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Occidental Profit Falls but Tops Forecasts

Occidental Petroleum said Thursday its fourth-quarter profit fell 69 percent from a year ago as results were hammered by lower oil and gas prices. But its bottom line easily topped Wall Street forecasts.

The Los Angeles-based oil and gas producer said net income in the October-December period amounted to $443 million, or 55 cents a share, versus $1.45 billion, or $1.74 a share, a year ago.

Revenue for the final three months of 2008 fell 27 percent to $4.02 billion.

Oil Barrels
Oil Barrels

Excluding one-time charges, Occidental's most-recent results were $957 million, or $1.18 a share. Analysts surveyed by Thomson Reuters were expecting earnings of 95 cents a share. Those forecasts typically exclude one-time items.

It shares fell 38 cents to $59 in morning trading after sinking as low as $57.92 earlier. Their 52-week range is $39.93 to $100.04.

The entire energy sector has moved quickly to adjust to plunging crude prices, which fell 60 percent from record highs in just the last three months of the year. Triple-digit prices had fueled huge profits throughout most of 2008.

Occidental, like other oil producers, said it was slashing its 2009 capital spending program and announced a $3.5 billion budget. That's 25 percent below 2008 spending levels.

Oil and gas producers large and small are scaling back operations as they prepare to ride out a recession that's crushing energy demand around the world.

"We believe that with this level of capital, we will achieve our targeted returns in the current price environment as well as grow our production volumes in 2009, 2010 and beyond," chairman and chief executive Ray R. Irani said in a statement.

The company reported adjusted earnings at its oil and gas arm of $996 million, well below the $2.46 billion it earned in the same period a year ago. Occidental said results were hurt by lower crude and natural gas prices and higher operating expenses.

During the most-recent quarter, the company recorded a $599 million asset-impairment charge and a $58 million expense for ending rig contracts.

Occidental said its worldwide realized price for crude in the fourth quarter was $53.52 a barrel, compared with $80.30 a barrel a year earlier. Realized natural gas prices were down too — $4.67 per thousand cubic feet in the most-recent quarter versus $6.77 a year ago.

Daily oil and natural-gas output in the fourth quarter rose 5 percent to 623,000 barrels of oil equivalent.

Buoyed by high prices for much of 2008, Occidental said its full-year net income rose 27 percent to $6.86 billion, or $8.35 a share. That compared with net income of $5.40 billion, or $6.44 a share, for all of 2007.

Full-year sales rose 29 percent to $24.2 billion.