Occidental Petroleum 2Q profit sets record
HOUSTON—A powerful combination of record crude prices and increased production helped oil producer Occidental Petroleum Corp. post record earnings in the second quarter, up 62 percent from a year ago.
The Los Angeles-based company also said Thursday it will increase its 2008 capital expenditures budget by $700 million to $4.7 billion, part of an aggressive plan to boost oil and natural gas output.
"In light of excellent additions to our asset portfolio and promising projects in pipeline, we expect 2008 to be another outstanding year for Oxy," chairman and chief executive Ray Irani said in a conference call with investors.
Occidental said it earned a record $2.29 billion, or $2.78 per share, in the April-June period, compared with $1.41 billion, or $1.68 per share, in the year-ago quarter.
Revenue jumped 61 percent to $7.12 billion from $4.41 billion a year ago.
Analysts polled by Thomson Financial on average expected earnings of $2.75 per share on sales of $6.77 billion in the most recent quarter.
Occidental said earnings at its oil and gas arm shot to $3.81 billion from $1.66 billion a year ago, lifted by record crude prices, higher natural gas prices and increased production.
Daily oil and gas production averaged 588,000 barrels of oil equivalent a day in the second quarter, up from 558,000 barrels a day a year ago.
Occidental said its realized price for crude oil in the second quarter was $110.12 a barrel, nearly double the price last year. Its domestic natural gas price rose to $9.99 per 1,000 cubic feet from $7.07 per 1,000 cubic feet in the second quarter of 2007.
For the first six months of 2008, Occidental's earnings grew to $4.14 billion, or $5.01 a share, from $2.62 billion, or $3.11 a share, a year ago.
Sales increased to $13.13 billion from $8.42 billion.
Occidental said its record net income for the second quarter beat the previous record set in this year's first quarter by 24 percent.
The company said production grew 7 percent for the first six months of the year, and it plans to increase capital spending for drilling wells and other projects primarily in California, Texas and Colorado, as well as Argentina, Colombia and Libya.
The company's midstream operations posted earnings of $161 million, up sharply from $25 million in the year-ago quarter. The big boost came in part from income generated by a Middle East pipeline project that came on line in the second half of 2007. Occidental has a roughly one-quarter stake in the pipeline, called Dolphin.
Occidental has no refining operations.
In a note to investors, Tudor, Pickering, Holt & Co. Securities said Occidental's increased capital budget "implies higher future U.S. growth." The firm also noted that while Occidental's past was good, the "future looks better."
Occidental shares rose $1.12, or 1.6 percent, to end at $73.34 Thursday. They have traded between $50.66 and $100.04 in the past year.
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