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Earnings report: Big 3rd-quarter profits for Occidental, Exxon-Mobil

October 27, 2011 |  7:51 am

Occidental Petroleum saw its profit rise like an old-style gusher in the third quarter, up nearly 50% to $1.77 billion compared to a year earlier, the company said Thursday. It benefited, in part, from record domestic production that helped offset losses in the Middle East.

Occidental’s $2.17 per share compared with $1.19 billion, or $1.46 per share, a year earlier. Sales also jumped 26.1% to $6.01 billion.

“The third-quarter domestic production was 436,000 barrels per day  ... [the] highest in Occidental's history,” said President and Chief Executive Stephen I. Chazen. It was a showing that easily surpassed Wall Street expectations of $1.97 per share and profit on revenue of $5.46 billion, according to FactSet.

“We weren’t expecting any production growth for Occidental. It was very highly unlikely because of its exposure to Libya,” said Fadel Gheit, senior oil analyst for Oppenheimer & Co., referring to the North African nation where production had ceased during a hard-fought civil war. “Those barrels are gone,” Gheit added.

Argus Research analyst Phil Weiss said Occidental’s production in California has also been slowed by delays in getting permits. But Weiss said that the company did well because it has positioned itself to perform profitably in almost any political situation and earnings environment.

“Occidental remains one the industry’s best-managed firms,” Weiss said.

Occidental's daily oil and gas production volumes averaged 739,000 barrels a day, compared to 706,000 in the third quarter of 2010. Domestic crude production rose by 56,000 barrels a day from such places as South Texas, the North Dakota Williston Basin and California.

The world’s biggest integrated oil firm, Exxon Mobil Corp., reported a third-quarter profit of $10.33 billion, or $2.13 a share, compared to $7.35 billion, or $1.44, a year earlier.

The results were indicative, Gheit said, of an industry enjoying substantially higher world oil prices compared to the third quarter a year ago. But sequentially, the average profit margins trailed those recorded in the second quarter when oil prices hit their peak for this year.

For the major integrated oil companies, most of the profit came in the so-called upstream segment, which includes exploration and production. Downstream segments, which include the business of refining oil into fuels like gasoline and diesel, did not perform as well.


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The Keystone Oil pipeline project

Gasoline prices at record high for October

-- Ronald D. White

Photo: Occidental headquarters in Westwood. The company's earnings were boosted by record domestic oil production in the third quarter. Credit: Kevork Djansezian / Associated Press