Tell me if you've heard this one before: An oil and gas company reports more or less flat production figures, but soaring oil and gas prices lead to great profit growth anyway.

Yeah, we've all heard that before. It's basically the theme of late for large oil companies such as ExxonMobil (NYSE:XOM), Chevron (NYSE:CVX), and BP (NYSE:BP), but it also happens to be true of Occidental Petroleum (NYSE:OXY), one of the largest independent oil and gas producers.

Net sales for the quarter rose about 35%, principally on the strength of oil and gas operations, though the chemicals business was no slouch. Core earnings (those not including significant items) in turn rose more than 43% on strong profitability in that same oil and gas business. It should be noted that core earnings excludes in excess of $650 million in profits tied to the sale of Premcor to Valero Energy (NYSE:VLO), tax benefits, and a writedown charge in the chemicals business.

In the oil and gas operations, earnings climbed 45% as the price of West Texas Intermediate crude rose 44% in the quarter. As that might suggest, production was basically flat on a year-over-year basis. While the company did produce more natural gas in North America, that was counterbalanced by lower gas production in Oman and essentially flat oil production across the board.

It should be noted, though, that the company expects this to change fairly promptly. Guidance suggests about a 4% improvement in daily production for the fourth quarter. Longer term, the company will also benefit from the acquisition of Vintage Petroleum (NYSE:VPI) and projects like the Mukhaizna field in Oman. Occidental has taken this over from Royal Dutch Shell (NYSE:RD) and will be investing about $2 billion (with partners) in an effort to increase production from about 10,000 barrels per day to as much as 150,000 barrels per day, with a total recovery target of at least 1 billion barrels.

It goes without saying that the price of energy has a lot to do with Occidental's profitability. According to the company, every $1 per barrel change in the price of oil means a swing of $37 million in profits. What's more, costs are on the rise as drillers, energy service companies, and workers all raise their prices in reaction to strong market demand. Nevertheless, should energy prices continue to creep higher and new production come online as expected, the stock could still have some room left for investors.

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Fool contributor Stephen Simpson has no financial interest in any stocks mentioned (that means he's neither long nor short the shares).