Buoyed by booming energy prices and output, Westwood-based Occidental
Petroleum Corp. said Thursday that first-quarter profit leaped 53% to
an all-time high.
Analysts predicted continuing good fortune for the company but warned
that a slowing global economy could lower demand and prices for crude
oil, which averaged $98 for the January-March quarter.
Advocacy groups complained that the rosy outlook for Occidental and
other oil companies came at a steep price: drivers’ suffering.
Judy Dugan, research director of Consumer Watchdog in Santa Monica,
said oil companies’ profits show "an industry operating in an economic
bubble with no connection to the pain its prices are causing in the
rest of the economy."
Net income for Occidental, the fourth-largest U.S. oil company, vaulted
to $1.85 billion, or $2.23 a share, from $1.21 billion, or $1.43, a
year earlier. Analysts surveyed by Thomson Financial had expected
income of $1.98 a share.
Houston-based ConocoPhillips, the third-largest U.S. oil company,
reported Thursday that first-quarter net income jumped to $4.14
billion, or $2.62 a share, from $3.55 billion, or $2.12, in the
year-earlier quarter. The company would have done even better,
executives said, if its refineries and service stations had been able
to pass along more of oil’s rapid price increase.
At Occidental, a 50% sales surge to $6.02 billion from $4.02 billion in
the year-earlier quarter suggested that 2008 could overtake 2007 as the
most successful year in the company’s history, Chief Executive Ray R.
Compared with $1.88 billion in first-quarter operating earnings last
year for its oil and gas segment, Occidental pulled in $2.89 billion
this year, offset by higher operating expenses. The company’s
production is more than 80% oil.
The total for last year’s period includes funds from a $412-million
sale of a joint venture in Russia and $109 million from legal
settlements, including a large tax payment from Ecuador over a property
The rapid run-up in oil prices over the last two months has squeezed
refiners, which have struggled to transfer skyrocketing oil costs to
consumers, Citigroup analyst Doug Leggate said.
But with no refining operation and a business model that touts
disciplined investment and aggressive international growth, Occidental
should expect smooth sailing.
"Occidental has been the most profitable company in the sector, bar
none," Leggate said. "If any company deserves this, it’s them."
Occidental’s production of oil and natural gas increased to a daily
average of 607,000 barrels of oil equivalent from 560,000 a day in the
first quarter of last year, mainly because of output from its shared
Middle East Dolphin natural gas project.
Occidental executives said they hoped to boost production to as many as
620,000 barrels a day in the second quarter, assuming oil at $100 a
barrel. The company commanded $86.75 per barrel of crude during the
quarter, up 68% from $51.67 last year.
Occidental’s shares fell $1.66, or 2%, to $82.83, on a day when most oil companies lost ground in reaction to lower oil prices.
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It’s a strange world when yearly CEO pay of $18.4 million looks humble. That’s what Exxon reports paying CEO Rex Tillerson in a filing today. Compared to the $460 million awarded to Ray Irani, the CEO of little Occidental Petroleum, you have to wonder if Tillerson is on the wrong boat. Of course, Exxon doesn’t count as compensation the $13.6 million in deferred-payout stock options that it also gave to Tillerson, putting him in the same total pay category as Chevron’s David O’Reilly. And Exxon always saves its greatest generosity for retirement day. Former CEO Lee Raymond, when he stepped down in 2005, walked off with $400 million. But who cares, since motorists are the forced labor that funds these elephant-choking paychecks.]]>
Obviously everybody sitting on top of an oil company these days gets paid in gold bullion, but I’m not alone in thinking that Irani and some of these other guys (and these) would make the robber barons blush. The $460 million is almost twenty times more than the $25.4 million/year he averaged over the prior five years. Must have been tough. So why was Irani due so much money this year? Reuters reports :
"When you look at this, this is solid pay for performance," said Richard Kline, an Occidental spokesman. "It serves the best interest of the corporation and the best interest of the shareholder."
According to the LA Times:
In justifying Irani’s pay, the company cited Occidental’s "superior operating performance" and its "exceptional growth in stockholder value."
The firm’s compensation committee gave Irani credit for reviving Occidental’s investment in Libya and increasing its holdings in other countries in the region. Irani "has developed particularly strong relationships with government leaders in a number of Middle East countries" that are "a competitive advantage for Occidental and have allowed Occidental to establish credibility similar to that enjoyed by significantly larger oil companies," the committee said.
They make fast friends with the Great Socialist People’s Libyan Arab Jamahiriya and other government leaders in the Middle East, but man are they pissing off their neighbors here at home.]]>
Eleven state officials, from Cal-EPA, the state Energy Commission, the governor’s office, the Public Utilities Commission and the state Air Resources Board, among others, joined twelve corporate executives – including from BP, Chevron, Shell Oil and Occidental, on the 9-day jaunt to Europe that started yesterday. The trip is sponsored by the California Climate Action Registry, which receives funding from BP.
This isn’t Chevron’s first turn with the same state officials. Its "government affairs" chief, Jack Coffey, and the California Energy Commission’s Jackalynne Pfannenstiel took a turn around South America together on a similar ‘study trip’ last November.
As oil giants sign up for a registry to track their emissions, then stymie real efforts to contain them, the state shouldn’t be giving them 9 days of alone time over chocolates and Belgian coffee with the folks who will write the regulations to implement the state’s new greenhouse gas law.
It’s bad if the state is paying for its executives to schmooze with the oil crowd. And worse if the oil companies are even indirectly paying for the whole trip.
Read the list of attendees and their itinerary: The trip boasts one fancy hotel – the Conrad Hotel Brussels (the “Luxury Brand of the Hilton Family”) – where the cheapest single room (read: closet) is $265 and a suite is more than $2,300.
(Thanks to FTCR colleague Carmen for this tip)]]>