Occidental Petroleum 2Q Income Declinesadmin
Sunday, August 6th 2006
Oil and gas producer Occidental Petroleum Corp. said Friday its second-quarter income declined due in part to the seizure of assets by Ecuador.
Occidental recorded an after-tax loss of $347 million, which includes the end of its investment in Ecuador. That loss offset gains the company saw from higher production and gas and oil prices in the quarter.
The company reported net income of $857 million, or $1.97 per share, for the quarter ended June 30, compared with $1.54 billion, or $3.77 per share, a year ago.
Core earnings, which excludes one-time charges, gains and tax benefits, grew to $2.77 per share from $1.96 per share.
On average, analysts surveyed by Thomson forecast a profit of $2.79 per share.
Revenue jumped to $4.6 billion from $3.39 billion, topping the average consensus estimate of $4.48 billion.
Daily production of oil and gas increased to 609,000 barrels of oil equivalent, an 18 percent increase over the same quarter last year.
Higher prices also sent earnings from oil and gas sales up 56 percent to $1.953 billion.
The company said it remains hopeful about the legal outcome of its fight against the Ecuadorean government, but that any outcome will likely take years.
“We should be able to recover what was taken away from us,” Ray R. Irani, chairman and chief executive told analysts on a conference call. “From a legal point of view, we feel very good about it.”
The company said its operations in Bolivia have not yet been effected by that government’s decision to nationalize its natural gas fields. Occidental has a relatively small investment there, producing about 3,000 barrels of oil equivalent per day, the company said.
“We don’t see it impacting us one way or the other very much,” said Stephen Chazen, senior executive vice president and chief financial officer.
Occidental said it has taken steps in recent months to increase shareholder returns, including expanding its share repurchase program, increasing the dividend and instituting a two-for-one stock split.
For the first six months of the year, net income dropped to $2.086 billion, or 4.83 per share, compared to $2.382 billion, or $5.86 per share in the same period last year.
Revenue for the first six months rose to $8.995 billion, compared to $6.558 billion for the first six months of 2005.
Shares of Occidental Petroleum fell $1.70, or 1.6 percent, to close at $105.24 on the New York Stock Exchange.