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Higher Oil Prices Boost Occidental’s & ConocoPhillips’ Profits

As profitable as the oil industry generally is, fourth quarter has been particularly significant. During that timeframe, higher oil prices managed to boost both Occidental’s and ConocoPhillips’ profits, despite smaller output.

On Wednesday, ConocoPhillips announced that its profits have increased 66.1 percent during the fourth quarter, mainly thanks to selling some pipelines and other assets. The company reported a net income of $3.39 billion, or $2.56 per share, doing much better than the same quarter one year earlier. In 2010’s fourth quarter, ConocoPhillips posted revenues of $2.04 billion, or $1.39 per share.

The company is at the end of a reassessment of its worldwide operations that will help make its business operations leaner and reduce the costs. Over the past year, ConocoPhillips sold over $10,7 billion in assets and has plans to sell another $1 billion by the end of 2012.

The interesting part is that the company managed to record profit, despite the fact that output has declined as the company closed some of its operations and undergone some setbacks. During the last three months of 2011, production plummeted by 13.3 percent and exploration and production profits dropped 5 percent.

Occidental Petroleum Corp. announced a fourth quarter gain of 35 percent, accounted by the higher oil prices and a record in U.S. crude production. The company posted a fourth quarter net income of $1.6 billion, or $2.01 share. The improvement isn’t a lot better, but it is one step forward from 2010’s fourth quarter, when Occidental recorded a $1.2 billion income.

U.S.’ fourth largest oil exploration and production company mentioned that in 2011’s last quarter, its worldwide average oil price was $99.62 a barrel. In comparison, in 2010, the price was $79.96 a barrel.

According to analysts, Occidental is the sort of company that has been built to make money even when oil prices are low. Phil Weiss is an oil industry analyst with Argus Research who explains that “Occidental’s low cost structure and use of enhanced oil recovery techniques (…) will enable it to maintain strong cash flow and profitability in almost any price environment”.

Energy economist James L. Williamson of WTRG Economics, mentions that 2011 was a good year for oil producers. But 2012 might pose some problems. He expects the oil industry to be as volatile as in 2008, a time when prices dropped to $148 a barrel.

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Cat Cain is our latest addition to the team. She's an expert in celebrity life and fashion and will cover any news that has to do with the life of the stars. She has a Bachelors Degree in Journalism and a Master Degree in Journalism and Social Communication and she's very passionate about life on the big screen and behind the curtains. If you have any suggestions or questions for her, send her an email at cat.cain @ dailygossip.org

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