Occidental Petroleum Corp. (OXY), the global oil producer that is pursuing a breakup to boost returns, said second-quarter profit rose as it continues to try to reduce costs.
Net income climbed to $1.43 billion or $1.82 a share, from $1.32 billion, or $1.64, a year earlier, Houston-based Occidental said in a statement today. Per-share profit excluding one-time items was 6 cents higher than the $1.76 average of 25 analysts’ estimates compiled by Bloomberg.
Occidental’s shares have climbed 15 percent since April 25, 2013, when the company said it would consider a breakup. The stock is up 11 percent in the past year, less than the average 26 percent gain by 16 oil peers including Exxon Mobil Corp. (XOM) and Marathon Oil Corp. (MRO), according to data compiled by Bloomberg. The company said in February it plans to spin its California business into a separate publicly traded company.
“A major focus a year or so ago was bring those costs back in line, especially here in the U.S.,” Brian Youngberg, an analyst at Edward Jones in St. Louis who rates the stock buy and doesn’t own any, said in a phone interview before the results were released. “The U.S. has to be the growth going forward, especially ahead of the spinoff of California.”
Occidental plans to sell its interest in the general partner of Plains All-American Pipeline LP, which is valued at $4.5 billion, according to slides accompanying its earnings presentation. The company had previously said it would sell a portion of its 35 percent stake in Plains.
Occidental is also trying to sell a 40 percent stake in its Middle Eastern business to raise cash for drilling and share buybacks, according to people with knowledge of the matter. It’s now looking to shop smaller pieces.
While spending by explorers and producers is expected to reach a record $682 billion in 2014, it’s growing at a slower pace than in recent years, according to Barclays Plc.
Brent crude, the global benchmark, averaged $109.76 a barrel in the second quarter. The average price of natural gas futures traded in New York rose 14 percent from a year earlier to $4.58 per million British thermal units during the period.
Occidental fell 0.2 percent to $98.29 at 2:07 p.m. in New York trading. The company has 21 buy ratings and 11 holds from analysts.
(An earlier version of this story was corrected because Occidental’s headquarters was misstated.)
To contact the editors responsible for this story: Susan Warren at email@example.com Jim Efstathiou Jr., Robin Saponar