Occidental profit up 64%
Westwood-based Occidental Petroleum Corp. reported a 64% jump in profit for the second quarter Tuesday, as gains from asset sales more than offset a drop in oil and natural gas production.
The company said net income rose to $1.41 billion, or $1.68 a share, for the three months that ended June 30, up from $860 million, or 99 cents, in the same quarter last year.
Occidental’s results included $419 million in after-tax income from an asset swap with BP and the sale of U.S. mineral interests, Pakistan assets and shares in Lyondell Chemical Co. Without those extras, the oil company’s second-quarter profit from operations was about $1.18 a share, above Wall Street analysts’ expectations of $1.10 a share, according to a survey by Thomson Financial.
The company’s sales for the quarter were down at its oil and natural gas business as well as at its chemicals unit, totaling a combined $4.4 billion, down 1.3% from the year-earlier period. Occidental’s average oil and natural gas production over the three months was the equivalent of 583,000 barrels of oil a day, compared with 609,000 barrels a day last year. The decline was attributed to weather, maintenance and contract issues.
“The earnings headlines aren’t that exciting,” Sanford Bernstein analyst Ben Dell said of Occidental’s results. “The concern people will have is that production was a fraction light.”
Future results will get a boost from the recent start-up of the massive Dolphin natural gas project in the Middle East. That project has begun tapping fields offshore from Qatar for delivery to the United Arab Emirates and Oman through a 230-mile undersea pipeline.
“That’s clearly important,” said Dell, who rates Occidental a “hold.” The company has a 24.5% interest in Dolphin, and “if you look at their growth over the next two years, it’s heavily dependent on that project.”
Also Tuesday, British oil giant BP reported a better-than-expected second-quarter profit of $7.38 billion, or $1.90 a share, up from $7.27 billion, or $1.82, in the year-earlier quarter.
The results were bolstered by one-time gains as well as a jump in refining and marketing income because of high gasoline prices in the United States and elsewhere.
The company, still reeling from a deadly refinery explosion in Texas and a costly pipeline leak in Alaska, said operating results were hurt by continuing downtime at its Whiting, Ind., refinery. Nonetheless, the sale of a refinery in Britain and a Texas pipeline helped boost profit at BP’s refining and marketing business to $2.7 billion, up 48%.
BP’s flagship business, production and exploration, had profit of $6.9 billion, down 12%. Average oil and natural gas production in that division fell by 5% to the equivalent of 3.8 million barrels a day.
Amid a marketwide sell-off, Occidental shares fell $2.20, or 3.6%, to $59.17 on Tuesday. BP shares declined $2.12, or 2.9%, to $72.30.
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