UPDATE 3-Occidental Q4 profits double, beat Wall St view

* Q4 EPS ex-items of $1.30 beats Wall St view of $1.25

* Sees 2010 output growing 5-8 pct, starting in Q1

* CFO says no plans to increase Phibro's value at risk

* Shares up, recovering from 2 pct drop earlier (Adds comments from conference call)

By Matt Daily and Braden Reddall

NEW YORK/SAN FRANCISCO, Jan 28 (Reuters) - Occidental Petroleum Corp (OXY.N), the fourth-largest U.S. oil and gas company, said Thursday that its quarterly profit more than doubled, boosted by higher oil prices and increased output.

Its shares recovered from early losses as it outlined a big rise in 2010 capital expenditures and said first-quarter sales volumes would be between 730,000 and 740,000 barrels of oil equivalent per day, up from 722,000 in the fourth quarter.

Under a reformatted reporting system that aligns the company with its peers, total 2009 daily production was 714,000 boe, compared with 645,000 before the change.

Overall 2009 output rose 7 percent from 2008, and the company expects 2010 output to grow by 5 percent to 8 percent.

Analysts at Tudor Pickering Holt said the production outlook looks "strong over restated volumes."

Simmons & Co wrote in a note that some investors might have expected the 2010 output range to be marginally higher based on production growth in California.

Occidental now has 15 producing wells at its Kern County discovery in central California, with fourth-quarter output of 31,700 boe per day, up from less than 8,000 in the first. The Los Angeles-based company plans to drill eight more wells there in the first half of this year.

The company is targeting $4.3 billion in 2010 capital expenditure, up from $3.6 billion last year. A quarter of the increase will go to California, and another quarter to Iraq, where Oxy has just signed a partnership deal. [ID:nLDE60L1EJ]

DECENT YEAR FOR M&A

Occidental's fourth-quarter net profit climbed to $938 million, or $1.15 per share, from $443 million, or 55 cents per share, in the same quarter a year before, when it took a charge to write down the value of its assets.

Excluding charges, earnings were $1.30 per share, topping the $1.25 analysts had expected, according to the average on Thomson Reuters I/B/E/S. Revenue rose 13 percent to $4.54 billion, beating the $4.23 billion that analysts had forecast.

Asked by analysts about its free cash flow, Occidental said it had no plans to sit on the money it will generate in 2010.

"I think we'll have a pretty decent year for acquisitions this year," Chief Financial Officer Stephen Chazen said on a conference call.

Occidental has just closed its purchase of high-profile oil and gas trading outfit Phibro [ID:nN0930601], and Chazen said it was doing fine. But he added that there were no plans to expand Phibro's value at risk, without giving further details.

The start-up of production in Bahrain and increased output from the Mukhaizna field in Oman helped increase fourth-quarter sales volume by nearly 5 percent from the previous year.

Occidental's fourth quarter realized oil price was $69.39 per barrel, up from $53.52 a year earlier. U.S. natural gas prices however, slipped to $4.37 per thousand cubic feet from $4.67.

Occidental, which has a chemicals arm but no oil refineries, has not been hit as hard by the downstream slump dragging down other integrated oil companies. [ID:N27162911]

But its shares had dropped 6 percent since the start of 2010 through Wednesday's close, compared with a 3 percent decline in the Chicago Board Options Exchange index of oil companies .OIX, as crude oil prices CLc1 have fallen steadily to start the new year.

Its shares were up 9 cents to $76.54 in afternoon trading, after dropping as much as 2 percent in the morning. (Reporting by Matt Daily in New York and Braden Reddall in San Francisco; Editing by Derek Caney and Gerald E. McCormick)