LOS ANGELES, Jan. 29, 2008 (PRIME NEWSWIRE) -- Occidental Petroleum Corporation (NYSE:OXY) announced record net income of $5.400 billion ($6.44 per diluted share) for the twelve months of 2007, compared with $4.191 billion ($4.87 per diluted share) for the twelve months of 2006.
Net income for the fourth quarter of 2007 was $1.452 billion ($1.74 per diluted share), compared with $930 million ($1.09 per diluted share) for the fourth quarter of 2006.
In announcing the results, Dr. Ray R. Irani, Chairman and Chief Executive Officer, said, "Oxy achieved the highest full year net income in our history and another record quarter core results. Driven largely by record oil and gas earnings, this achievement reflects the continued success of our strategy to focus on profitable, long-lived oil and gas assets, a disciplined investment philosophy and maintaining a strong balance sheet. We are pleased with the 25.7% return on equity for the full year of 2007.
"In 2007, Occidental's consolidated subsidiaries preliminary proved reserve additions from all sources totaled 242 million barrels of oil equivalent (BOE) compared to production of 209 million BOE, for a production replacement rate of 116 percent.
"While high commodity prices clearly have boosted earnings throughout the industry, Oxy has consistently produced top-quartile results in capturing the value from higher prices on an equivalent barrel basis and delivering it to the bottom line."
QUARTERLY RESULTS
Oil and Gas
Oil and gas segment earnings were $2.599 billion for the fourth quarter of 2007, compared with $1.422 billion for the same period in 2006. The $1.2 billion increase in the fourth quarter 2007 segment earnings reflected $1.3 billion of increases from record crude oil and higher natural gas prices and volumes from the Dolphin project in the UAE coming on line in 2007, partially offset by increased DD&A rates and higher operating expenses.
The average price for West Texas Intermediate crude oil in the fourth quarter of 2007 was $90.68 per barrel, compared to $60.20 per barrel in the fourth quarter of 2006. Oxy's realized price for worldwide crude oil was $80.30 per barrel for the fourth quarter of 2007, compared with $52.55 per barrel for the fourth quarter of 2006. The average price for NYMEX gas in the fourth quarter of 2007 was $7.06 per MCF, compared with $6.27 per MCF in the fourth quarter of 2006. Domestic realized gas prices increased from $5.63 per MCF in the fourth quarter of 2006 to $6.77 per MCF for the fourth quarter of 2007. For the fourth quarter of 2007, daily oil and gas production averaged 590,000 barrels of oil equivalent (BOE), compared with 561,000 BOE per day produced in the fourth quarter of 2006.
Chemicals
Chemical segment earnings for the fourth quarter of 2007 were $94 million, compared with $157 million for the same period in 2006. The fourth quarter of 2007 results reflect lower margins for polyvinyl chloride.
TWELVE-MONTHS RESULTS
Net income for the twelve months of 2007 was a record $5.400 billion ($6.44 per diluted share), compared with $4.191 billion ($4.87 per diluted share) for the twelve months of 2006.
Core results were also a record $4.405 billion ($5.25 per diluted share) for the twelve months of 2007, compared with $4.116 billion ($4.78 per diluted share) for the twelve months of 2006. See the attached schedule for a reconciliation of net income to core results.
Oil and Gas
Oil and gas segment earnings were $8.318 billion for the twelve months of 2007, compared with $6.880 billion for the same period of 2006. Oil and gas core results were $7.730 billion for the twelve months of 2007 after excluding gains from the sale of Oxy's joint venture in Russia, sales of exploration properties, net of asset impairments, sales of domestic oil and gas interests, and litigation settlements. The increase of $850 million in the twelve months of 2007 core results from $6.880 billion in 2006 reflected $1.3 billion from higher crude oil and natural gas prices, and increased production, including Dolphin coming on line in the third quarter of 2007, partially offset by higher DD&A rates, exploration and operating expenses.
The average price for West Texas Intermediate crude oil in the twelve months of 2007 was $72.32 per barrel compared to $66.23 per barrel in the twelve months of 2006. Oxy's realized price for worldwide crude oil was $64.77 per barrel for the twelve months of 2007, compared with $57.81 per barrel for the twelve months of 2006. The average price for NYMEX gas in the twelve months of 2007 was $7.12 per MCF, compared with $7.82 per MCF in the twelve months of 2006. Domestic realized gas prices increased slightly from $6.49 per MCF in the twelve months of 2006 to $6.53 per MCF for the same period of 2007.
Production
For the twelve months of 2007, daily oil and gas production averaged 570,000 BOE, compared with 545,000 BOE per day produced from continuing operations in the twelve months of 2006.
Chemicals
Chemical segment earnings for the twelve months of 2007 were $601 million, compared with $906 million for the same period in 2006. The 2007 results reflect lower margins for polyvinyl chloride.
About Oxy
Occidental Petroleum Corporation is an international oil and gas exploration and production company with operations in the United States, Middle East/North Africa and Latin America regions. Oxy is the fourth largest U.S. oil and gas company, based on equity market capitalization. Oxy's wholly owned subsidiary, OxyChem, manufactures and markets chlor-alkali products and vinyls. Occidental is committed to safeguarding the environment, protecting the safety and health of employees and neighboring communities and upholding high standards of social responsibility in all of the company's worldwide operations.
Forward-Looking Statements
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 and supply/demand considerations for oil, gas and chemicals; higher-than-expected costs; political risk; operational interruptions; changes in tax rates 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 release. 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.
For further analysis of Occidental's quarterly performance, please visit the web site: www.oxy.com
SUMMARY OF SEGMENT NET SALES AND EARNINGS
Fourth Quarter Twelve Months
(Millions, except ---------------- ----------------
per-share amounts) 2007 2006 2007 2006
================================ ======= ======= ======= =======
SEGMENT NET SALES
Oil and Gas $ 4,321 $ 2,946 $13,918 $12,190
Chemical 1,134 1,036 4,664 4,815
Other 62 56 202 170
------- ------- ------- -------
Net sales $ 5,517 $ 4,038 $18,784 $17,175
================================ ======= ======= ======= =======
SEGMENT EARNINGS
Oil and Gas (a) $ 2,599 $ 1,422 $ 8,318 $ 6,880
Chemical 94 157 601 906
------- ------- ------- -------
2,693 1,579 8,919 7,786
Unallocated Corporate Items
Interest expense, net (b) (13) (51) (199) (131)
Income taxes (1,057) (771) (3,507) (3,354)
Other (c) (175) 113 (135) (99)
------- ------- ------- -------
Income from Continuing Operations 1,448 870 5,078 4,202
Discontinued operations, net (d) 4 60 322 (11)
------- ------- ------- -------
NET INCOME $ 1,452 $ 930 $ 5,400 $ 4,191
======= ======= ======= =======
BASIC EARNINGS PER COMMON SHARE
Income from continuing
operations $ 1.75 $ 1.03 $ 6.08 $ 4.93
Discontinued operations, net (d) -- 0.07 0.39 (0.01)
------- ------- ------- -------
$ 1.75 $ 1.10 $ 6.47 $ 4.92
======= ======= ======= =======
DILUTED EARNINGS PER COMMON SHARE
Income from continuing
operations $ 1.74 $ 1.02 $ 6.05 $ 4.88
Discontinued operations, net (d) -- 0.07 0.39 (0.01)
------- ------- ------- -------
$ 1.74 $ 1.09 $ 6.44 $ 4.87
======= ======= ======= =======
AVERAGE COMMON SHARES OUTSTANDING
BASIC 828.4 846.4 834.9 852.6
DILUTED 833.1 852.6 839.1 860.4
================================ ======= ======= ======= =======
See footnotes on following page.
(a) Oil and Gas - The twelve months of 2007 includes pre-tax gains
of $412 million from the sale of Occidental's Russian investment,
$112 million resulting from the resolution of certain legal
disputes, $35 million from the sale of domestic oil and gas
interests and $103 million from the sale of exploration
properties, partially offset by a pre-tax loss of $74 million for
the impairment of properties.
(b) Interest Expense, net - Includes pre-tax interest charges for
the purchase of various debt issues in the open market of $167
million for the twelve months of 2007 and $31 million for the
twelve months of 2006, respectively.
(c) Unallocated Corporate Items - Other - The twelve months of
2007 includes a $326 million pre-tax gain from the sale of
Occidental's remaining investment in Lyondell Chemical Company
(Lyondell) and a $47 million pre-tax charge for a plant closure
and related environmental remediation reserve. The fourth quarter
of 2006 includes pre-tax gains of $108 million related to
litigation settlements and $90 million from the sale of a portion
of Occidental's investment in Lyondell.
(d) Discontinued Operations, net -- In June 2007, Occidental
completed an exchange of oil and gas interests in Horn Mountain
with BP p.l.c. (BP) for oil and gas interests in the Permian
Basin and a gas processing plant in Texas. Occidental also sold
its oil and gas interests in Pakistan to BP. The twelve months of
2007 includes after-tax income of $326 million related to these
transactions and their operating results and a $4 million
after-tax charge from assets classified to discontinued
operations in 2006.
In January 2006, Occidental completed the merger of Vintage into a subsidiary and classified certain assets and liabilities as held for sale. In May 2006, Ecuador terminated Occidental's contract for the operation of Block 15. The twelve months of 2006 includes a $253 million after-tax loss for Ecuador and the properties held for sale and $242 million after-tax income for the operations of Horn Mountain and Pakistan.
SUMMARY OF CAPITAL EXPENDITURES AND DD&A EXPENSE
Fourth Quarter Twelve Months
---------------- ----------------
($ millions) 2007 2006 2007 2006
================================ ======= ======= ======= =======
CAPITAL EXPENDITURES $ 987 $ 1,010 $ 3,497 $ 2,987
======= ======= ======= =======
DEPRECIATION, DEPLETION
AND AMORTIZATION
OF ASSETS $ 639 $ 562 $ 2,379 $ 2,008
================================ ======= ======= ======= =======
SUMMARY OF OPERATING STATISTICS
Fourth Quarter Twelve Months
---------------- ----------------
2007 2006 2007 2006
================================ ======= ======= ======= =======
NET OIL, GAS AND LIQUIDS
PRODUCTION PER DAY
United States
Crude Oil and Liquids (MBBL)
California 88 94 89 86
Permian 170 167 167 167
Hugoton and other 4 3 4 3
------- ------- ------- -------
Total 262 264 260 256
Natural Gas (MMCF)
California 250 261 254 256
Hugoton and other 148 142 153 138
Permian 180 190 186 194
------- ------- ------- -------
Total 578 593 593 588
Latin America
Crude Oil (MBBL)
Argentina 31 35 32 33
Colombia 41 44 42 38
------- ------- ------- -------
Total 72 79 74 71
Natural Gas (MMCF)
Argentina 19 17 22 17
Bolivia 22 18 18 17
------- ------- ------- -------
Total 41 35 40 34
Middle East/North Africa
Crude Oil (MBBL)
Oman 20 19 20 18
Dolphin 14 -- 4 --
Qatar 52 44 48 43
Yemen 22 26 25 29
Libya 22 24 22 23
------- ------- ------- -------
Total 130 113 119 113
Natural Gas (MMCF)
Oman 30 25 30 30
Dolphin 133 -- 51 --
------- ------- ------- -------
Total 163 25 81 30
Barrels of Oil Equivalent (MBOE)
Subtotal consolidated subsidiaries 594 565 573 549
Colombia-minority interest (6) (6) (5) (5)
Yemen-Occidental net interest 2 2 2 1
------- ------- ------- -------
Total Worldwide Production-
MBOE (a) 590 561 570 545
================================ ======= ======= ======= =======
(a) Occidental sold its interest in Russia in January 2007. In
June 2007, Occidental sold its Pakistan operations to BP and
exchanged its Gulf of Mexico - Horn Mountain operations with BP.
Production from these operations has been excluded from all
periods for comparability.
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 results," 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 results is not considered to be an alternative to operating income in accordance with generally accepted accounting principles.
The following tables set forth the core results and significant items affecting earnings for each operating segment and corporate:
SIGNIFICANT TRANSACTIONS AND EVENTS AFFECTING EARNINGS (continued)
Fourth Quarter
----------------------------------
($ millions, except Diluted Diluted
per-share amounts) 2007 EPS 2006 EPS
================================ ======= ======= ======= =======
TOTAL REPORTED EARNINGS $ 1,452 $ 1.74 $ 930 $ 1.09
======= ======= ======= =======
Oil and Gas
Segment Earnings $ 2,599 $ 1,422
Less:
No significant items
affecting earnings -- --
------- -------
Segment Core Results 2,599 1,422
------- -------
Chemicals
Segment Earnings 94 157
Less:
No significant items
affecting earnings -- --
------- -------
Segment Core Results 94 157
------- -------
Total Segment Core Results 2,693 1,579
------- -------
Corporate
Corporate Results --
Non Segment* (1,241) (649)
Less:
Litigation settlements -- 108
Gain on sale of Lyondell
shares -- 90
Deferred tax write-off due to
compensation program changes** -- (40)
Severance accrual (25) --
Debt purchase expense -- (31)
Tax effect of pre-tax
adjustments 9 (41)
Discontinued operations, net** 4 60
------- -------
Corporate Core Results --
Non Segment (1,229) (795)
------- -------
TOTAL CORE RESULTS $ 1,464 $ 1.76 $ 784 $ 0.92
=============================== ======= ======= ======= =======
*Interest expense, income taxes, G&A expense and other, and non-core
items.
**Amounts shown after tax.
SIGNIFICANT TRANSACTIONS AND EVENTS AFFECTING EARNINGS (continued)
Twelve Months
----------------------------------
($ millions, except Diluted Diluted
per-share amounts) 2007 EPS 2006 EPS
================================ ======= ======= ======= =======
TOTAL REPORTED EARNINGS $ 5,400 $ 6.44 $ 4,191 $ 4.87
======= ======= ======= =======
Oil and Gas
Segment Earnings $ 8,318 $ 6,880
Less:
Gain on sale of Russia
Investment** 412 --
Litigation settlements** 112 --
Gain on sale of oil and gas
interests 35 --
Gain on sale of exploration
properties 103 --
Impairments (74) --
------- -------
Segment Core Results 7,730 6,880
------- -------
Chemicals
Segment Earnings 601 906
Less:
No significant items
affecting earnings -- --
------- -------
Segment Core Results 601 906
------- -------
Total Segment Core Results 8,331 7,786
------- -------
Corporate
Corporate Results --
Non Segment* (3,519) (3,595)
Less:
Gain on sale of Lyondell shares 326 90
Litigation settlements -- 108
Debt purchase expense (167) (31)
Plant closure (47) --
Severance accrual (25) --
Deferred tax write-off due to
compensation program changes** -- (40)
Tax effect of pre-tax
adjustments (2) (41)
Discontinued operations, net** 322 (11)
------- -------
Corporate Core Results --
Non Segment (3,926) (3,670)
------- -------
TOTAL CORE RESULTS $ 4,405 $ 5.25 $ 4,116 $ 4.78
================================ ======= ======= ======= =======
*Interest expense, income taxes, G&A expense and other, and non-core
items.
**Amounts shown after tax.