Occidental Petroleum Announces Third Quarter 2003 Results


LOS ANGELES, Oct. 21, 2003 (PRIMEZONE) -- Occidental Petroleum Corporation (NYSE:OXY) announced net income for the third quarter 2003 of $446 million ($1.16 per share), compared with $402 million ($1.07 per share) for the third quarter 2002.

In announcing the results, Dr. Ray R. Irani, chairman and chief executive officer, said, "Core earnings of $446 million, or $1.16 per share, were 43 percent higher than the $312 million, or $0.83 per share, the company earned in the third quarter of 2002. Higher oil and gas prices and a nine percent increase in production contributed to a 35 percent increase in oil and gas earnings over last year's third quarter.

Core earnings of $1.25 billion, or $3.27 per share, for the first nine months of 2003 were 85 percent higher than the $676 million, or $1.80 per share, the company earned in the comparable period last year."

Oil and Gas

Oil and gas segment earnings were $660 million for the third quarter 2003, compared with $490 million for the third quarter 2002. The improvement in the third quarter 2003 earnings reflected higher worldwide crude oil and natural gas prices and increased crude oil sales volumes; partially offset by higher exploration expenses and operating costs. The increased crude oil production results largely from higher Ecuador production, reflecting the completion of the Oleoducto de Crudos Pesados Ltd. oil export pipeline, and Horn Mountain production, which came on line in the fourth quarter 2002.

Chemicals

Chemical core earnings were $61 million for the third quarter 2003, compared with $50 million for the third quarter 2002. The third quarter 2002 core earnings excluded a $164 million net of tax gain from the sale of the investment in Equistar. The third quarter 2003 results reflected higher sales prices in chlor-alkali, which were more than offset by higher energy and raw material costs. The third quarter 2002 core earnings included a $37 million pre-tax charge for the impairment of various operating assets.

Nine Months Results

For the first nine months of 2003, net income was $1.15 billion ($2.99 per share), compared with $667 million ($1.77 per share) for the first nine months of 2002.

Core earnings for the first nine months of 2003 were $1.25 billion ($3.27 per share), compared with $676 million ($1.80 per share) for 2002. The debt to total capitalization ratio was 38 percent compared with 43 percent at the end of last year. See the attached schedules for a reconciliation of net income to core earnings for the third quarter and nine months.

Statements in this presentation that contain words such as "will" or "expect," or otherwise relate to the future, are forward-looking and involve risks and uncertainties that could significantly affect expected results. Factors that could cause results to differ materially include, but are not limited to: global commodity pricing fluctuations, and supply/demand consideration, for oil, gas and chemicals; higher-than-expected costs; and not successfully completing (or any material delay in) any expansion, capital expenditure, acquisition, or disposition. Occidental disclaims any obligation to update any forward-looking statements.



 SUMMARY OF SEGMENT NET SALES AND EARNINGS
 ($ millions, except per-share amounts)

                                      Third Quarter    Nine Months
                                   ----------------  ----------------
                                     2003     2002     2003     2002
 ================================= =======  =======  =======  =======

 SEGMENT NET SALES

   Oil and gas                     $ 1,480  $ 1,224  $ 4,473  $ 3,347
   Chemical                            793      739    2,368    2,006
   Other                                46        -      115        -
                                   -------  -------  -------  -------
   Net sales                       $ 2,319  $ 1,963  $ 6,956  $ 5,353
 ================================  =======  =======  =======  =======

 SEGMENT EARNINGS

  Oil and gas                      $   660  $   490  $ 2,024  $ 1,217
  Chemical                              61      214      139      217
                                   -------  -------  -------  -------
                                       721      704    2,163    1,434
 Unallocated Corporate Items
  Interest expense, net (a)
    Debt, net                          (59)     (73)    (236)    (195)
    Trust preferred
     distributions
      & other                          (12)     (12)     (34)     (35)
  Income taxes (b)                    (160)    (105)    (505)    (250)
  Other (c)                            (44)     (38)    (175)    (114)
                                   -------  -------  -------  -------

 Income from continuing
  operations                           446      476    1,213      840
  Discontinued operations,
   net                                  --      (74)      --      (78)
  Cumulative effect of
    changes in accounting
    principles, net (d)                 --       --      (68)     (95)
                                   -------  -------  -------  -------
 NET INCOME                        $   446  $   402  $ 1,145  $   667
                                   =======  =======  =======  =======


 BASIC EARNINGS PER COMMON SHARE

  Income from continuing
    operations                     $  1.16  $  1.26  $  3.17  $  2.23
  Discontinued operations,
    net                                 --    (0.19)      --    (0.21)
  Cumulative effect of
   changes in accounting
   principles, net                      --       --    (0.18)   (0.25)
                                   -------  -------  -------  -------
                                   $  1.16  $  1.07  $  2.99  $  1.77
                                   =======  =======  =======  =======

 DILUTED EARNINGS PER COMMON SHARE

  Income from continuing
   operations                      $  1.14  $  1.25  $  3.14  $  2.22
  Discontinued operations,
   net                                  --    (0.19)      --    (0.21)
  Cumulative effect of
    changes in accounting
    principles, net                     - -      --    (0.18)   (0.25)
                                   -------  -------  -------  -------
                                   $  1.14  $  1.06  $  2.96  $  1.76
                                   =======  =======  =======  =======
 AVERAGE BASIC COMMON SHARES
  OUTSTANDING                        385.5    376.8    382.6    375.7
 ============================      =======  =======  =======  =======


 (a) The nine-months 2003 includes a $61 million interest charge to
     repay a $450-million 6.4-percent senior-notes issue that had ten
     years of remaining life, but was subject to remarketing on April
     1, 2003. The nine months 2002 includes $22 million of interest
     income on notes receivable from Altura partners. The partnership
     exercised an option in May 2002 to redeem the sellers' remaining
     partnership interests in exchange for the outstanding balance on
     the notes.

 (b) Excludes U.S. federal income tax charges and credits allocated to
     the segments and foreign taxes. Oil and gas segment earnings
     include a credit of $1 million in the third quarter of 2003 and a
     charge of $3 million in the third quarter of 2002. Chemical
     segment earnings include a $395 million credit in the third
     quarter of 2002, almost entirely related to the sale of the
     Equistar investment.

     Oil and gas segment earnings for the nine-months 2003 and 2002
     include charges of $6 million and $2 million, respectively.
     Chemical segment earnings include credits of $403 million for the
     nine months 2002.

 (c) The nine-months 2002 includes $20 million of preferred
     distributions to the Occidental Permian partners. This is
     essentially offset by the interest income discussed in (a) above.
     The partnership exercised an option in May 2002 to redeem the
     sellers' remaining partnership interests in exchange for the
     outstanding balance on the notes. The nine-months 2003 also
     includes $42 million equity losses from investments in
     unconsolidated subsidiaries, compared with $3 million losses for
     the same period in 2002.

 (d) Effective January 1, 2003, Occidental implemented SFAS No. 143 -
     "Accounting For Asset Retirement Obligations." Adoption of this
     new accounting standard resulted in a cumulative after-tax
     reduction in net income of $50 million. Also effective January 1,
     2003, Occidental implemented the rescission of EITF 98-10, which
     precludes mark-to-market accounting for all energy-trading
     contracts that are not derivatives and fair value accounting for
     inventories purchased from third parties. Adoption of this
     accounting change resulted in a cumulative after-tax reduction in
     net income of $18 million. Effective January 1, 2002, Occidental
     implemented SFAS No. 142 - "Goodwill and Other Intangible
     Assets." Adoption of this new accounting standard resulted in a
     cumulative after-tax reduction in net income of $95 million.





 SUMMARY OF OPERATING STATISTICS

                                    Third Quarter     Nine Months
                                  ----------------  ----------------
                                    2003     2002     2003     2002
 ===============================  =======  =======  =======  =======

 NET OIL, GAS AND LIQUIDS
   PRODUCTION PER DAY

 United States
  Crude oil and liquids (MBBL)
    California                          80       84       79       87
    Permian                            151      143      150      141
    Horn Mountain                       24       --       19       --
    Hugoton                              4        3        4        3
                                   -------  -------  -------  -------
      Total                            259      230      252      231

  Natural Gas (MMCF)
    California                         248      283      254      293
    Hugoton                            136      149      141      152
    Permian                            134      132      128      129
    Horn Mountain                       16       --       12       --
                                   -------  -------  -------  -------
      Total                            534      564      535      574

 Latin America
  Crude oil (MBBL)
    Colombia                            31       38       35       39
    Ecuador                             27       13       20       13
                                   -------  -------  -------  -------
      Total                             58       51       55       52

 Middle East and
  Other Eastern Hemisphere

  Crude oil (MBBL)
    Oman                                13        9       12       14
    Pakistan                            10       12       10       10
    Qatar                               44       44       47       43
    Yemen                               34       29       36       36
                                   -------  -------  -------  -------
      Total                            101       94      105      103

  Natural Gas (MMCF)
    Pakistan                            71       74       74       58

 Barrels of Oil Equivalent (MBOE)

 Subtotal consolidated
  subsidiaries                         519      481      514      491
 Other Interests
  Colombia-minority interest            (4)      (5)      (4)      (5)
  Russia-Occidental net interest        30       26       30       27
  Yemen-Occidental net interest          1        -        1        -
                                   -------  -------  -------  -------
 Total worldwide production            546      502      541      513
                                   =======  =======  =======  =======


 CAPITAL EXPENDITURES
   (millions)                      $   360  $   283  $ 1,151  $   840
                                   =======  =======  =======  =======


 DEPRECIATION, DEPLETION
  AND AMORTIZATION OF
  ASSETS (millions)                $   295  $   245  $   866  $   759
 =======================           =======  =======  =======  =======

SIGNIFICANT TRANSACTIONS AND EVENTS AFFECTING EARNINGS

Occidental's results of operations often include the effects of significant transactions and events affecting earnings that vary widely and unpredictably in nature, timing, and amount. Therefore, management uses a measure called "core earnings", which excludes those items. This non-GAAP measure is not meant to disassociate those items from management's performance, but rather is meant to provide useful information to investors interested in comparing Occidental's earnings performance between periods. Reported earnings are considered representative of management's performance over the long term. Core earnings is not considered to be an alternative to operating income in accordance with generally accepted accounting principles. The following table sets forth the core earnings and significant items affecting earnings for each operating segment and corporate:



                                                     Third Quarter

                                  ----------------------------------
 ($ millions)                         2003      EPS     2002      EPS
 ===========================       ======= ======== ======== ========
 TOTAL REPORTED EARNINGS           $   446 $   1.16 $    402 $   1.07
                                   ======= ======== ======== ========
 Oil and Gas

 Segment Earnings                  $   660          $    490
 No significant items
  affecting earnings                    --                --
                                   -------          --------
 Segment Core Earnings                 660               490
                                   -------          --------
 Chemicals

 Segment Earnings                       61               214
  Less:
  Sale of Equistar investment*          --               164
                                   -------          --------
 Segment Core Earnings                  61                50
                                   -------          --------
 Corporate

 Results                              (275)             (302)
  Less:
  Discontinued operations, net*         --               (74)
                                   -------          --------
 TOTAL CORE EARNINGS               $   446 $   1.16 $    312 $   0.83
 ================================  ======= ======== ======== ========
 * These amounts are shown after tax.

 SIGNIFICANT TRANSACTIONS AND EVENTS AFFECTING EARNINGS (continued)
                                                        Nine Months

                                  ----------------------------------
 ($ millions)                        2003      EPS     2002      EPS
 ================================  ======= ======== ======== ========
 TOTAL REPORTED EARNINGS           $ 1,145 $   2.99 $    667 $   1.77
                                   ======= ======== ======== ========
 Oil and Gas

 Segment Earnings                  $ 2,024          $  1,217
 No significant items
  affecting earnings                    --                --
                                   -------          --------
 Segment Core Earnings               2,024             1,217
                                   -------          --------
 Chemicals

 Segment Earnings                      139               217
 Less:
  Sale of Equistar investment*          --               164
                                   -------          --------
 Segment Core Earnings                 139                53
                                   -------          --------
 Corporate

 Results                            (1,018)             (767)
 Less:
  Debt repayment charge                (61)               --
  Tax effect of pre-tax
   adjustment                           21                --
 Discontinued operations, net*          --               (78)
  Changes in accounting
    principles, net*                  (68)              (95)
                                   -------          --------
 TOTAL CORE EARNINGS               $ l,253 $   3.27 $    676 $   1.80
 ===========================       ======= ======== ======== ========
 * These amounts are shown after tax.

 ITEMS AFFECTING COMPARABILITY OF CORE EARNINGS BETWEEN PERIODS

                                     Third Quarter      Nine Months

  ($ millions)                       2003     2002      2003     2002
 ===========================       =======  =======   =======  =======

 PRE-TAX
  INCOME / (EXPENSE)

 Oil and Gas
  Gain on sale of GOM assets (a)        --   $    7   $   14   $    7
  Exploration asset write-offs          --       --       --      (33)

 Chemicals
  Asset idling and impairments          --      (37)      (9)     (37)
  Equistar equity results               --        7       --      (33)
  Reorganizations/severance             --       --      (15)     (14)

 Corporate
  Environmental remediation             --       (8)     (13)      (8)
  Equity earnings                       (6)      (3)     (42)      (3)


 (a) Net of tax.


            

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