Conoco, Oxy profits top Wall Street, Hess disappoints

(Reuters) - U.S. oil companies ConocoPhillips (COP.N) and Occidental Petroleum Corp (OXY.N) posted profit increases that topped Wall Street forecasts on Wednesday, helped by rising oil prices, while smaller rival Hess Corp (HES.N) lagged, hurt by drilling misses in Asia.

Hess shares shed 4.8 percent, while Conoco's dipped a more modest 0.9 percent. Occidental shares reversed early losses to move 1.7 percent higher after the company said it expected to raise its dividend next month.

Hess, which announced last week it would shut down a refinery in the Caribbean, disappointed investors with lower-than-expected oil and gas production, and it forecast only modest growth this year.

Hess benefited from the rise in oil prices from a year ago, but it did not sell its output at prices as high as those fetched by Conoco and Occidental, analysts said.

Conoco, the third-largest U.S. oil company behind Exxon Mobil Corp (XOM.N) and Chevron Corp (CVX.N), said prices for its oil rose by about a third from a year ago, offsetting declines in its production.

The company has been selling off assets to cut debt and expects to spin off its refining arm in the second quarter. Those asset sales removed about 48,000 barrels of oil equivalent per day from its total output, which were off about 8 percent to 1.6 million BOE per day.

The figures were "a further indication that the strategy is working," said Phil Weiss, analyst with Argus Research.

Conoco's overall production slipped nearly 8 percent to 1.6 million barrels of oil equivalent per day largely due to the asset sales, but Weiss said he viewed recent acquisitions in the Gulf of Mexico, offshore Angola and in shale fields in the United States as positive.

Houston-based Conoco was the most aggressive bidder in a U.S. auction of drilling leases in the Gulf of Mexico last month, and it added about 500,000 acres in shale and other "unconventional" fields on land in the United States in 2011.

Chief Financial Officer Jeff Sheets said the company would cut back output from North American fields that produce only "dry" gas and no oil or other liquids because of the selloff that has driven gas prices to their lowest levels in a decade, near $2.50 per million British thermal unit.

"We think things need to be more at a $5 to $6 dollar level until we would be motivated to start making investments," he told Reuters.

Late on Tuesday, Conoco announced it and China National Offshore Oil Corp (CNOOC) would pay $160 million to settle liabilities for the oil spill at China's Bohai Bay.

Conoco's fourth-quarter profit climbed 70 percent to $3.4 billion, or $2.56 per share, from a year ago. Excluding one-time items, earnings of $2.02 per share were higher than the $1.76 that analysts expected, according to Thomson Reuters I/B/E/S.

OXY GROWTH

Occidental's profit climbed by 33 percent to $1.6 billion, or $2.01 per share, as it increased oil and gas production in the United States and benefited from the higher oil prices. Analysts expected $1.95 a share.

CEO Stephen Chazen told analysts the company expected to increase its production by 8 to 10 percent this year, with much of that growth coming in the first six months.

It produced 748,000 barrels of oil equivalent (BOE) per day in the quarter, with 449,000 (BOE) a day coming from the United States.

Hess suffered costs of $236 million from drilling two "dry holes" off the Indonesian coast that failed to find viable reservoirs, and reported a quarterly loss as its production shrank.

The company said it expected 2012 oil and gas output between 370,000 to 390,000 BOE per day, a modest increase from the 367,000 BOE per day it produced in the fourth quarter, but it stuck to its long-term forecast for output growth of 3 to 5 percent.

That forecast did not include Hess' share of the output from Libya, where its executives said the unstable political situation made them wary of projecting volumes, even though its field there was currently producing oil.

"We don't feel comfortable putting that in yet," CEO John Hess told analysts on a conference call, adding that Hess' share of oil from its stake in a consortium in Libya was currently about 13,000 barrels per day.

Hess' net loss for the fourth quarter was $131 million, or 39 cents per share. Excluding $525 million in charges related to the closure of the Hovensa refinery in St. Croix, Hess' earnings per share of $1.17 fell short of analysts' average forecast of $1.27.

Shares of Conoco slipped 0.9 percent to $69.96 on Wednesday afternoon, while Occidental shares were up 1.7 percent at $102.66 and Hess shares were down 4.8 percent at $57.45.

(Additional reporting by Braden Reddall in San Francisco, editing by Dave Zimmerman and Matthew Lewis)