Occidental Petroleum more than doubles its quarterly profit
Occidental Petroleum more than doubled its fourth-quarter profits in 2009 compared to the same period a year ago, the company said in a statement early today. Oil production also rose to record levels. Analysts said it was a good way to end a year in which full-year net income was less than half of what it was in 2008, when oil soared above $147 a barrel.
Oil production, which grew by 7% in 2009, was what Occidental Chairman and chief executive Ray R. Irani chose to emphasize, predicting that a record would be set in 2010.
“I am pleased to announce Occidental’s production for the 12 months ended Dec. 31, 2009, was 645,000 barrels per day, the highest annual volume in the company’s history,” Irani said, later adding, “We expect the 2010 production to increase by 5% to 8%.”
The prediction came on the heels of an announcement that a deal had been finalized to develop the massive, 4-billion-barrel Zubair oil field in Iraq in a partnership with Italian energy giant Eni and the Korean Gas Corp.
Irani also cited cost-cutting measures the Westwood company took in 2009, a year in which oil prices ranged from around $40 to more than $80 a barrel.
“Occidental reacted to the lower prices by reducing costs in key areas and managing our capital program,” Irani said. “We successfully reduced our oil and gas cash production costs, excluding production and property taxes, by 15%.”
Analysts said that Occidental had one of the oil industry’s better fourth-quarter performances.
“It has an undeniably steady hand in management that has really proven itself over the years. They are very conservative players. There is very little not to like about that company,” said James DiGeorgia, editor of investment newsletter Gold & Energy Advisor.
Analysts said that Occidental also benefits by being an oil production company that does not do any of its own refining. The refinery industry struggled to make profits in 2009, resulting in net losses for some companies and severe earnings drags on others.
“Oil prices were good in the fourth and Occidental doesn’t have the exposure in the refinery industry that some other big oil companies have. This is their kind of environment. They have so much oil production. We have been expecting some nice numbers from Occidental,” said Phil Weiss, a senior analyst at Argus Research.
Houston-based ConocoPhillips, for example, posted a fourth-quarter profit of $1.2 billion, but its refinery segment lost $215 million. Valero Energy, the nation’s biggest refiner, said Wednesday that it lost nearly $2 billion in 2009.
Occidental posted a net fourth-quarter income of $933 million, or $1.15 per diluted share, compared to $443 million, or 55 cents a share, a year earlier. For the year, Occidental netted $2.9 billion in profits, or $3.58 a share, compared to $6.9 billion, or $8.34 per diluted share in 2008.
Occidental’s oil and gas segment earnings were $1.6 billion for the fourth quarter of 2009, compared with $339 million a year earlier. Oxy’s realized price for worldwide crude oil in the fourth quarter was $69.39 per barrel, compared to $53.52 per barrel for the fourth quarter of 2008.
The company’s chemical segment earnings for the fourth quarter of 2009 were $33 million, compared with $127 million for the same period in 2008.
