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Sales at Occidental Surge 17%

Acquisitions and higher oil prices are credited. Profit, excluding one-time items, rises.

October 19, 2006|Elizabeth Douglass | Times Staff Writer

Occidental Petroleum Corp. said Wednesday that higher oil prices boosted third-quarter sales, but profit for the period fell 33% compared with a year earlier, when net income was amplified by one-time gains.

The Westwood-based company reported net income of $1.17 billion, or $1.36 a share, for the three months that ended Sept. 30. In last year's third quarter, the company posted profit of $1.75 billion, or $2.12 a share, helped by a $726-million pretax gain from a stock sale and other special items.

Excluding special items, Occidental's core earnings for the third period rose 15% to $1.16 billion, or $1.35 a share -- compared with analysts' average estimate of $1.34, according to Thomson Financial. Sales for the quarter rose more than 17% to $4.5 billion, the company said.

"Sharply higher crude oil prices and a strong performance from our chemicals business were key drivers in our financial performance for the quarter," Chairman Ray Irani said Wednesday. In addition, he said, "our continuing focus on expanding and strengthening operations in our core businesses was a key factor."

Some of that expansion has come through acquisitions. Occidental closed a deal this month to pay $865 million to buy oil and natural gas properties from Plains Exploration and Production Co. And earlier this year, the company completed its $4.1-billion acquisition of Vintage Petroleum Inc. of Tulsa, Okla.

The Vintage acquisition and the resumption of oil production in Libya helped increase third-quarter oil and natural gas production to the equivalent of 587,000 barrels a day, up 14% from the year-earlier period.

Occidental said it received an average of $60.52 for each barrel of oil it produced worldwide during the quarter, up from $55.97 a barrel. The company's North American natural gas production, a relatively small segment for the company, brought an average price of $5.88 per thousand cubic feet, a 7% decline.

Higher oil prices and greater production pushed Occidental's oil and gas segment's earnings up almost 15%, to $1.9 billion for the quarter. Its chemicals business surged, yielding third-quarter earnings of $247 million, up from $3 million.

"It appears that peak earnings are behind us" in the oil industry, said Subash Chandra, an oil analyst at Morgan Keegan. But at Occidental, he said, "they've built a company that's pretty hard to break."

Chief Financial Officer Stephen Chazen told analysts that the company expected fourth-quarter production to rise to 610,000 to 620,000 barrels a day, but that lower prices for both oil and natural gas would reduce earnings for that segment. Its operations in Ecuador, seized by the government there earlier this year, are listed as discontinued.

Shares of Occidental slipped a nickel Wednesday to $46.33.

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elizabeth.douglass@latimes.com

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