Oil & gas profits slide, cost cuts help outperform

By Adveith Nair and Arup Roychoudhury

BANGALORE (Reuters) - Independent oil and gas firms EOG Resources (EOG.N), Petrohawk Energy (HK.N), Plains Exploration (PXP.N) and Continental Resources (CLR.N) all reported sharply lower quarterly profits due to a slump in prices.

The global economic slowdown has reduced demand for natural gas and crude oil, swelling inventories in the third quarter and hammering prices, which cut into the producers' profits.

It is also hammering prices, which cut into the producers' profits. But a dramatic recovery in crude prices in recent months has seen companies gear up for more production.

EOG, the fourth-largest independent U.S. oil and gas company, increased its production outlook after reporting a sharp drop in third-quarter profit.

Eighth-ranked Petrohawk reported late on Wednesday quarterly earnings below expectations, increased its fourth-quarter production forecast, and said 2010 production would rise 43 percent on a pro forma basis.

And lower production costs drove better-than-expected profits at the two smaller companies. Continental reported a 21 percent fall in production expenses, while costs at Plains Exploration & Production fell 9 percent.

Given the steep drop in commodity prices from a year ago, when oil and gas prices hit record highs, average realized prices at both those companies halved.

Shares of Plains and Petrohawk rose more than 1 percent, while Continental rose by 0.3 percent.