Occidental Petroleum Reports 33 Percent Drop in Profit

Oil and gas producer Occidental Petroleum Corp. said Wednesday its third-quarter earnings fell 33 percent from year-ago results that included hefty one-time gains.

The latest results were just above Wall Street estimates, however.

“Sharply higher crude oil prices and a strong performance from our chemicals business were key drivers in our financial performance in the quarter,” said Chairman, President and Chief Executive Ray R. Irani.

Net income fell to $1.17 billion, or $1.36 per share, in the July-September period from $1.75 billion, or $2.12 per share, a year ago. The year-ago figures included nearly $800 million of gains and tax benefits as well as a $98 million write-off charge.

Its core earnings excluding charges and gains increased 16 percent to $1.16 billion, or $1.35 per share, from $1 billion, or $1.22 per share, a year ago.

Revenue grew 17 percent to $4.52 billion from $3.86 billion.

Analysts surveyed by Thomson Financial expected the company to earn $1.34 per share, excluding one-time items, and sales of $4.16 billion.

Occidental realized a crude oil price of $60.52 per barrel in the recent quarter, up from $55.97 per barrel a year earlier. Natural gas prices declined to $5.88 per thousand cubic feet from $6.33 per thousand cubic feet.

Oil and gas production averaged 587,000 barrels of oil equivalent per day in the quarter.

This year’s oil and gas results were driven by higher oil prices and higher combined oil and gas volumes that were partially offset by higher operating costs, increased depreciation, depletion and amortization rates and higher exploration costs, Stephen Chazen, senior executive vice president and chief financial officer, said during a conference call with Wall Street analysts.

For the first nine months of the year, Occidental reported net income of $3.3 billion, or $3.77 per share, compared with $4.1 billion, or $5.06 per share for the same period last year.

Core income for the first nine months was $3.5 billion, compared with $2.6 billion in the same period last year.

Revenue for the first nine months rose to $13.5 billion from $10.4 billion in the first nine months of 2005.

Looking ahead to the fourth quarter, the company said it expects each dollar per barrel change in oil prices to have an impact on its oil and gas segment earnings of about $38 million, before taxes.

The company said it expects its realized domestic gas price in the fourth quarter to be $5.20 per million cubic feet compared to $5.88 in the third quarter, reducing oil and gas segment earnings by $32 million, compared to the third quarter.

The company said higher drilling and seismic activity, mostly in its operations in Libya, will cause exploration expense for the fourth quarter to rise to about $100 million.

Occidental said it expects its chemical business to earn about $200 million during the quarter and $945 million for the full year.

Shares of Occidental Petroleum fell 5 cents to close at $46.33 on the New York Stock Exchange.

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