 Occidental cashes in on high oil prices
(China Daily)
Updated: 2008-07-25 07:47
Occidental Petroleum Corp, the fourth-largest US oil company by market value, said second-quarter profit rose 63 percent as crude prices climbed above $140 a barrel for the first time. Net income jumped to $2.3 billion, or $2.78 a share, from $1.41 billion, or $1.68, a year earlier, the Los Angeles-based company said yesterday. Occidental signed agreements for new oil and natural-gas projects this year in Libya, Canada, Texas and Abu Dhabi. The company raised its dividend by 28 percent in May, the biggest increase in at least a decade, as crude prices surged toward an all-time high and gas prices rose even faster. "I'm eager to hear what they plan to do with this tremendous cash flow they are generating," said Pavel Molchanov, an analyst at Raymond James & Associates Inc in Houston. "Whether it's a bigger dividend or an increase in buybacks, all those options would be well received by the market." Chief Executive Officer Ray Irani, 73, is focusing on the Middle East, North Africa, Canada and West Texas to expand reserves and output. Irani plans to spend $3.9 billion this year to increase production by as much as 11 percent to the equivalent of 630,000 barrels of oil a day. Occidental's 29 percent profit margin is almost three times that of its biggest rival, Irving, Texas-based Exxon Mobil Corp, according to data compiled by Bloomberg. The company increased its oil and gas reserves by the equivalent of 830,000 barrels of crude last year. Exxon Mobil and Chevron Corp saw reserves decline. Molchanov said he expects oil prices to average $130 a barrel in 2009, lifting profits for Occidental, whose production is 80 percent crude, more weighted to oil than any of its biggest US rivals. Crude oil rose from a seven-week low yesterday as traders viewed this week's 3 percent decline as an opportunity to buy futures contracts. Crude oil for September delivery advanced as much as $1, or 0.8 percent, to $125.44 a barrel, on the New York Mercantile Exchange, trading for $125.13 at 1:40 pm London time. Agencies (China Daily 07/25/2008 page17) |
