Occidental Petroleum’s fourth-quarter profit sinks

The collapse in crude oil prices came home to roost in a big way Thursday as Occidental Petroleum Corp., the nation’s fourth-largest oil company, said that its fourth-quarter profit fell to a five-year low.

Earnings for the Westwood company plunged more than 69% to $443 million, or 55 cents a share, from $1.45 billion, or $1.74 a share, a year earlier, the company said. Sales fell 27% to $4 billion as crude oil futures fell below $45 a barrel.

Some companies appear to be better prepared than others for riding out the abrupt reversal of fortunes. Royal Dutch Shell, Europe’s largest oil company, on Thursday said it lost $2.8 billion in the fourth quarter, its first quarterly loss in a decade. That came one day after Houston oil company ConocoPhillips announced its biggest-ever fourth-quarter loss of $31.8 billion.

That was the context used by Chairman Ray R. Irani to frame Occidental’s performance, noting that 2008 was still the best year ever for the firm.

“In spite of a difficult fourth quarter, 2008 was a very strong year for Occidental with full-year earnings being the highest in Oxy’s history,” Irani said. “In addition, our production grew by 5.4% from 2007, reaching 601,000 barrels a day.”

For the year, Occidental’s net income was $6.9 billion compared with $5.4 billion in the previous year.

Still, the change in the oil climate, punctuated by the difficulty in obtaining reasonable credit rates, was apparent. Like many oil companies, Occidental is cutting the amount of planned spending.

Irani said Occidental would reduce capital spending in 2009 to $3.5 billion, down about 26% compared with 2008. He said the company would focus primarily on its oil holdings in West Texas, the Persian Gulf, Libya and South America because production costs were lower.

Other companies have announced much deeper spending cuts. Exxon Mobil and Chevron Corp., which are posting their financial results today, have said they planned to maintain their spending at 2008 levels.

For the short term, oil markets appear to be headed for continued doldrums despite efforts to boost global economies and threats from oil producers to curb the glut in oil supplies.

Oil was trading around $100 a barrel when the fourth quarter began Oct. 1, but tumbled to $44.60 at the end of the year after falling as low as $32.40. On Thursday, crude oil for March delivery fell 72 cents to $41.44 a barrel despite a pledge from the Organization of the Petroleum Exporting Countries to continue production cuts as needed to prop up the price.

Cartel members “are not happy with $40-a-barrel oil or even $50 a barrel,” Abdalla Salem el-Badri, secretary-general of OPEC, told leaders at the World Economic Forum in Switzerland.

Occidental shares slid $2.56, or 4.3%, to $56.82.

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ron.white@latimes.com