Occidental Petroleum Corp., the largest onshore crude producer in the continental U.S., reported profit that beat analysts’ estimates as domestic production reached a record for the ninth consecutive quarter.
Excluding a $1.1 billion writedown for the value of natural gas assets, fourth-quarter profit was $1.83 a share, exceeding the average of 23 estimates compiled by Bloomberg. Net income fell 79 percent to $336 million, or 42 cents a share, from $1.63 billion, or $2.01, a year earlier, Los Angeles-based Occidental said in a statement today.
Production costs fell $1.04 a barrel from the third quarter. The company is about halfway to meeting its target of cutting drilling costs 15 percent this year and may be able to save more, Chief Executive Officer Stephen I. Chazen said in a call with investors today.
“The company is making good progress already on getting their costs back in line,” said Brian Youngberg, an analyst with Edward Jones & Co. in St. Louis, who rates Occidental a buy and doesn’t own shares. “Investors are liking what they see so far.”
Occidental rose 3.5 percent to $88.27 at the close in New York, the most since Sept. 13. The shares have 18 buy and nine hold ratings from analysts.
The company’s U.S. output rose to the equivalent of 475,000 barrels a day during the fourth quarter. Sales surged 2.3 percent to $6.17 billion. The company reported reserve additions that amounted to 143 percent of its output for 2012.
Occidental plans to reduce spending 5.9 percent to $9.6 billion in 2013 while increasing U.S. oil production by 8 to 10 percent, Chazen said. He said gas output for the year is too hard to forecast because of declining prices.
Occidental’s writedown of the value of its gas holdings follows other energy producers, including BHP Billiton Ltd. and Encana Corp., which have written down billions of dollars worth of North American gas asset values amid a glut that pushed prices to a 10-year low in April.