Occidental Petroleum produced plenty of oil and gas in the fourth quarter of 2012, but heavy investments in the future of business and giving investors pause.
Occidental Petroleum, still based in Los Angeles, is still the biggest domestic player in the oil and gas business. But look out below! The company posted a massive drop in profits for the fourth quarter of 2012.
As in really massive, down to $336 million from $1.6 billion in 2011 — nearly an 80 percent year-over-year plunge.
The decline was much bigger than Occidental’s third quarter slide of 20 percent. Some of the same problems are to blame: the cost of managing wells in California and heavy spending to improve the business.
Wall Street shrugged off the loss and pushed Oxy’s stock price higher in trading Thursday. And for what it's worth, Occidental set records for oil production in the quarter, continuing a trend.
But rumblings continue about whether the company should break apart its different businesses — and whether CEO Stephen Chazen, who took charge in 2011, is the right man for the job.
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Mickey Mouse gestures as he poses during the launch of Disneyland Paris's 20th birthday celebrations. Back in the U.S.A., the Walt Disney Company finished the year as the most valuable publicly traded company in the L.A. region.
The stock market has officially ended its final day of trading for 2012. So which Los Angeles company wound up racking up the highest valuation?
The answer is completely unsurprising: $88.23 billion is how much the Walt Disney Company was worth as the closing bell rang on New Year’s Eve at the New York Stock Exchange.
Disney handily beat out the L.A. area’s two next most valuable companies: biotech colossus Amgen and energy giant Occidental Petroleum.
But it wasn’t all smooth sailing for Disney in 2012. Theme parks and broadcast networks performed well, but the movie business struggled — with a major flop, "John Carter," and a shakeup in executive leadership in April before “The Avengers” broke box office records.
After all that, CEO Bob Iger closed out the year with a bold move: He paid a bit more than $4 billion to buy Lucasfilm and bring the “Star Wars” franchise into the house the Walt built.
Occidental Petroleum could be a buyer for Yates Petroleum, a family owned oil company that owns fields in New Mexico.
Los-Angeles based Occidental Petroleum is looking for more growth. It's coming off a weaker 2012 third quarter than the prior year, with profits down over 20 percent, and has a new CEO, Stephen Chazen, who wants to prevent a further slide. But rather than do as some analysts have suggested and buy back stock — a reliable way to boost a flagging share price — Chazen could be going shopping. And Yates Petroleum, a family-owned company, could be the prize.
Things are rough in the oil business right now, with refineries catching fire in California and superstorms ravaging the supply infrastructure in the Northeast. In this context, Occidental's third quarter slide is understandable. But the word on the street is that Chazen wants to move the needle on the company's stock price, which is well off its high of $115, achieved in 2011.
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When will it end?
AP doesn't sugarcoat the bad news for investors:
The stock market extended its longest and deepest slump of the year Tuesday, caught between a recurring nightmare of European debt and the beginning of uncertain corporate earnings reports at home.
The Dow Jones industrial average fell almost 220 points and was on pace for its third triple-digit decline in four trading sessions. It hit its lowest point since Feb. 3, during the market's strong and steady climb earlier this year.
Prices for U.S. government debt rose for the fifth day in a row as investors sought a safe place for their money.
So how are public companies located in Los Angeles handling the decline?
The Big Three — Disney, Northrop Grumman, and Occidental Petroleum — are actually doing okay. They're all down, of course, but nobody has fallen off a cliff. Occidental has fared the worst, due to the assumption that weak demand for gas is going to hurt profits, most likely.