Occidental Profit Falls Amid Shareholder Leadership Vote
Occidental Petroleum Corp. (OXY), the oil and natural gas producer on the brink of a shareholder vote that may eject longtime Chairman Ray Irani, said fourth-quarter profit fell as declining overseas production pared sales.
Net income declined to $1.36 billion, or $1.68 a share, from $1.56 billion, or $1.92, a year earlier, Los Angeles-based Occidental said in a statement on Business Wire today. Per-share profit excluding one-time items was 15 cents more than the average of 23 analysts’ estimates compiled by Bloomberg.
Maintenance in Qatar, pipeline disruptions in Colombia and production contracts in the Middle East and North Africa were behind a decline in sales volumes equivalent to 40,000 barrels of oil a day from the fourth quarter, reducing earnings by as much as $300 million, according to slides from a company presentation released March 18.
Investors including First Pacific Advisors LLC, Livermore Partners Inc. and Cambiar Investors LLC have complained that Occidental’s February announcement that it planned to replace Chief Executive Officer Stephen I. Chazen was a mistake and that Irani should depart instead. The California State Teachers’ Retirement System joined First Pacific to publicly express support for Chazen.
Proxy advisers Institutional Shareholder Services and Glass Lewis & Co. have recommended that Occidental investors vote against re-electing Irani to the board at the company’s May 3 annual meeting.
Speculation about a rift between Irani and Chazen that followed the company’s announcement that it would seek a new CEO is unfounded, Occidental said in a statement April 8.
The uncertainty around who will ultimately lead the company has made some investors cautious, Philip Weiss, an analyst with Argus Research in New York, said in a telephone interview before earnings were announced.
Irani plans to retire at the end of 2014. If the majority of votes are cast against his re-election next week, the former CEO will have to tender his resignation, according to company filings. The company has not announced a time line for replacing Chazen.
Chazen plans to cut drilling costs 15 percent in 2013, saving as much as $400 million, while boosting output by as much as 5 percent. Occidental, the largest crude producer in the continental U.S., had increased oil and gas production in the U.S. for nine consecutive quarters through the end of 2012.
Earnings were announced before regular trading began in U.S. markets. Occidental rose 3.2 percent to $84.33 yesterday in New York. The shares, which have 19 buy ratings and eight holds from analysts, are up 10 percent this year.
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