Higher prices, pure and simple, are leading the way for record earnings by several North American independents in the first quarter, including Burlington Resources Inc., which saw its earnings more than quadruple. Occidental Petroleum Corp. also set records for the quarter, reporting earnings up 90%, which it said were propelled by natural gas demand in California.

Though many more independents will be announcing earnings in the next few weeks, Merrill Lynch analyst Donato J. Eassey said that he expects the reports to be positive, with “upside EPS surprises” similar to those in the fourth quarter. Winners will be the “rule rather than the rarity” for companies with natural gas, he said.

“This should delight momentum investors as we believe the Street is still underestimating the earnings power of those in the natural gas group with E&P and merchant operations,” Eassey said. “While we expect that the group will continue to be buffeted near-term by event-driven issues such as California and volatile commodity prices, long-term performance ultimately comes down to fundamentals and earnings growth. Here, we expect the gas group to deliver.”

Houston-based Burlington is definitely coming through on delivery, reporting its net income grew to $336 million, or $1.56 a share, up from $77 million, or 35 cents a share from a year ago. First quarter revenues were up 61%, standing at $1.14 billion. First Call/Thomson Financial had estimated earnings to average of $1.38.

“With record levels of earnings and cash flow in the first quarter, we have made a tremendous start to what is shaping up to be an exciting and profitable year,” said Burlington CEO Bobby S. Shackouls. “We have begun to see improvement in our production outlook and are particularly pleased with the contribution our Canadian operation is making.”

Burlington’s natural gas sales averaged 2,000 MMcf/d during the first quarter, down from 2000’s 2,121 MMcf/d, but up 5% from the fourth quarter. Canadian gas production was particularly strong, said the company, increasing 19% from the fourth quarter, and up 14% from a year ago. Canadian production increases came from “aggressive tie-in and first delivery” from winter drilling programs.

Total exploration expenses for the first quarter were $70 million. During the period, Burlington participated in drilling four deepwater Gulf of Mexico wells. It also announced two Canadian property acquisitions in January, buying Petrobank’s Alder Flats and Cynthia properties and the ATCO Viking-Kinsella properties, which boosted proved reserves 300 Bcf and added 379,000 net acres. Burlington has about 80% of its reserve base in natural gas.

Burlington also continued to repurchase common shares under a standing $1 billion authorization. As of March 31, Burlington had repurchased 5.2 million shares at an average price of $46.06 a share.

Los Angeles-based Occidental saw its first quarter earnings soar 90%, posting earnings of $1.38 a share, or $510 million. A year ago, earnings were 72 cents a share, or $2364 million. First Call had expected Occidental to earn between 82 cents and $1.11 a share. The huge growth, said CEO Ray Irani, came from a 35% increase in oil and gas production.

Occidental’s energy sales increased to $4.5 billion for the quarter, an increase of 70% from a year ago, when it posted $2.6 billion in sales.

Strong natural gas prices in California particularly helped Occidental’s first quarter, and Irani said that trend should continue. “Premium pricing for California gas compared to gas production from the Gulf of Mexico should not be viewed as a temporary phenomenon because California’s current supply-demand imbalance that is driving in-state prices is expected to continue for the next two to three years,” Irani said. The CEO said “premium pricing for natural gas sales from our Elk Hills operation in California” propelled the large energy company’s earnings.

Overall, net income was $484 million, or $1.31 a share, up from $271 million, or 74 cents a share a year ago. Ironically, the high natural gas prices hurt Occidental’s chemical earnings, which reported a loss before special items of $53 million, compared with income of $143 million for the first quarter of 2000.

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