Despite recording oil and natural gas production increases from 2Q2008 to 2Q2009, lower commodity prices forced exploration and production giant Occidental Petroleum Corp. (Oxy) to record a 70% decrease in net income from one period to the next.
The Los Angeles-based independent posted net income of $682 million, or $0.84 per diluted share, compared with $2.3 billion, or $2.78 per diluted share, for 2Q2008. The oil and gas segment earnings slumped to $1.1 billion from $3.8 billion for the same period last year due to lower crude oil and natural gas prices and higher depletion, depreciation and amortization rates. The decline in earnings for the segment was partially offset by higher oil and gas sales volumes and lower operating expenses, the company reported.
“Occidental achieved year-over-year production growth of 10% in the second quarter and nearly 9% in the six months of 2009,” said CEO Ray R. Irani. In April Irani said Occidental during 1Q2009 had achieved nearly 8% growth in year-over-year oil and gas production.
Irani also pointed to recent developments that will point the way forward for Oxy. “Our discovery in Kern County, CA, which was announced [Wednesday] should also contribute to our future growth,” he said.
Occidental believes there are 150-250 million gross boe reserves within the outlined area where it has so far drilled six wells to delineate the new discovery (see Daily GPI, July 23). The multi-pay zone discovery area, whose areal geological extent is still being defined, has both conventional and unconventional pay zones. The bulk of the discovery’s producing zones are conventional oil- and gas-bearing formations, Occidental said. The company’s interest in the discovery area is approximately 80%. Approximately two-thirds of the discovery is believed to be natural gas.
During 2Q2009 daily oil and gas sales volumes averaged 649,000 boe, compared with 588,000 Bboe sold in 2Q2008. Volumes increased by approximately 3% domestically, mainly from California and Midcontinent/Rockies; by about 37% in Latin America, mostly in Argentina; and by 16% in the Middle East/North Africa, largely in Oman and Dolphin. California volumes included increases in Long Beach resulting from economic arrangements similar to a production sharing contract and production from new exploration wells in Elk Hills, Oxy reported.
Oxy’s realized price for worldwide crude oil was $52.97/bbl for 2Q2009, compared with $110.12/bbl for 2Q2008. Domestic realized gas prices decreased from $9.99/Mcf in 2Q2008 to $2.87/Mcf for 2Q2009.
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