Occidental Petroleum Corp., the largest onshore crude producer in the continental U.S., said first-quarter profit increased on new output from California and Texas.
Net income climbed to $1.56 billion, or $1.92 a share, from $1.55 billion, or $1.90, a year earlier, Los Angeles-based Occidental said in a statement today. Per-share profit met the average of 20 analysts’ estimates compiled by Bloomberg. Production during the quarter rose to the equivalent of 755,000 barrels a day from 730,000 a year earlier, a company record.
Chief Executive Officer Stephen I. Chazen, who took over in May, has said he plans to spend about $4.57 billion in 2012 developing U.S. oil and natural-gas prospects. Texas and California has become more attractive as costs to drill in North Dakota’s Bakken formation rise, Chazen told investors on a conference call today.
Oil production in Texas’ Permian region, which has exceeded company expectations in the past 10 years, is poised to “grow sharply” if prices remain at current levels, he said. “The Permian has really gone through a significant rejuvenation, and so we’re well positioned to reap that.”
Occidental is seeking to boost domestic crude production in 2012 by as much as 32,000 barrels a day, with much of the increase coming in California and Texas. The Permian is Occidental’s biggest U.S. oil production area, accounting for 57 percent of the company’s output in the first quarter.
‘Positive on California’
In California, the company owns about 870,000 acres of land in the Monterey Shale, which holds more than 15 billion barrels of oil, according to a U.S. Energy Information Administration estimate.
“Steve Chazen was as positive on California as he’s been since he became CEO,” Tim Rezvan, an analyst with Sterne Agee & Leach Inc. in New York, said in a telephone interview. “You could see them accelerating activity there significantly.”
Sales rose 9.5 percent to $6.27 billion. Domestic oil and gas production rose 13 percent to the equivalent of 455,000 barrels a day, an all-time high, including 86,000 barrels of crude a day in California and 139,000 barrels in Texas, according to the statement.
The price of West Texas Intermediate crude, the U.S. benchmark, surged 8.9 percent to average $103.03 a barrel during the first three months of 2012, from $94.60 a year earlier. Occidental sold crude for an average of $107.98 a barrel in the quarter, a 17 percent increase from the same period last year. Domestic gas prices dropped 33 percent.
The company has pared back drilling of gas wells after prices in New York reached a 10-year low. It may cut back production of natural gas liquids if prices continue to fall, Chazen said on the call.
Occidental rose 2 percent to $91.90 at the close in New York. The shares, which have 17 buy and five hold ratings from analysts, have dropped 1.9 percent this year.