Oil and gas company Occidental Petroleum Corp. (OXY) reported Monday higher profit in its first quarter as sales were benefited by higher domestic prices, despite lower production. Earnings per share topped analysts' estimates, while top line missed their view.
Noting that the company continued to focus on its domestic production growth strategy, President and Chief Executive Officer Stephen Chazen said, "We are on track with our key long-term projects. The New Johnsonville chlor-alkali plant started production in March, the BridgeTex Pipeline is expected to start operations in the third quarter and the Al Hosn Gas Project is expected to start-up by the end of the year."
For the first quarter, the company's net income was $1.390 billion or $1.75 per share, compared with $1.355 billion or $1.68 per share last year. On average, 25 analysts polled by Thomson Reuters expected earnings of $1.70 per share for the quarter. Analysts' estimates typically exclude one-time items.
Oil and gas segment earnings were benefited mainly by higher domestic oil, NGL and gas prices and higher oil volumes. These were partially offset by lower international oil prices, and higher domestic operating costs, the company noted.
In the Chemical segment, earnings were hurt by lower caustic soda prices driven by new chlor-alkali capacity in the industry, partly offset by growth in polyvinyl chloride and vinyl chloride margins resulting from improvement in U.S. construction market.
Midstream segment's earnings also were down with lower marketing and trading performance due to the timing of mark-to-market adjustments on trading contracts.
For the quarter, the firm's net sales increased to $6.09 billion from $5.87 billion in the previous year. Six analysts estimated revenues of $6.21 billion for the period. In the quarter, oil and gas as well as chemical segments posted higher sales.
Daily oil and gas production volumes averaged 745 thousand barrels of oil equivalent or BOE, compared to 763 thousand BOE a year ago. Domestic oil production increased by 10,000 barrels per day, but overall domestic production was lower mostly due to reduced domestic gas drilling.
The company noted that Middle East/North Africa production was down mainly due to field and port strikes in Libya, and insurgent activity in Yemen, despite growth in Qatar.
Daily sales volumes were 735 thousand BOE, lower than 746 thousand BOE last year. According to the company lower sales volumes than production volumes reflected the timing of liftings in Oxy's international operations.
Oxy's worldwide realized price for crude oil was $99 per barrel, compared with $98.07 per barrel a year ago. In the domestic region, crude oil prices increased almost 5 percent, NGL prices climbed 15 percent and that of gas prices surged 48 percent. Meanwhile, Middle East/North Africa crude oil prices were approximately 3 percent lower.
Occidental Petroleum shares closed Friday's trading at $94.44, down $0.55 or 0.58 percent.
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