LOS ANGELES, Oct. 17, 2001 (PRIMEZONE) -- Occidental Petroleum Corporation (NYSE:OXY) announced earnings before special items for the third quarter 2001 of $317 million ($0.85 per share), compared with $370 million ($1.00 per share) for the same period a year ago.
In announcing the results, Dr. Ray R. Irani, chairman and chief executive officer, said, "The strong third quarter performance of our oil and gas segment and the profitability of our chemical segment, despite the slowing economy, has kept us on track for another record year. Our earnings before special items, of $1.3 billion, or $3.48 per share, through the first three quarters nearly equaled our record performance for the entire year 2000. The combination of strong cash flow from operations and proceeds from non-strategic asset sales has resulted in substantial debt reduction that, along with outstanding earnings, has enabled us to slash our debt-to-capitalization ratio to 46-percent, the lowest level in nearly two decades."
Net income for the third quarter of 2001 was $444 million ($1.19 per share), compared with $402 million ($1.09 per share) for the same period of 2000. The third quarter 2001 included the sale of non-strategic assets, including Occidental's interest in the Tangguh LNG project in Indonesia and the sale of the entity that leased a pipeline in Texas to Occidental's former MidCon subsidiary for after-tax cash proceeds of $750 million, resulting in a net after-tax gain of $127 million. The third quarter 2000 included net after-tax gains of $31 million.
Debt Reduction
During the third quarter, the $750 million in after-tax proceeds from the Indonesia and pipeline asset sales, combined with free cash flow from operations, lowered Occidental's total debt to $5.0 billion, compared to $6.4 billion at the end of 2000 and the pro-forma peak of $9.2 billion in April 2000. The reduced debt level, along with the drop in interest rates, lowered interest expense (including distribution on trust preferred securities) to $98 million from $113 million for the second quarter 2001 and $152 million for the third quarter of 2000.
Oil and Gas
Oil and gas segment earnings before special items were $528 million for the third quarter 2001, compared with $690 million for the same period in 2000. The decline in earnings is primarily due to lower worldwide crude oil prices and higher exploration expense. The third quarter 2001 exploration expense included the write-off of the Gibraltar well in Colombia.
Oil and gas segment earnings for the third quarter 2001 were $927 million and included the $399 million gain, net of tax, from the sale of the Tangguh LNG project. Third quarter 2000 oil and gas earnings were $696 million, including net gains of $6 million from special items.
Chemicals
Earnings from the chemicals segment were $40 million for the third quarter 2001, compared with $47 million for the third quarter 2000. The results reflect improvements in those chemicals businesses operated by the company that were more than offset by significantly lower earnings from our petrochemical equity investment.
Nine Months Results
For the first nine months of 2001, Occidental's earnings before special items increased 31-percent to $1.3 billion ($3.48 per share), compared with $977 million ($2.65 per share) for the same period of 2000. Net income was $1.4 billion ($3.77 per share) for the first nine months of 2001, compared with $1.2 billion ($3.36 per share) for the first nine months of 2000. Sales rose by approximately 20-percent to $11.6 billion for the first nine months of 2001, from $9.6 billion for the same period a year ago.
Forward-looking statements and estimates regarding exploration and production activities, oil, gas and commodity chemical prices and their related earnings effects, and cost reductions, as well as pro-forma estimates 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) Third Quarter Nine Months Periods Ended September 30 2001 2000 2001 2000 ================================= ======= ======= ======= ======= SEGMENT NET SALES Oil and gas $ 2,521 $ 2,972 $ 9,097 $ 6,634 Chemical 764 891 2,508 2,998 ------- ------- ------- ------- Net sales $ 3,285 $ 3,863 $11,605 $ 9,632 ================================= ======= ======= ======= ======= SEGMENT EARNINGS (LOSS) Oil and gas $ 927 $ 696 $ 2,679 $ 1,647 Chemical 40 47 19 224 ------- ------- ------- ------- 967 743 2,698 1,871 Unallocated Corporate Items Interest expense, net (a) (60) (97) (207) (300) Income taxes (b) (129) (169) (553) (668) Trust preferred distributions & other (13) (17) (43) (50) Other (c) (321) (59) (467) 383 ------- ------- ------- ------- Income before extraordinary items and effect of changes in accounting principles 444 401 1,428 1,236 Extraordinary items, net -- 1 (3) 1 Cumulative effect of changes in accounting principles, net -- -- (24) -- ------- ------- ------- ------- Net Income 444 402 1,401 1,237 Effect of repurchase of Trust Preferred Securities -- -- -- 1 ------- ------- ------- ------- EARNINGS APPLICABLE TO COMMON STOCK $ 444 $ 402 $ 1,401 $ 1,238 ======= ======= ======= ======= BASIC EARNINGS PER COMMON SHARE Income before extraordinary items and effect of changes in accounting principles $ 1.19 $ 1.09 $ 3.84 $ 3.36 Extraordinary loss, net -- -- (.01) -- Cumulative effect of changes in accounting principles, net -- -- (.06) -- ------- ------- ------- ------- $ 1.19 $ 1.09 $ 3.77 $ 3.36 ======= ======= ======= ======= DILUTED EARNINGS PER COMMON SHARE Income before extraordinary items and effect of changes in accounting principles $ 1.19 $ 1.09 $ 3.82 $ 3.36 Extraordinary loss, net -- -- (.01) -- Cumulative effect of changes in accounting principles, net -- -- (.06) -- ------- ------- ------- ------- $ 1.19 $ 1.09 $ 3.75 $ 3.36 ======= ======= ======= ======= AVERAGE BASIC COMMON SHARES OUTSTANDING 373.5 369.2 371.9 368.7 ================================= ======= ======= ======= ======= See footnotes. (a) The third quarter and nine months year-to-date 2001 include $24 million and $85 million, respectively, interest income on notes receivable from Altura partners. The third quarter and nine months year-to-date 2000 include $38 million and $68 million, respectively. (b) Includes an offset for charges and credits in lieu of U.S. federal income taxes allocated to the segments. Oil and gas segment earnings have been impacted by charges of $35 million and $42 million in the third quarters of 2001 and 2000, respectively. The oil and gas segment third quarter of 2001 includes the tax effects from the sale of its interest in the Tangguh LNG project in Indonesia. The oil and gas segment third quarter of 2000 amount includes the tax effects from the partial-interest sale of the subsidiary that owned the Gulf of Mexico shelf assets and receipt of contingency payments related to a prior year sale of a Dutch North Sea subsidiary. Chemical segment earnings have been impacted by credits of $16 million in the third quarter of 2001, $12 million of which related to asset dispositions, and $4 million in the third quarter of 2000. (c) The third quarter and nine months year-to-date 2001 include preferred distributions to the Occidental Permian partners of $25 million and $87 million, respectively. The third quarter and nine months year-to-date 2000 include $38 million and $68 million, respectively. These amounts are essentially offset by the interest income discussed in (a) above. The third quarter and nine months year-to-date 2001 also include a $272 million net-of-tax loss related to the sale of Occidental's residual interest in Occidental Texas Pipeline Company. SUMMARY OF OPERATING STATISTICS Third Quarter Nine Months Periods Ended September 30 2001 2000 2001 2000 ================================= ======= ======= ======= ======= NET OIL, GAS AND LIQUIDS PRODUCTION PER DAY United States Crude oil and liquids (MBBL) California 78 74 75 68 Permian 137 136 136 89 US Other -- -- -- 2 ------- ------- ------- ------- Total 215 210 211 159 Natural Gas (MMCF) California 302 305 305 302 Hugoton 154 178 161 168 Permian 146 161 147 106 US Other -- 43 -- 89 ------- ------- ------- ------- Total 602 687 613 665 Latin America Crude oil and condensate (MBBL) Colombia 35 21 19 33 Ecuador 13 21 13 19 ------- ------- ------- ------- Total 48 42 32 52 Eastern Hemisphere Crude oil and condensate (MBBL) Oman 10 8 10 9 Pakistan 7 8 7 6 Qatar 45 48 43 50 Russia 27 28 27 27 Yemen 32 32 33 32 ------- ------- ------- ------- Total 121 124 120 124 Natural Gas (MMCF) Pakistan 52 47 50 49 Barrels of Oil Equivalent (MBOE) 493 499 473 454 CAPITAL EXPENDITURES (millions) $ 418 $ 275 $ 965 $ 608 ======= ======= ======= ======= DEPRECIATION, DEPLETION AND AMORTIZATION OF ASSETS (millions) $ 244 $ 268 $ 726 $ 687 ================================ ======= ======= ======= =======