LOS ANGELES, April 18, 2001 (PRIMEZONE) -- Occidental Petroleum Corporation (NYSE:OXY) announced record earnings before special items for the first quarter 2001 of $510 million ($1.38 per share), an increase of more than 90 percent, compared with $264 million ($0.72 per share) for the first quarter 2000.
Net income for the first quarter 2001 was $484 million ($1.31 per share), compared with $271 million ($0.74 per share) for the first quarter 2000. The first quarter 2001 results included special items that are discussed below. Sales increased to $4.5 billion for the first quarter 2001, an increase of over 70 percent, compared with $2.6 billion for the first quarter 2000.
In announcing the results, Dr. Ray R. Irani, chairman and chief executive officer, said, "This year's first quarter results represent the highest quarterly earnings before special items in the history of the company. The increase in oil and gas production of more than 35 percent, from 352,000 barrels of oil equivalent in the first quarter of 2000 to 478,000 barrels in the first quarter this year, was the key factor in our outstanding first quarter performance. In addition, premium pricing for natural gas sales from our Elk Hills operation in California was another important contributor to our results. Premium pricing for California gas compared to gas production from the Gulf of Mexico should not be viewed as a temporary phenomenon because California's current supply - demand imbalance that is driving in-state prices is expected to continue for the next two to three years. Partially offsetting the positive factors in the first quarter were the reduced chemical results due to a decline in product demand and higher energy and feedstock costs."
Oil and Gas
The oil and gas segment earned $946 million for the first quarter 2001, compared with $394 million for the same period of 2000. The improvement is primarily the result of higher domestic natural gas prices and higher domestic oil production volumes, partially offset by lower worldwide crude oil price realizations and higher exploration expense. The California gas market price premium, which began to increase in the fall of 2000 and continued through the first quarter 2001, resulted in a significantly higher realized price for domestic natural gas. Oil production was also higher in the first quarter this year compared to last year due primarily to the Altura and THUMS acquisitions which occurred in the second quarter 2000.
Chemicals
The chemicals segment reported a net loss before special items of $53 million for the first quarter 2001, compared with income of $143 million for the first quarter 2000. The decline in results before special items reflects higher energy and feedstock costs; lower sales prices and volumes for PVC, VCM, EDC and chlorine; and lower results from equity investments.
Chemical results after special items were a loss of $79 million for the first quarter 2001. The 2001 first quarter included $26 million pre-tax expense for employee severance, plant write-down costs and plant shut-down costs.
Other
Special items reduced earnings by $26 million after tax, or 7 cents per share. The special items included charges for severance and plant write-downs in the chemicals segment totaling $26 million and an increase in environmental reserves. These two items were largely offset by the settlement of a long-standing tax issue and an insurance dividend. An additional after-tax charge of $24 million for a change in accounting standards for derivatives also was recorded.
Forward-looking statements and estimates regarding exploration and production activities, oil, gas and commodity chemical prices and their related earnings effects, and cost reductions in this release are based on assumptions concerning market, competitive, regulatory, environmental, operational and other conditions. Actual results could differ materially as a result of factors discussed in Occidental's Annual Report on Form 10-K.
SUMMARY OF SEGMENT NET SALES AND EARNINGS
(Millions, except per-share amounts)
First Quarter
Periods ended March 31 2001 2000
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SEGMENT NET SALES
Oil and gas $ 3,612 $ 1,534
Chemical 863 1,040
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Net sales $ 4,475 $ 2,574
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SEGMENT EARNINGS (LOSS)
Oil and gas $ 946 $ 394
Chemical (79) 143
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867 537
Unallocated Corporate Items
Interest expense, net (a) (76) (99)
Income taxes (b) (175) (150)
Trust preferred distributions
& other (16) (17)
Other (c) (89) -
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Income before extraordinary items and effect
of changes in accounting principles 511 271
Extraordinary loss, net (d) (3) -
Cumulative effect of changes in accounting
principles, net (e) (24) -
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Net Income 484 271
Effect of repurchase of Trust
Preferred Securities - 1
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EARNINGS APPLICABLE TO COMMON
STOCK $ 484 $ 272
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BASIC EARNINGS PER COMMON SHARE
Income before extraordinary items and
effect of changes in accounting principles $ 1.38 $ .74
Extraordinary loss, net (d) (.01) -
Cumulative effect of changes
in accounting principles, net (e) (.06) -
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$ 1.31 $ .74
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DILUTED EARNINGS PER COMMON SHARE
Income before extraordinary items and
effect of changes in accounting principles $ 1.37 $ .74
Extraordinary loss, net (d) (.01) -
Cumulative effect of changes
in accounting principles, net (e) (.06) -
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$ 1.30 $ .74
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AVERAGE BASIC COMMON SHARES
OUTSTANDING 370.2 368.1
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See footnotes on following page.
The first quarter 2001 includes $33 million interest income on notes receivable from Occidental Permian partners.
Includes an offset for credits in lieu of U.S. federal income taxes allocated to the divisions. Divisional earnings have benefited from credits allocated by $1 million and $4 million at oil and gas and chemical, respectively, in the first quarters of 2001 and 2000.
The first quarter 2001 includes $34 million for preferred distributions to the Occidental Permian partners. This is essentially offset by the interest income discussed in (a) above.
During the first quarter 2001, Occidental placed into an escrow account, with a third party, sufficient funds to retire the outstanding $20.5 million Calcasieu pollution control revenue bonds due 2005. As a result of the defeasance, Occidental recognized an after-tax loss of $3 million.
Effective January 1, 2001, Occidental implemented SFAS No. 133 - "Accounting for Derivative Instruments and Hedging," as amended by SFAS No. 137 - "Accounting for Derivative Instruments and Hedging Activities-Deferral of the Effective Date of FASB Statement No. 133," and SFAS No. 138 - "Accounting for Certain Derivative Instruments and Certain Hedging Activities." Adoption of these new accounting standards resulted in a cumulative after-tax reduction in net income of $24 million and other comprehensive income of approximately $27 million.
SUMMARY OF OPERATING STATISTICS
First Quarter
Periods ended March 31 2001 2000
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NET OIL, GAS AND LIQUIDS
PRODUCTION PER DAY
United States
Liquids (MBBL)
California 73 50
Permian 134 13
US Other - 7
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Total 207 70
Natural Gas (MMCF)
California 317 305
Hugoton 167 164
Permian 148 51
US Other - 110
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Total 632 630
Latin America
Crude oil & condensate (MBBL)
Colombia 21 36
Ecuador 13 16
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Total 34 52
Eastern Hemisphere
Crude oil and condensate (MBBL)
Oman 11 9
Pakistan 6 4
Qatar 42 42
Russia 28 26
Yemen 36 36
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Total 123 117
Natural Gas (MMCF)
Pakistan 50 50
Barrels of Oil Equivalent (MBOE) 478 352
CAPITAL EXPENDITURES (millions) $ 238 $ 122
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DEPRECIATION, DEPLETION AND
AMORTIZATION OF ASSETS (millions) $ 245 $ 185
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CONTACT: Occidental Petroleum Corporation, Los Angeles
Lawrence P. Meriage (media)
310-443-6562
Kenneth J. Huffman (investors), New York
212-603-8183
On the web: www.oxy.com