LOS ANGELES, April 25, 2006 (PRIMEZONE) -- Occidental Petroleum Corporation (NYSE:OXY) announced net income for the first quarter 2006 of $1.23 billion ($2.90 basic per share), compared with $846 million ($2.11 basic per share) for the first quarter 2005. Diluted earnings were $2.86 per share for the first quarter 2006, compared with $2.08 per share for the first quarter 2005.
In announcing the results, Dr. Ray R. Irani, chairman, president and chief executive officer, said, "The first quarter daily production was 636,000 barrels of oil equivalent, the highest quarterly production in Oxy's history. This was an increase of 13 percent over the first quarter of 2005. We expect production for the second quarter to be approximately 650,000 BOE, which would be another record. First quarter core earnings of $1.22 billion set a new record surpassing the previous record set in the last quarter of 2005."
Oil and Gas
Oil and gas segment earnings were a record $2.0 billion for the first quarter 2006, which was a 48 percent increase from the $1.35 billion in earnings for the first quarter 2005. The first quarter 2006 earnings reflected a $700 million improvement from the impact of higher energy prices and $198 million increase from higher production, partially offset by higher operating expenses and increased DD&A rates.
For the quarter, oil and gas daily production averaged a record high 636,000 barrels of oil equivalent(BOE), which was a 13 percent increase over the 565,000 equivalent barrels per day produced in the first quarter 2005. The increase included two months of Vintage production at 57,000 BOE per day which added 38,000 BOE per day to Occidental's quarterly production, Libya production of 22,000 BOE per day that came on line in the third quarter of 2005, and 25,000 BOE per day from Permian acquisitions that were acquired in the second quarter of 2005. Compared to a year ago, production under the Company's production sharing contracts in Oman, Qatar, Yemen and Long Beach was negatively impacted by higher prices. The average price for West Texas Intermediate crude oil in the first quarter 2006 was $63.48 per barrel compared to $49.84 per barrel in the first quarter 2005. If prices had remained at first quarter 2005 levels, production in the first quarter 2006 would have been 8,000 equivalent barrels per day higher.
Chemicals
Chemical segment earnings were $248 million for the first quarter 2006, compared with $214 million for the first quarter 2005. The improvement was due to increased volumes in chlor-alkali and higher margins in chlor-alkali and polyvinyl chloride, resulting from higher sales prices, partially offset by higher energy and feedstock costs.
Core Earnings
Core earnings for the first quarter 2006 were $1.22 billion ($2.87 basic per share), compared with $866 million ($2.16 basic per share) for the same period in 2005. See the attached schedule for a reconciliation of net income to core earnings for the first quarter.
Statements in this release that contain words such as "will," "expect" or "estimate," 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: exploration risks such as drilling of unsuccessful wells, global commodity pricing fluctuations, changes in tax rates, and supply/demand considerations 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. You should not place undue reliance on these forward-looking statements which speak only as of the date of this presentation. Unless legally required, Occidental does not undertake any obligation to update any forward-looking statements as a result of new information, future events or otherwise. U.S. investors are urged to consider carefully the disclosure in our Form 10-K, available through the following toll-free telephone number, 1-888-OXYPETE (1-888-699-7383) or on the Internet at http://www.oxy.com. You also can obtain a copy from the SEC by calling 1-800-SEC-0330.
SUMMARY OF SEGMENT NET SALES AND EARNINGS
First Quarter
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(In millions, except per-share amounts) 2006 2005
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SEGMENT NET SALES
Oil and Gas $ 3,299 $ 2,219
Chemical 1,241 1,061
Other 30 23
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Net sales $ 4,570 $ 3,303
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SEGMENT EARNINGS
Oil and Gas $ 2,002 $ 1,349
Chemical 248 214
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2,250 1,563
Unallocated Corporate Items
Interest expense, net (a) (29) (61)
Income taxes (b) (932) (601)
Other (73) (51)
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Income from Continuing Operations 1,216 850
Discontinued operations, net (c) 13 (4)
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NET INCOME $ 1,229 $ 846
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BASIC EARNINGS PER COMMON SHARE
Income from continuing operations $ 2.87 $ 2.12
Discontinued operations, net (c) 0.03 (0.01)
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$ 2.90 $ 2.11
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DILUTED EARNINGS PER COMMON SHARE
Income from continuing operations $ 2.83 $ 2.09
Discontinued operations, net (c) 0.03 (0.01)
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$ 2.86 $ 2.08
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AVERAGE BASIC COMMON SHARES OUTSTANDING 424.2 400.4
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See footnotes on following page.
(a) The first quarter 2005 includes a $10 million pre-tax interest
charge to redeem all the outstanding 7.65 percent senior notes,
which were due in February 2006.
(b) The first quarter 2005 includes a $10 million charge, net,
related to a state income tax issue.
(c) The first quarter 2006 discontinued operations represent the net
after tax results of the operations of the Vintage properties
that are held for sale.
SUMMARY OF CAPITAL EXPENDITURES AND DD&A EXPENSE
First Quarter
----------------
($ millions) 2006 2005
========================================== ======= =======
CAPITAL EXPENDITURES $ 605 $ 536
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DEPRECIATION, DEPLETION AND
AMORTIZATION OF ASSETS $ 480 $ 344
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SUMMARY OF OPERATING STATISTICS
First Quarter
----------------
2006 2005
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NET OIL, GAS AND LIQUIDS
PRODUCTION PER DAY
United States
Crude oil and liquids (MBBL)
California 82 77
Permian 166 148
Horn Mountain 15 18
Hugoton and other 3 4
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Total 266 247
Natural Gas (MMCF)
California 250 241
Hugoton and other 133 129
Permian 189 146
Horn Mountain 10 12
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Total 582 528
Latin America
Crude oil (MBBL)
Argentina 24 --
Colombia 39 32
Ecuador 44 42
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Total 107 74
Natural Gas (MMCF)
Argentina 13 --
Bolivia 13 --
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Total 26 --
Middle East/North Africa
Crude oil (MBBL)
Oman 17 23
Qatar 44 43
Yemen 32 35
Libya 22 --
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Total 115 101
Natural Gas (MMCF)
Oman 25 56
Other Eastern Hemisphere
Crude oil (MBBL)
Pakistan 4 5
Natural Gas (MMCF)
Pakistan 75 78
Barrels of Oil Equivalent (MBOE)
Subtotal consolidated subsidiaries 610 537
Colombia-minority interest (5) (4)
Russia-Occidental net interest 29 30
Yemen-Occidental net interest 2 2
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Total Worldwide Production (MBOE) 636 565
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SIGNIFICANT TRANSACTIONS AND EVENTS AFFECTING EARNINGS (continued)
Occidental's results of operation 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.
First Quarter
($ millions, except ----------------------------------
per-share amounts) 2006 EPS 2005 EPS
================================ ======= ======= ======= =======
TOTAL REPORTED EARNINGS $ 1,229 $ 2.90 $ 846 $ 2.11
======= ======= ======= =======
Oil and Gas
Segment Earnings $ 2,002 $ 1,349
No significant items affecting
earnings -- --
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Segment Core Earnings 2,002 1,349
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Chemicals
Segment Earnings 248 214
No significant items affecting
earnings -- --
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Segment Core Earnings 248 214
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Total Segment Core Earnings 2,250 1,563
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Corporate
Corporate Results --
Non Segment* (1,021) (717)
Less:
Debt purchase expense -- (10)
State tax issue -- (10)
Tax effect of pre-tax
adjustments -- 4
Discontinued operations, net** 13 (4)
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Corporate Core Results --
Non Segment (1,034) (697)
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TOTAL CORE EARNINGS $ 1,216 $ 2.87 $ 866 $ 2.16
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*Interest expense, income taxes, G&A expense and other, and non-
core items.
**Amounts shown after tax.
ITEMS AFFECTING COMPARABILITY OF CORE EARNINGS BETWEEN PERIODS
The item(s) below are included in core earnings but are shown in this
table because they affect the comparability of core earnings between
periods.
First Quarter
----------------
($ millions) 2006 2005
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PRE-TAX
INCOME / (EXPENSE)
Corporate
Environmental remediation (7) (9)