LOS ANGELES, Jan. 26, 1999 (PRIMEZONE) -- Occidental Petroleum Corporation (NYSE: OXY) today reported a net loss of $38 million ($.12 per share) for the fourth quarter of 1998, compared with a net loss of $884 million ($2.65 per share) for the fourth quarter of 1997. Results before special items were a loss of $35 million for the fourth quarter of 1998, compared with earnings of $99 million for the same period in 1997. The 1997 earnings before special items exclude MidCon's operating earnings of $44 million. Sales were $1.7 billion for the fourth quarter of 1998, compared with $1.9 billion for the fourth quarter of 1997.
In announcing the results, Dr. Ray R. Irani, Chairman and Chief Executive Officer, stated, "Occidental's 1998 results reflect significantly lower oil and gas and chemical prices than we realized in 1997. Prudent planning dictates that we reduce our capital spending during this period of low oil and chemical prices. The 1999 capital spending budget will be reduced to $350 million compared with $1.06 billion for 1998. Of the $350 million in 1999 capital spending, oil and gas will be allocated approximately $275 million, with Elk Hills and Qatar receiving the highest priority, and the remainder will go to chemicals. We expect that 1999 worldwide oil and gas production will remain at approximately the same level as 1998 even with the reduced spending level."
Oil and gas divisional earnings were $36 million for the fourth quarter of 1998, compared with earnings before special items of $164 million for the fourth quarter of 1997. Results for the fourth quarter of 1997 were a loss of $92 million after including $256 million charges for the write-down of various nonstrategic and impaired assets and additional environmental and other reserves. The decrease in earnings before special items primarily reflects the negative impact of worldwide crude oil and natural gas prices, partially offset by increased worldwide crude oil production and natural gas production in the United States.
Chemical divisional results were a loss of $14 million for the fourth quarter of 1998, compared with earnings before special items of $104 million for the fourth quarter of 1997. The 1997 fourth quarter results were a loss of $55 million, after $159 million in charges for additional environmental matters and the write-down of various idled and impaired assets. The decline in 1998 earnings resulted from lower prices in chlorine, EDC, PVC and petrochemical products, partially offset by higher caustic soda prices and lower energy and raw material prices.
For the total year 1998, Occidental's net income totaled $363 million ($.99 per share), compared with a net loss of $390 million ($1.43 per share) for 1997. Total year 1998 income before special items was $104 million, compared with 1997 income before special items of $548 million, which excludes MidCon's operating earnings of $143 million. Sales were $6.6 billion for 1998, compared with $8.0 billion for 1997.
SUMMARY OF DIVISIONAL NET SALES AND EARNINGS
(Millions, except per-share amounts)
Fourth Quarter Twelve Months
Periods Ended December 31 1998 1997(b) 1998 1997(b)
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DIVISIONAL NET SALES
Oil and gas $ 1,112 $ 887 $ 3,621 $ 3,667
Chemical 580 1,047 2,975 4,349
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$ 1,692 $ 1,934 $ 6,596 $ 8,016
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DIVISIONAL EARNINGS
Oil and gas $ 36 $ (92) $ 804 $ 438
Chemical (14) (55) 266 435
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22 (147) 1,070 873
Unallocated corporate items
Interest expense, net (115) (105) (451) (407)
Income taxes (a) 63 104 (228) (60)
Other (8) (30) (66) (189)
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Income from continuing operations (38) (178) 325 217
Discontinued operations, net (d) - (706) 38 (607)
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NET INCOME (LOSS) (38) (884) 363 (390)
Preferred dividends (4) (21) (17) (88)
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Earnings (loss) applicable to
common stock $ (42) $ (905) $ 346 $ (478)
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BASIC EARNINGS PER COMMON SHARE (c)
Income from continuing
operations $ (.12) $ (.58) $ .88 $ .39
Discontinued operations, net - (2.07) .11 (1.82)
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Basic earnings (loss) per
common share $ (.12) $ (2.65) $ .99 $ (1.43)
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DILUTED EARNINGS PER
COMMON SHARE (c)
Income from continuing
operations $ (.12) $ (.58) $ .88 $ .39
Discontinued operations, net - (2.07) .11 (1.82)
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Diluted earnings (loss) per
common share $ (.12) $ (2.65) $ .99 $ (1.43)
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Average common shares outstanding(c) 347.1 341.9 350.2 334.3
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(a) 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 $4 million and $6 million
at oil and gas and chemical, respectively, in the fourth quarter of 1998 and by
$3 million and $6 million at oil and gas and chemical, respectively, in the
fourth 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."
(c) The 1998 earnings per share calculations include the effect of 17.6 million
shares of preferred stock being converted into 40.1 million shares of common
stock, partially offset by the stock buyback of 35.1 million shares.
(d) In the fourth quarter of 1997, Occidental classified its MidCon subsidiary
as a discontinued operation and recorded a net $750 million charge.
SUMMARY OF OPERATING STATISTICS
Fourth Quarter Twelve Months
Periods Ended December 31 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) 67 55 73 57
Natural gas liquids
(thousands of barrels) 9 12 8 10
Natural gas
(millions of cubic feet) 645 574 614 596
Other Western Hemisphere
Crude oil and condensate
(thousands of barrels) 107 104 90 113
Eastern Hemisphere
Crude oil and condensate
(thousands of barrels) 163 114 151 106
Natural gas
(millions of cubic feet) 41 107 89 110
CAPITAL EXPENDITURES (millions) $ 223 $ 541 $ 1,063 $ 1,549
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DEPRECIATION, DEPLETION AND
AMORTIZATION OF ASSETS (millions) $ 182 $ 224 $ 835 $ 822
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Contacts: Howard Collins (media)
310-443-6523
Kenneth J. Huffman (investors)
212-603-8183