Occidental Petroleum's profit fell to $1.4 billion on lower commodity… (Los Angeles Times )
Occidental Petroleum Corp. of Westwood led off what is expected to be a lower third-quarter earnings performance for the oil and gas industry compared to a year ago. But the company still made a $1.4-billion profit while setting another production record.
Occidental is the nation's fourth biggest oil and gas company. It's $1.4-billion and $1.70-a-share performance compared with a profit of $1.8 billion and $2.18 a share in the third quarter of 2011.
The main difference in performance involved lower commodity prices.
Occidental said that oil prices averaged $96.62 per barrel in the most recently ended quarter, compared with $97.24 a barrel a year earlier.
But the biggest difference was a sharp decline in natural gas prices caused by a major increase in U.S. production, involving many companies. Domestic natural gas prices were down 41% in the third quarter compared to a year ago.
But the biggest news for Occidental, according to President and chief executive Stephen I. Chazen, was its continuing string of U.S. production records.
"Our domestic production of 469,000 barrels of oil was 8% higher than the third quarter of 2011 and was a record for the eighth consecutive quarter," said Chazen.
Overall, Occidental's crude oil production rose by 27,000 barrels a day, or 4%, to 766,000 barrels a day, compared to a year earlier.
Phil Weiss, senior energy analyst for Argus Research, said that Occidental's performance was buttressed by the fact that its holdings produce more oil than natural gas.
"Occidental is more heavily weighted toward oil than peers and should benefit from oil prices that remain high" Weiss said.
Fadel Gheit, senior oil analyst for Oppenheimer & Co., said that Occidental's lower third-quarter profit would be reflected throughout much of the oil and gas industry.
"We expect 3Q12 earnings to be lower for most of the oil and gas companies we cover compared with the year-ago period on sharply lower natural gas prices in North America, which hit a 12-year low earlier this year," Gheit said.
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