Occidental profit up, capex to rise in 2011

SAN FRANCISCO (Reuters) - Occidental Petroleum Corp (OXY.N) reported a quarterly profit that topped estimates and laid out a plan to raise capital spending by more than 50 percent after not producing as much oil and gas as planned.

The fourth-largest U.S. oil company produced 753,000 barrels of oil equivalent per day (boepd) in the quarter, compared with the 760,000 to 770,000 boepd it had forecast in October.

Chief Operating Officer Stephen Chazen on Wednesday set a capital expenditure budget of $6.1 billion for 2011, up from $3.9 billion last year.

"It doesn't surprise me at all that Steve Chazen would do that," said Stephen Davis at Alpine Mutual Funds. "He's always said that production is a function of how much you spend."

That figure does not include the $4 billion Occidental will have to spend on the Shah gas project in Abu Dhabi over the next few years.

"And no production for four years. So it will be a drag," Chazen said on a conference call, but he said growth from its other properties would "easily overcome that."

Troubles with natural gas processing in California have hampered output there.

The company expects to produce 740,000 to 750,000 boepd in the current quarter and plans to return to output growth in the second half of the year once it closes some recent acquisitions and starts booking the acquired production.

Occidental also reported that fourth-quarter profit rose to $1.2 billion, or $1.49 per share, from $938 million, or $1.15 a share, a year before. Excluding one-time items, Oxy earned $1.58 per share, 4 cents higher than analysts expected on average, according to the Thomson Reuters I/B/E/S.

The company posted net sales of $5.06 billion in the quarter, up from $4.38 billion in the year-earlier quarter.

Occidental shares were down 0.7 percent at $96.46, even while the rest of the sector rose along with oil prices.

(Reporting by Braden Reddall, with additional reporting by Matt Daily in New York, editing by Maureen Bavdek)