Occidental Petroleum Corp (OXY.N), the fourth-largest U.S. oil company, reported a higher-than-expected quarterly profit as it cut costs to blunt the impact of low natural gas prices.
Los Angeles-based Occidental said operating costs in the United States, which accounted for nearly two-thirds of the company's production in the first quarter, fell to $14.06 per barrel from $16.44 per barrel a year earlier.
Chief Executive Stephen Chazen announced a cost-cutting program in October with the aim of reducing U.S. drilling costs by 15 percent this year, a response to a tough 2012 in which costs escalated and the company's stock underperformed.
"To date, (we) are running ahead of our full-year objectives in our program to improve domestic operational and capital efficiencies," Chazen said in a statement.
The company plans to cut the number of U.S. rigs it deploys to 55 this year from 64. Most of the cost-cutting effort is focused on California, which accounts for about a third of the company's oil and gas production.
Occidental reported a first-quarter net profit of $1.36 billion, or $1.68 per share, compared with $1.56 billion, or $1.92 per share, a year earlier.
Excluding items, the company earned $1.69 per share, topping analysts' average 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.
Occidental said that oil prices rose 2 percent from the preceding quarter, while natural gas prices fell 11 percent on the same sequential basis.
The company is also fighting 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 chief executive was part of a succession plan.
Occidental said its overall daily oil and gas production averaged 763,000 barrels of oil equivalent (boe) in the first quarter, up from 755,000 boe a year before.
As well as the United States, the company has assets in Latin America and the Middle East.
Occidental's stock edged up 0.3 percent to $84.56 in pre-market trading on the New York Stock Exchange on Thursday.
(Reporting by Braden Reddall in San Francisco and Siddharth Cavale in Bangalore; Editing by Saumyadeb Chakrabarty and Robin Paxton)