be purchased by Valero for $6.9 billion.

Occidental’s net income in the quarter ended March 31 jumped to $846 million, or $2.08 a share, from $487 million, or $1.23 a share, a year earlier.

It was the highest quarterly profit in Occidental’s history, and it easily bested Wall Street’s forecast of $1.99 a share, based on analysts surveyed by Thomson First Call. Revenue climbed 27% to $3.3 billion from $2.6 billion.

“Our results were driven by record-high quarterly oil and gas earnings and the improving earnings from our chemicals business,” Occidental Chief Executive Ray Irani told analysts in a conference call.

The company’s production averaged the equivalent of 565,000 barrels of oil a day in the quarter, just below its year-earlier output. Occidental expects production to reach 600,000 barrels a day by 2006, partly because of recently acquired fields in the Permian Basin in Texas.

Occidental also recently won development rights in Libya, which is reopening its country to exploration. “Drilling could begin next year,” Irani said.

In addition, the company is in talks to take over development of a major oil field in Oman because of a dispute between the Omani government and the project’s current operator led by Royal Dutch/Shell Group.

Also Tuesday, British oil giant BP said its first-quarter profit rose by more than one-third from a year earlier, to $6.66 billion, or 30 cents a share, from $4.95 billion, or 22 cents, a year earlier. Revenue rose 16% to $79.8 billion from $69 billion.

BP said earnings at its core exploration-and-production business jumped 53% to $6.49 billion from $4.24 billion, driven by higher prices and a moderate increase in production.

The company also said its refining earnings rose sharply. But BP, which owns the Arco gasoline brand, struggled with retail profit margins that “were extremely weak during the first quarter because of steadily rising” prices for crude oil, BP CEO John Browne said in a statement.