Oct. 22 (Bloomberg) -- Occidental Petroleum Corp., the U.S. oil producer that agreed this month to buy Citigroup Inc.’s Phibro LLC unit, said third-quarter profit dropped less than estimated as output gains cushioned the impact of lower prices. Net income fell 59 percent to $927 million, or $1.14 a share, from $2.27 billion, or $2.78, a year earlier, the Los Angeles-based company said today in a statement. Per-share profit was 8 cents higher than the average of 18 analyst estimates compiled by Bloomberg. Oil and natural-gas production climbed 6.9 percent to the equivalent of 632,000 barrels of crude a day as Chief Executive Officer Ray Irani expanded output from California to Yemen. Crude futures in New York traded as low as $58.32 a barrel, down from last year’s high of $147.27, and gas touched a seven-year low. Oil prices have climbed 14 percent since the quarter ended. “Companies that can grow production in the current environment and in the long term are going to benefit as prices move higher,” said Ryan Cournoyer, head of energy trading at Lighthouse Financial in New York. Third-quarter revenue fell 42 percent to $4.1 billion, Occidental said. The average analyst estimate was $3.85 billion. Occidental rose 11 cents to $81.66 at 9:31 a.m. in New York Stock Exchange composite trading. The shares have risen 36 percent this year, outperforming Exxon Mobil Corp., Chevron Corp. and ConocoPhillips. California Discoveries Irani, 74, raised the company’s drilling budget, helping Occidental discover reservoirs beneath California that hold hundreds of millions of barrels of crude. Output from a new find announced in June swelled 50 percent during the third quarter to the equivalent of 26,000 barrels a day, surpassing production from Occidental wells in Yemen, the company said. Occidental agreed on Oct. 9 to buy the Phibro energy- trading operation led by Andrew J. Hall from Citigroup. The $250 million transaction will give Occidental the sort of trading muscle that has been a boon to Europe’s largest oil companies, analysts said. The purchase price was less than Phibro’s average annual pretax profit during the past half decade. New York-based Citigroup asked Occidental to take Phibro off its hands after the Obama administration warned the lender that a potential $100 million payday for Hall encouraged excessive risk-taking. Citigroup, the third-largest U.S. bank by assets, is 34 percent owned by the U.S. government. To contact the reporter on this story: Joe Carroll in Chicago at jcarroll8@bloomberg.net.

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