LOS ANGELES, Oct. 22, 1998 (PRIMEZONE) -- Occidental Petroleum Corporation (NYSE:OXY) today reported net income of $38 million ($.10 per share) for the third quarter of 1998, compared with net income of $157 million ($.40 per share) for the third quarter of 1997. Earnings before special items were $3 million for the third quarter of 1998, compared with $184 million for the same period in 1997. Sales were $1.7 billion for the third quarter of 1998, compared with $2.0 billion for the third quarter of 1997.
In announcing the results, Dr. Ray R. Irani, Chairman and Chief Executive Officer, stated, "During this period of low energy and chemical prices we have taken steps to improve the quality of our assets through acquisitions, divestitures and asset swaps. In addition, we are reducing capital spending and operating costs across the company. We believe that these actions will provide upside leverage to Occidental's earnings when commodity prices improve."
Oil and gas divisional earnings before special items were $61 million for the third quarter of 1998, compared with $144 million for the third quarter of 1997. Results for the third quarter of 1998 were $156 million after including gains of $137 million primarily related to the sale of the stock of Occidental Netherlands, Inc., a $30 million charge for the write-off of its investment in certain exploration projects and a $12 million charge for the recently announced reorganization. The decrease in earnings before special items primarily reflects the negative impact of lower worldwide crude oil prices, partially offset by increased crude oil production in the eastern hemisphere and United States. Additionally, the swap of Occidental's Malaysia and Philippines assets for Royal Dutch/Shell Group's Yemen and Colombia assets, completed in the third quarter, should result in an increase in oil production in the fourth quarter.
Chemical divisional earnings for the third quarter of 1998 were $62 million, compared with $209 million for the third quarter of 1997. The decline in 1998 earnings resulted primarily from lower prices for chlorine, EDC, PVC and petrochemical products, partially offset by higher caustic soda prices and lower energy and raw material prices.
For the first nine months of 1998, Occidental's net income totaled $401 million ($1.11 per share), compared with net income of $494 million ($1.29 per share) for the first nine months of 1997. The nine months earnings before special items were $139 million for 1998, compared with $449 million for 1997. Sales were $4.9 billion for the nine months of 1998, compared with $6.1 billion for the same period of 1997.
SUMMARY OF DIVISIONAL NET SALES AND EARNINGS
(Millions, except per-share amounts)
Third Quarter Nine Months
Periods Ended September 30 1998 1997(b) 1998 1997(b)
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DIVISIONAL NET SALES
Oil and gas $ 1,030 $ 883 $ 2,509 $ 2,780
Chemical 631 1,124 2,395 3,302
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$ 1,661 $ 2,007 $ 4,904 $ 6,082
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DIVISIONAL EARNINGS
Oil and gas $ 156 $ 144 $ 768 $ 530
Chemical 62 209 280 490
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218 353 1,048 1,020
Unallocated corporate items
Interest expense, net (106) (100) (336) (302)
Income taxes (a) (49) (17) (291) (164)
Other (25) (106) (58) (159)
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Income from continuing operations 38 130 363 395
Discontinued operations, net - 27 38 99
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NET INCOME 38 157 401 494
Preferred dividends (4) (21) (13) (67)
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Earnings applicable to common stock $ 34 $ 136 $ 388 $ 427
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BASIC EARNINGS PER COMMON SHARE (c)
Income from continuing operations $ .10 $ .32 $ 1.00 $ .99
Discontinued operations, net - .08 .11 .30
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Basic earnings per common share $ .10 $ .40 $ 1.11 $ 1.29
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DILUTED EARNINGS PER COMMON SHARE (c)
Income from continuing operations $ .10 $ .31 $ .99 $ .96
Discontinued operations, net - .07 .10 .27
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Diluted earnings per common share $ .10 $ .38 $ 1.09 $ 1.23
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Average common shares outstanding (c) 350.0 335.6 351.2 331.8
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(a) Includes an adjustment to corporate taxes, as quarterly consolidated taxes are computed in accordance with APB Opinion No. 28 and hence are based on projections of total-year income and taxes. Also, includes an offset for credits in lieu of U.S. federal income taxes allocated to the divisions. Divisional earnings are shown before U.S. tax effect, but have benefited from credits allocated by $2 million and $7 million at oil and gas and chemical, respectively, in the third quarter of 1998 and by $3 million and $7 million at oil and gas and chemical, respectively, in the third quarter of 1997.
(b) 1997 results have been restated to reflect the adoption of SFAS 131, "Disclosures about Segments of an Enterprise and Related Information" and to reflect MidCon as a discontinued operation.
(c) The 1998 earnings per share calculations include the effect of 17.1 million shares of preferred stock being converted into 38.6 million shares of common stock, primarily in the first quarter of 1998.
SUMMARY OF OPERATING STATISTICS
Third Quarter Nine Months
Periods Ended September 30 1998 1997 1998 1997
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NET OIL, GAS AND LIQUIDS
PRODUCTION PER DAY
United States
Crude oil and condensate
(thousands of barrels) 69 57 75 58
Natural gas liquids
(thousands of barrels) 9 7 8 10
Natural gas
(millions of cubic feet) 603 587 603 603
Other Western Hemisphere
Crude oil and condensate
(thousands of barrels) 79 107 84 116
Eastern Hemisphere
Crude oil and condensate
(thousands of barrels) 164 108 146 103
Natural gas
(millions of cubic feet) 54 96 105 111
CAPITAL EXPENDITURES (millions) $ 254 $ 353 $ 840 $1,008
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DEPRECIATION, DEPLETION AND
AMORTIZATION OF ASSETS (millions) $ 202 $ 187 $ 653 $ 598
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Contacts: Howard Collins (media)
310-443-6523
Kenneth J. Huffman (investors)
212-603-8183