Jan. 8 (Bloomberg) -- Occidental Petroleum Corp., the largest onshore crude producer in the continental U.S., rose to the highest point in more than two months after reaching half its 2013 target for drilling cost cuts.
Occidental climbed 2.3 percent to $81.72 at the close in New York, the highest since Oct. 25, even as an index including 43 of the largest energy stocks fell 0.2 percent.
The company may have reached as much as $450 million in 2012 cost savings from tactics including simplifying well design and using conventional drilling methods, according to a slide presentation by Chief Executive Officer Stephen I. Chazen released today in a company filing.
Chazen is trying to cut drilling costs 15 percent in 2013 in order to boost the Los Angeles-based company’s flagging shares, which fell 18 percent in 2012. Occidental is about halfway to its target, Chazen said in the slides.
“The cost issue has been a cloud over the company the last few months,” Brian Youngberg, an analyst at Edward Jones & Co., said in a telephone interview today. “Hopefully this will give investors some confidence that they’re addressing the issue.”
The cost savings should add 25 cents to 35 cents a share to Occidental’s fourth-quarter earnings, said Youngberg, who rates the shares a buy and doesn’t own any.
Domestic production growth for Occidental in the final three months of 2012 may be unchanged compared with the third quarter, but the candor about improved operational efficiency is positive for investors, Tim Rezvan, an analyst at Sterne Agee & Leach Inc. in New York, said today in a telephone interview.
“They’re well on their way,” said Rezvan, who has a buy on the stock and doesn’t own shares.
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