Occidental Petroleum’s Profit Surges

Oil and natural gas producer Occidental Petroleum Corp. said Tuesday that its fourth-quarter profit jumped 55% because of energy price increases and production gains, bringing its 2005 earnings to an all-time high.

The news came on the heels of record profits posted by major oil companies such as Chevron Corp. and Exxon Mobil Corp. -- gains that have angered politicians and consumer groups.

London-based BP, the world’s second-largest oil company, also reported record 2005 earnings Tuesday, taking in $22.34 billion on revenue of $255.2 billion, compared with 2004’s net income of $17.1 billion on revenue of $204.5 billion.

But BP’s fourth-quarter profit, which rose to $3.69 billion from $3.01 billion a year earlier, failed to live up to Wall Street’s expectations. Fourth-quarter revenue grew to $66.1 billion from $54.3 billion.

At Occidental, fourth-quarter net income came in at $1.15 billion, or $2.84 a share, up from $742 million, or $1.86, in the same period of 2004. That beat Wall Street’s forecast of $2.76 a share, based on Thomson Financial’s survey of analysts.

Revenue for the quarter ended Dec. 31 increased 41% to $4.3 billion.

For the year, the Westwood-based company reported net income of $5.3 billion, more than double its 2004 earnings of $2.6 billion. Revenue was $15.2 billion, up 34%.

“In terms of volume, in terms of magnitude, they don’t generate as much net income as Chevron and Exxon because they’re a much smaller company,” said Gene Gillespie, an analyst with investment firm Howard Weil Inc. “But in terms of profitability and earnings relative to expectations, they were extraordinarily good.”

Higher-than-expected natural gas prices and lower-than-expected interest expenses were partially offset by increases in operating, corporate and exploration costs.

Chief Executive Ray Irani credited Occidental’s improved performance to increased production and high energy prices. The company’s production of oil and natural gas was equivalent to 589,000 barrels of oil a day, up 5.6% from the fourth quarter of 2004.

“Our success in increasing production has allowed us to reap the benefits of a strong energy environment,” Irani said Tuesday in a conference call with analysts. He added that he expected first-quarter production to average 620,000 to 630,000 equivalent barrels a day.

Irani said a recently completed acquisition of Vintage Petroleum would strengthen Occidental’s operations in California, Latin America and the Middle East. He added that the company’s status as the largest holder of exploration acreage in Libya, which was closed to U.S. oil companies until recently, had strengthened its position in the Middle East, as had a contract it won to develop a field in Oman.

Occidental’s stock fell $3.89, or 4.1%, to $90.10 a share Tuesday, a losing day for most energy companies as traders became less worried about petroleum inventories should Iran halt its shipments because of an international dispute over its nuclear program. BP’s U.S.-traded shares fell $2.47, or 3.5%, to $67.50.

Irani also announced Tuesday the promotion of James Lienert, head of Occidental’s chemical subsidiary, to executive vice president of finance and planning.