Occidental Petroleum Corp.’s net income in the third quarter fell nearly 33% to $1.168 billion ($1.36/share) from $1.747 billion ($2.12) in 3Q2005, which the producer attributed to one-time gains of $800 million and tax benefits a year ago. Core earnings, excluding charges and gains, jumped 16% to $1.16 billion ($1.35/share), in line with Wall Street estimates of $1.34/share. A year ago, Oxy’s quarterly earnings reached $1 billion ($1.22/share).

Revenue grew 17% in 3Q2006 to $4.52 billion, from $3.86 billion in 3Q2005. Analysts estimated 3Q2006 revenue would reach $4.16 billion.

Domestically, Occidental’s quarterly natural gas production climbed to 597 MMcf/d from 564 MMcf/d in 3Q2005. In the United States, the Los Angeles-based producer explores for oil and gas principally in California, the Permian Basin of Texas and New Mexico and the Hugoton area encompassing portions of Kansas, Oklahoma and Texas. Occidental also has an interest in the Horn Mountain field in the deepwater Gulf of Mexico. The United States accounts for more than 70% of Occidental’s proven worldwide oil and gas reserves and 60% of current worldwide production.

Daily production from continuing operations worldwide averaged 587,000 boe/d, a 71,000 boe/d increase over the 516,000 boe/d reported in 3Q2005.

“Our continuing focus on expanding and strengthening operations in our core businesses was a key factor in the 15% increase in our core earnings compared to last year’s third quarter results,” said CEO Ray Irani. “Our success in growing combined oil and gas production by 14% compared to the same period a year ago, along with sharply higher crude oil prices and a strong performance from our chemicals business, were key drivers in our financial performance for the quarter.”

Rising production costs were a factor in the quarter. Oxy reported total production costs have risen $2.32/boe to $11.13 year-to-date versus $8.81/boe in fiscal 2005. About 45% of the increase was the result of higher energy prices, with other costs attributed to increased workover and maintenance expenses.

Oxy’s average price for West Texas Intermediate crude oil in 3Q2006 was $70.53/bbl, compared with $63.19 a year ago. The average price for New York Mercantile Exchange gas was $6.33/Mcf, compared with $7.09 in 3Q2005. Domestic realized gas prices decreased to $5.88/Mcf from $6.33 a year ago.

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