Occidental Petroleum Corporation (OXY) posted better-than-expected numbers for fourth quarter and fiscal 2009 driven by higher production volumes. Net income from continuing operations was $1.30 per share, higher than the Zacks Consensus Estimate of $1.23 and last year’s net income of $1.18. The company’s earnings of $3.78 per share for full year 2009 were above the Zacks Consensus Estimate of $3.71 but below last year’s earnings of $8.94. 

Daily oil and gas sales volumes increased 5%, averaging 650,000 barrels of oil equivalent (BOE) during the reported quarter; compared with 620,000 BOE sold in the fourth quarter of 2008. Volumes increased by approximately 14% in the Middle East/North Africa and 2% each in the United States and Latin America. The Middle East/North Africa increase was driven by new production from the Bahrain start-up and increased production from the Mukhaizna field in Oman.
 
For 2009, Occidental’s production volumes soared to record levels of 645,000 BOE per day, representing an increase of more than 7% versus 601,000 BOE in 2008. Volumes increased 4% domestically- mainly in California and Midcontinent Gas, by 10% in Latin America, and 13% in the Middle East/North Africa. 

Revenue increased 13% year over year to $4.5 billion in the fourth quarter, while it decreased 36% year over year to $15.4 billion for the year 2009. Revenue in the quarter increased over last year due to higher realized crude oil and natural gas prices during the quarter, while price realization comparisons were down for the year.
 
Occidental’s average realized crude oil and natural gas prices in the quarter increased 30% and 7%, respectively. However, price realizations for the year declined 36% for crude and 57% for natural gas. 

The company continued to focus on its cost-reduction efforts during the year, successfully reducing its oil and gas cash production costs for 2009 by 15% per BOE.
 
The company continues to maintain its financial flexibility with net debt of $2.8 billion and total debt-to-capitalization of 9% at year-end 2009. Capital spending for the quarter was $932 million, with year-end capex totaling $3.6 billion. 

Going forward, Occidental expects oil and gas production volumes to increase by 5% – 8% in 2010.
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