In a retreat from the record profits of a year ago, BP plc reported Tuesday that 1Q2007 profit fell 17% from the same period in 2006 on falling energy prices and lower oil and natural gas production. Occidental Petroleum Corp. (Oxy), the fourth-largest U.S. oil company, reported a 1.5% decline in profit.

Energy analysts expect most of the major producers, including ExxonMobil Corp., Royal Dutch Shell, Chevron Corp. and ConocoPhillips, to report lower profits. ConocoPhillips is scheduled to report its earnings Wednesday, with ExxonMobil reporting on Thursday.

"Earnings are going to be down across the board, because commodity prices were so much lower," Raymond James & Associates analysts said in a report. Citigroup Inc. last week forecast energy companies' profits to fall around 9% on average, with BP among the worst performers. Gas prices fell more than 8% after reaching $4.05/MMBtu in late September, which was their lowest level in almost five years.

London-based BP reported a decline in profit to $4.66 billion (24 cents/share) from $5.62 billion (27 cents) in 1Q2006. BP's oil and natural gas output was off 3% from a year ago to 3.912 MMboe/d from 4.04 MMboe/d in 1Q2006. U.S. natural gas production fell to 2.163 Bcf/d net from 2.485 Bcf/d a year ago.

Los Angeles-based Oxy saw its profit fall to $1.21 billion ($1.43/share) from $1.23 billion ($1.43). Production from continuing operations averaged 587,000 boe/d, a 24,000 boe/d increase from 1Q2006. Oxy's U.S. gas production rose to 585 MMcf/d from 582 MMcf/d. The gain in output was partially offset by a gas pipeline rupture at Elk Hills in California's San Joaquin Valley in February, which negatively impacted Oxy's net production for the quarter by 14,000 boe/d (see Daily GPI, Feb. 9).

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