Occidental profit unchanged amid higher output, lower price

By Bradley Olson
Bloomberg News

Occidental Petroleum Corp., the largest onshore crude producer in the contiguous U.S., said second-quarter profit was unchanged as output surged in Texas and California while oil prices fell abroad.

Net income of $1.32 billion, or $1.64 a share, compared with earnings of $1.33 billion, or $1.64, a year earlier, Los Angeles-based Occidental said in a statement today. Per-share profit excluding one-time items missed the $1.60 average of 23 analysts’ estimates compiled by Bloomberg. Sales rose 3.4 percent to $5.96 billion.

Expansion: Occidental to construct propane export facility in Texas

U.S. output rose to the equivalent of 471,000 barrels of oil a day, a 2 percent increase from the second quarter of 2012, as the price it got for oil worldwide fell 1.4 percent to $97.91 a barrel. Occidental has reduced drilling costs 21 percent from last year.

“Domestic oil production is a key growth area for the company going forward,” Brian Youngberg, an analyst at Edward Jones in St. Louis who rates the company a buy, said in a phone interview today. “Their costs continue to come down and they are addressing a major issue from last year.”

Chief Executive Officer Stephen I. Chazen, who gained more autonomy at the company after shareholders voted to oust longtime Chairman Ray Irani in May, said April 25 he is exploring a breakup that would “move the needle” of the company’s shares.

Restructuring Occidental

Possibilities include splitting into as many as three companies, separating units in Texas, California and the Middle East and North Africa, according to comments Chazen made in May meetings with analysts including Oppenheimer & Co.’s Fadel Gheit and Bank of America Corp.’s Doug Leggate.

“The key to Occidental is not earnings but restructuring and showing what steps they have taken so far,” Gheit said in an interview before the earnings were released. Gheit, based in New York, rates the company the equivalent of a buy and doesn’t own the shares.

Leadership concerns: Occidental to keep CEO through 2014

Quarterly average prices for Brent crude, the global benchmark, fell 5 percent to $103.35 a barrel, and the average price of natural gas futures traded in New York rose 71 percent from the year-earlier quarter to $4.018 per million British thermal units.

Earnings were announced before regular trading began in U.S. markets. Occidental gained 0.6 percent to $91 at 8:11 a.m. in New York. The shares, which have 19 buy ratings and nine holds from analysts, have risen 18 percent this year.