* First-quarter earnings/share ex items $1.69 vs est $1.54
* Cost cut program offsets lower natural gas prices
* Weighs buybacks, asset moves due to lower share price
* Stock rises 3.7 pct to 2-month high
By Braden Reddall and Siddharth Cavale
April 25 Occidental Petroleum Corp
posted a higher-than-expected profit as cost cuts blunted the
impact of low natural gas prices, while the fourth-largest U.S.
oil company weighs various efforts to boost its lagging stock
Shares of Occidental rose 3.7 percent to a two-month high on
Thursday, but they are still down about 3 percent in the past
year, compared with a 15 percent rise for California rival
Occidental Chief Executive Stephen Chazen, who would not
comment on the timing of his departure while the board seeks the
66-year-old's eventual replacement, said the lower stock price
meant there would "probably" be share buybacks in its future.
Chazen said a weaker stock value also meant he would have to
take a harder look at possibly selling parts of the company or
hiving assets off into tax-favorable master limited partnerships
(MLP), though he wanted any such deals to move the needle.
"I do not want to go down the path of a sort of delicatessen
approach to this where you slice a piece of baloney off and
throw it to the wolves," he told analysts on a conference call.
Besides the United States, which accounts for nearly
two-thirds of Occidental's production, the company has assets in
Latin America and the Middle East.
Asked by one analyst about a potential move with its Middle
East business as an example, Chazen talked hypothetically of
splitting the entire thing as being easier than selling off one
country at a time, which would require approvals. There was "no
shortage of suggestions" for deals to make, he added.
"You start looking for things that move the needle a lot,
rather than things to fine-tune," Chazen said, characterizing an
MLP as fine-tuning.
Breakingviews story on potential Oxy moves
The company is fending off reports of a "fight at the top",
which led its board to publish a statement this month denying
any conflict and explaining that its search for a new CEO was
part of a succession plan.
Occidental's first-quarter net profit fell to $1.36 billion,
or $1.68 per share, from $1.56 billion, or $1.92 per share, a
year earlier. Excluding items, it made $1.69 per share, topping
the average analyst estimate of $1.54 per share, according to
Thomson Reuters I/B/E/S.
Revenue fell 6 percent to $5.87 billion in the quarter.
Chazen said the company was ahead of schedule with its
cost-cutting program unveiled last October and aimed at reducing
U.S. drilling costs by 15 percent this year, a response to a
tough 2012 in which costs escalated along with production
U.S. operating costs fell to $14.06 per barrel in the first
quarter from $16.44 per barrel a year earlier.
Most of the cost-cutting effort is focused on California,
which accounts for about a third of its oil and gas output.
"The highlight was impressive progress on cost reduction
initiatives," analysts at Simmons & Co wrote. "Total company
production was slightly below our expectation."
Daily oil and gas production averaged 763,000 barrels of oil
equivalent (boe) in the quarter, up from 755,000 boe a year ago.
Oxy said oil prices rose 2 percent from the fourth quarter,
while natural gas prices fell 11 percent on the same basis.
Occidental's stock rose 3.7 percent to $87.49 in afternoon
trading on the New York Stock Exchange on Thursday.