Occidental Petroleum Announces Record Third Quarter 2004 Results


LOS ANGELES, Oct. 21, 2004 (PRIMEZONE) -- Occidental Petroleum Corporation (NYSE:OXY) announced record net income for the third quarter 2004 of $758 million ($1.91 per share), compared with $446 million ($1.16 per share) for the third quarter 2003. Earnings of $1.83 billion ($4.63 per share) for the first nine months of 2004 were 55 percent higher than the $1.15 billion ($2.99 per share) the company earned in the comparable period last year.

In announcing the results, Dr. Ray R. Irani, chairman and chief executive officer, said, "Earnings of $758 million, $1.91 per share, were 65 percent higher than the third quarter 2003. High oil prices and robust gas prices, plus improved chemical margins, contributed to the record high income for both the third quarter and the nine month period. Oil and gas production per day was up 3 percent for the quarter and 5 percent year-to-date over the comparable periods last year."

Core earnings for the first nine months of 2004 were $1.81 billion ($4.60 per share), compared with $1.25 billion ($3.27 per share) for 2003. The debt-to-total capitalization at the end of the third quarter was 29 percent, compared with 37 percent at the end of last year. Interest expense of $187 million for the first nine months of 2004 was 31 percent lower than the comparable 2003 period.

Oil and Gas

Oil and gas segment earnings were $1.0 billion for the third quarter 2004, compared with $660 million for the third quarter 2003, an increase of 52 percent. The improvement in the third quarter 2004 earnings reflected higher worldwide crude oil and natural gas prices, partially offset by increased DD&A rates and higher operating costs.

Chemicals

Chemical segment earnings were $137 million for the third quarter 2004, compared with $61 million for the third quarter 2003, an increase of 125 percent. The improvement in the third quarter 2004 was primarily due to higher sales prices and margins in chlorine, ethylene dichloride, polyvinyl chloride and vinyl chloride monomer, partially offset by higher ethylene and energy costs. Chemical earnings of $272 million for the nine months were almost double that of 2003.

See the attached schedules for a reconciliation of net income to core earnings for the third quarter and nine months.

For further analysis of Occidental's quarterly performance, please visit the website: www.oxy.com

Statements in this release 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 considerations for oil, gas and chemicals; higher-than-expected costs; political risk; 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

                                      Third Quarter       Nine Months
 ($ millions, except               ----------------  ----------------
  per-share amounts)                  2004     2003     2004     2003
 ================================  =======  =======  =======  =======
 SEGMENT NET SALES
  Oil and gas                      $ 2,033  $ 1,480  $ 5,509  $ 4,473
  Chemical                             973      793    2,767    2,368
  Other                                 27       46       87      115
                                   -------  -------  -------  -------
  Net sales                        $ 3,033  $ 2,319  $ 8,363  $ 6,956
 ================================  =======  =======  =======  =======
 SEGMENT EARNINGS
  Oil and gas                      $ 1,003  $   660  $ 2,567  $ 2,024
  Chemical                             137       61      272      139
                                   -------  -------  -------  -------
                                     1,140      721    2,839    2,163
 Unallocated Corporate Items
  Interest expense, net (a)--
    debt and trust preferred
    distributions                      (59)     (71)    (187)    (270)
  Income taxes (b)                    (274)    (160)    (673)    (505)
  Other                                (49)     (44)    (153)    (175)
                                   -------  -------  -------  -------

 Income from Continuing Operations     758      446    1,826    1,213
 Cumulative effect of changes in
    accounting principles, net          --       --       --      (68)
                                   -------  -------  -------  -------
 NET INCOME                        $   758  $   446  $ 1,826  $ 1,145
                                   =======  =======  =======  =======
 BASIC EARNINGS PER COMMON SHARE
  Income from continuing
    operations                     $  1.91  $  1.16  $  4.63  $  3.17
  Cumulative effect of changes in
    accounting principles, net          --       --       --    (0.18)
                                   -------  -------  -------  -------
                                   $  1.91  $  1.16  $  4.63  $  2.99
                                   =======  =======  =======  =======
 DILUTED EARNINGS PER COMMON SHARE
  Income from continuing
    operations                     $  1.88  $  1.14  $  4.57  $  3.14
  Cumulative effect of changes in
    accounting principles, net          --       --       --    (0.18)
                                   -------  -------  -------  -------
                                   $  1.88  $  1.14  $  4.57  $  2.96
                                   =======  =======  =======  =======
 AVERAGE BASIC COMMON SHARES
  OUTSTANDING                        396.3    385.5    394.1    382.6
 ================================  =======  =======  =======  =======

See footnotes on following page.

(a) The third quarter 2004 includes a $2 million pre-tax interest charge to purchase in the open market and retire $19 million of Occidental's senior notes and a $3 million pre-tax interest charge to redeem all the $157 million outstanding 6.5 percent senior notes which were due in 2005. The nine months 2004 also includes an $11 million pre-tax interest charge to redeem all the outstanding 8.16 percent Trust Preferred Redeemable Securities on January 20, 2004. The nine months 2003 includes a $61 million pre-tax interest charge to repay a $450 million 6.4 percent senior notes issue that had ten years of remaining life, but was subject to re-marketing on April 1, 2003.

(b) The nine months 2004 includes a $20 million credit related to a first quarter settlement of an issue with the Internal Revenue Service. The nine months 2004 also reflected a lower U.S. income tax rate resulting from the crediting of foreign income taxes.



 SUMMARY OF CAPITAL EXPENDITURES AND DD&A EXPENSE

                                      Third Quarter       Nine Months
                                   ----------------  ----------------
 ($ millions)                         2004     2003     2004     2003
 ================================  =======  =======  =======  =======

 CAPITAL EXPENDITURES              $   467  $   360  $ 1,271  $ 1,151
                                   =======  =======  =======  =======
 DEPRECIATION, DEPLETION
  AND AMORTIZATION
   OF ASSETS                       $   322  $   295  $   972  $   866
 ================================  =======  =======  =======  =======

 SUMMARY OF OPERATING STATISTICS
                                      Third Quarter       Nine Months
                                   ----------------  ----------------
                                      2004     2003     2004     2003
 ================================  =======  =======  =======  =======

 NET OIL, GAS AND LIQUIDS
   PRODUCTION PER DAY

 United States
  Crude oil and liquids (MBBL)
    California                          77       80       77       79
    Permian                            154      151      155      150
    Horn Mountain                       17       24       22       19
    Hugoton                              3        4        3        4
                                   -------  -------  -------  -------
      Total                            251      259      257      252

  Natural Gas (MMCF)
    California                         228      248      235      254
    Hugoton                            124      136      128      141
    Permian                            122      134      131      128
    Horn Mountain                       14       16       15       12
                                   -------  -------  -------  -------
      Total                            488      534      509      535

 Latin America
  Crude oil (MBBL)
    Colombia                            38       31       37       35
    Ecuador                             49       27       46       20
                                   -------  -------  -------  -------
      Total                             87       58       83       55

 Middle East
  Crude oil (MBBL)
    Oman                                14       13       13       12
    Qatar                               44       44       44       47
    Yemen                               28       34       33       36
                                   -------  -------  -------  -------
      Total                             86       91       90       95

  Natural Gas (MMCF)
    Oman                                88       --       52       --

 Other Eastern Hemisphere
  Crude oil (MBBL)
    Pakistan                             7       10        8       10

  Natural Gas (MMCF)
    Pakistan                            73       71       74       74

 Barrels of Oil Equivalent (MBOE)
  Subtotal consolidated subsidiaries   539      519      544      514
  Other Interests
   Colombia-minority interest           (4)      (4)      (5)      (4)
   Russia-Occidental net interest       27       30       29       30
   Yemen-Occidental net interest         1        1        1        1
                                   -------  -------  -------  -------
 Total Worldwide Production (MBOE)     563      546      569      541
 ================================  =======  =======  =======  =======

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, except               ----------------------------------
  per-share amounts)                  2004      EPS     2003      EPS
 ================================  =======  =======  =======  =======
 TOTAL REPORTED EARNINGS           $   758  $  1.91  $   446  $  1.16
                                   =======  =======  =======  =======
 Oil and Gas
  Segment Earnings                 $ 1,003           $   660
  No significant items
    affecting earnings                  --                --
                                   -------           -------
  Segment Core Earnings              1,003               660
                                   -------           -------
 Chemicals
  Segment Earnings                     137                61
  No significant items
    affecting earnings                  --                --
                                   -------           -------
  Segment Core Earnings                137                61
                                   -------           -------
 Corporate
  Results                             (382)             (275)
  No significant items
    affecting earnings                  --                --
                                   -------           -------
 TOTAL CORE EARNINGS               $   758  $  1.91  $   446  $  1.16
 ================================  =======  =======  =======  =======
 * These amounts are shown after-tax.



 SIGNIFICANT TRANSACTIONS AND EVENTS AFFECTING EARNINGS (continued)


                                                          Nine Months
 ($ millions, except               ----------------------------------
  per-share amounts)                  2004      EPS     2003      EPS
 ================================  =======  =======  =======  =======
 TOTAL REPORTED EARNINGS           $ 1,826  $  4.63  $ 1,145  $  2.99
                                   =======  =======  =======  =======
 Oil and Gas
  Segment Earnings                 $ 2,567           $ 2,024
  No significant items
    affecting earnings                  --                --
                                   -------           -------
  Segment Core Earnings              2,567             2,024
                                   -------           -------
 Chemicals
  Segment Earnings                     272               139
  No significant items
    affecting earnings                  --                --
                                   -------           -------
  Segment Core Earnings                272               139
                                   -------           -------
 Corporate
  Results                           (1,013)           (1,018)
  Less:
    6.4% senior note remarket fee       --               (61)
    Trust preferred redemption
      charge                           (11)               --
    IRS settlement                      20                --
    Tax effect of pre-tax adjustment     4                21
    Changes in accounting
      principles, net*                  --               (68)
                                   -------           -------
 TOTAL CORE EARNINGS               $ 1,813  $  4.60  $ 1,253  $  3.27
 ================================  =======  =======  =======  =======
 * These amounts are shown after-tax.


 ITEMS AFFECTING COMPARABILITY OF CORE EARNINGS BETWEEN PERIODS


                                      Third Quarter       Nine Months
                                   ----------------  ----------------
 ($ millions)                         2004     2003     2004     2003
 ================================  =======  =======  =======  =======
 PRE-TAX
 INCOME / (EXPENSE)

 Oil and Gas
  Gain on sale of GOM assets (a)   $    --  $    --  $    --  $    14

 Chemicals
  Chlorine derivatives asset
   impairment                           --       --       --       (9)
  Reorganizations/severance             --       --       --      (15)

 Corporate
  Environmental remediation             --       --       --      (13)
  Equity earnings                       15       (6)      13      (42)
  Interest expense - early debt
   extinguishments - 2004/
   consolidation of variable
   interest entity - 2003               (5)      --       (5)       6

 (a) Net of tax.


            

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