Occidental Petroleum 4Q Profit Falls 79% on Write-Down
Occidental Petroleum Corp.'s (OXY) fourth-quarter earnings tumbled 79% as the energy producer recorded a $1.1 billion write-down of gas assets in the Midcontinent that offset higher oil production and cost-cutting.
Occidental, based in Los Angeles, boosted its oil and gas production in West Texas, California and the so-called Midcontinent region, where advances in drilling methods have helped unlock previously unreachable hydrocarbons. The growing production, combined with a still-tepid economy, has caused prices for oil and natural gas to fall, however.
Occidental said oil and gas output rose by 31,000 barrels a day, or 4%, to 779,000 barrels of oil equivalent a day. Even with the increase, Occidental also said its operations were more efficient, shaving production costs by $1.04 a barrel from the third quarter.
Revenue rose 2.3% to $6.17 billion.
Still, Occidental's capital expenditures budget continued to swell despite the company's promises to rein it in. The oil producer reported $2.5 billion in capital expenditures in the fourth quarter, essentially unchanged from the year before. Full year capex was $10.2 billion, 36% higher than 2011.
"Lone negative of the quarter appears to be stubbornly high capex," Simmons & Co. International analyst Bill Herbert said in a note to clients.
Occidental said it will spend $9.6 billion on capital expenditures in 2013, down nearly 6% from 2012. At the same time, the company plans to boost oil production by as much as 10%, Occidental Chief Executive Stephen Chazen said.
"We're trying to keep capital under control this year," Mr. Chazen said during a call with investors. "We're trying to be conservative and spend it only on the best things we can."
Lower oil and natural gas prices took a toll, however. Realized prices fell 3.4% for crude oil, while natural-gas liquids prices dropped 18%. Domestic-gas prices sank 14%.
Overall, Occidental reported a profit of $336 million, or 42 cents a share, down from $1.63 billion, or $2.01 a share, a year earlier. Excluding a $1.1 billion charge related to the impairment of gas assets in the Midcontinent, per-share earnings were $1.83.
Analysts polled by Thomson Reuters recently forecast earnings of $1.66 a share on revenue of $5.85 billion.
Investors cheered Los Angeles-based Occidental overall performance.
WHAT DO YOU THINK?
Generated by readers, the comments included herein do not reflect the views and opinions of Rigzone. All comments are subject to editorial review. Off-topic, inappropriate or insulting comments will be removed.
More from this Author
Most Popular Articles
From the Career Center
Jobs that may interest you