Occidental's profit soars; BP bounces back
Occidental Petroleum Corp. of Westwood rode a wave of higher oil prices to a net profit of $1.82 billion in the second quarter, up 71% when compared to the same period last year, the company said in an earnings announcement Tuesday.
The oil exploration and production company was among the first in the industry to announce second-quarter results, which included a share price gain to $2.23, compared with $1.31 in the same quarter a year ago. The results beat Wall Street expectations of $2.15 per share on revenue of $5.79 billion, according to FactSet. Occidental's sales for the quarter were $6.17 billion, compared with $4.6 billion a year earlier, up 34%.
Analysts said it would likely be the oil industry's biggest second quarter since 2008, when oil prices hit record highs. "We expect almost all the oil and gas companies we cover to report higher earnings than in [2009 and 2010]. The earnings improvements from a year ago reflect higher oil prices of 32% for West Texas Intermediate crude and and 50% for Brent North Sea crude," said Fadel Gheit, senior energy analyst for Oppenheimer and Co.
West Texas Intermediate is the crude oil used for trading on the New York Mercantile Exchange. Brent North Sea crude is the European trading equivalent.
Occidental's biggest boost came from the price of oil, which was $103.12 per barrel for the second quarter of 2011, compared with $74.39 per barrel a year earlier. Analysts had been expecting Occidental to show a production decline for the quarter, based on losses from unrest in the Middle East, but the company's newest domestic assets were paying off.
Occidental's oil and gas production volumes averaged 715,000 barrels of oil in the second quarter, compared with 701,000 barrels a year earlier. Most of the gains came from a 42,000-barrel increase in the U.S., mainly from recent acquisitions in South Texas and the North Dakota Williston Basin, the company said.
Gheit said he was expecting the world's major integrated oil companies, as a group, to show a quarterly profit improvement of 39% this week. BP will undoubtedly show the biggest year-to-year improvement.
On Tuesday, BP announced a second-quarter profit of $5.6 billion. That compared with a loss of $17.2 billion a year earlier from the disastrous Macondo well explosion and leak in the Gulf of Mexico, the worst offshore oil spill in U.S. history.
-- Ronald D. White