LOS ANGELES, Jan. 25, 2000 (PRIMEZONE)--Occidental Petroleum Corporation (NYSE:OXY) announced net income of $383 million ($1.04 per share) for the fourth quarter of 1999, compared with a net loss of $38 million ($.12 per share) for the fourth quarter of 1998. The 1999 results included the effects of a number of special items discussed below in their respective business segments.
Earnings before special items were $192 million for the fourth quarter of 1999 compared with a loss before special items of $35 million for the fourth quarter of 1998. Sales were $2.5 billion for the fourth quarter of 1999, compared with $1.7 billion for the same period in 1998.
Dr. Ray R. Irani, Chairman and Chief Executive Officer, said, "We finished the year on a very strong note. Oil and gas earnings before special items set a new quarterly record due to higher energy prices and cost reductions. Chemicals earnings are up due to increasing margins in PVC and chlorine and it appears that key chemical prices will continue to increase throughout 2000. Earnings before special items were $.52 per share for the fourth quarter. Our balance sheet has been strengthened by debt reduction during 1999 due to the Chevron litigation settlement and improved cash flow from operations. Total debt to total capitalization has been reduced from 64 pct to 59 pct."
Oil and Gas
Oil and gas divisional earnings before special items were $329 million for the fourth quarter of 1999, compared with $36 million for the fourth quarter of 1998, primarily as a result of higher energy prices and lower exploration, production and overhead costs, partially offset by lower crude oil production volumes.
Oil and gas results after special items for the fourth quarter of 1999 were $754 million. The 1999 results include the $488 million benefit, net of tax, from the Chevron settlement; a $29 million loss, net of tax, related to the previously announced sale of our Peru producing assets; a $25 million pre-tax charge for claims and settlements and a $9 million pre-tax charge for the write down of an office building investment to market value.
Chemicals
Chemical divisional earnings before special items were $66 million for the fourth quarter of 1999, compared with a loss of $14 million for the fourth quarter of 1998, primarily due to higher prices for chlorine, EDC and PVC resins which were partially offset by lower caustic soda prices and higher raw material costs.
Chemical results after special items for the fourth quarter of 1999 were a loss of $130 million. The 1999 results include a $159 million pre-tax charge to write down various domestic and foreign impaired assets, a $28 million pre-tax charge for Occidental's share of asset writedowns in Equistar, Occidental's petrochemicals joint venture investment, and a $9 million pre-tax charge for claims and settlements.
Other
Substantially all of the proceeds from the Chevron settlement were used to extinguish high cost outstanding debt through calls and tenders. These previously announced debt extinguishments resulted in an after-tax extraordinary loss of $104 million ($.29 per share) in the fourth quarter of 1999.
For the total year 1999, Occidental's net income was $448 million ($1.24 per share), compared with net income of $363 million ($.99 per share) for the total year 1998. The twelve months results before special items were net income of $253 million, compared with earnings before special items of $104 million in 1998. Sales were $7.6 billion for the total year of 1999, compared with sales of $6.6 billion for the same period of 1998.
Forward-looking statements and estimates regarding exploration and production activities, oil, gas and commodity chemical prices and their related earnings effects, and cost reductions in this release are based on assumptions concerning market, competitive, regulatory, environmental, operational and other conditions. Actual results could differ materially as a result of factors discussed in Occidental's Annual Report on Form 10-K.-0-
SUMMARY OF DIVISIONAL NET SALES AND EARNINGS
(Millions, except per-share amounts)
Fourth Quarter Twelve Months
Periods Ended December 31 1999 1998 1999 1998
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Divisional net sales
Oil and Gas $ 1,617 $ 1,112 $ 4,572 $ 3,621
Chemical 889 580 3,038 2,975
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$ 2,506 $ 1,692 $ 7,610 $ 6,596
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Divisional earnings
Oil and Gas $ 754 $ 36 $ 1,261 $ 804
Chemical (130) (14) (52) 266
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624 22 1,209 1,070
Unallocated corporate items
Interest expense, net (111) (115) (468) (451)
Income taxes (a) (3) 63 (68) (228)
Trust preferred distributions (11) - (41) -
Other (12) (8) (64) (66)
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Income (loss) from continuing
operations 487 (38) 568 325
Discontinued operations, net - - - 38
Extraordinary loss, net (b) (104) - (107) -
Cumulative effect of changes in
accounting principles, net (c) - - (13) -
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Net income (loss) 383 (38) 448 363
Effect of repurchase of Trust
Preferred Securities (d) 1 - 1 -
Preferred dividends - (4) (7) (17)
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Earnings (loss) applicable to
common stock $ 384 $ (42) $ 442 $ 346
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Earnings per common share
Basic
Income (loss) from continuing
operations $ 1.33 $ (.12) $ 1.58 $ .88
Discontinued operations, net - - - .11
Extraordinary loss, net (b) (.29) - (.30) -
Cumulative effect of changes in
accounting principles, net (c) - - (.04) -
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Basic earnings (loss) per
common share $ 1.04 $ (.12) $ 1.24 $ .99
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Diluted
Income (loss) from continuing
operations $ 1.33 $ (.12) $ 1.58 $ .88
Discontinued operations, net - - - .11
Extraordinary loss, net (b) (.29) - (.30) -
Cumulative effect of changes in
accounting principles, net (c) - - (.04) -
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Diluted earnings (loss) per
common share $ 1.04 $ (.12) $ 1.24 $ .99
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Average common shares
Outstanding 367.7 347.1 355.4 350.2
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SUMMARY OF DIVISIONAL NET SALES AND EARNINGS
Fourth Quarter Twelve Months
Periods Ended December 31 1999 1998 1999 1998
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Net oil, gas and liquids
production per day
United States
Crude oil and condensate
(thousands of barrels) 64 67 64 73
Natural gas liquids
(thousands of barrels) 9 9 9 8
Natural gas
(millions of cubic feet) 655 645 662 614
Other Western Hemisphere
Crude oil and condensate
(thousands of barrels) 78 107 96 90
Eastern Hemisphere
Crude oil and condensate
(thousands of barrels) 126 163 137 151
Natural gas
(millions of cubic feet) 52 41 52 89
Capital expenditures (millions) $ 218 $ 234 $ 601 $ 1,074
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Depreciation, depletion and
amortization of assets
(millions) $ 207 $ 182 $ 805 $ 835
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Includes an offset for charges and credits in lieu of U.S. federal income taxes allocated to the divisions. Divisional earnings have been impacted from allocations of a $260 million charge and a $4 million credit at Oil and Gas and Chemical, respectively, in the fourth quarter of 1999 and by credits of $4 million and $6 million at Oil and Gas and Chemical, respectively, in the fourth quarter of 1998. The Oil and Gas fourth quarter of 1999 amount included a charge related to the Chevron litigation settlement and a credit for the loss on Peru producing assets.
The fourth quarter of 1999 includes the early extinguishment of $274 million principal of 7 percent debentures due 2011, $240 million principal of 10-1/8 percent senior notes due November 15, 2001 and $138 million principal of 11-1/8 percent senior notes due August 1, 2010. The impact of these extinguishments is a $104 million charge, which is net of a $60 million income tax benefit. The twelve months of 1999 also includes the 2nd quarter early extinguishment of $69 million principal of 11-1/8 percent senior debentures. The impact of this extinguishment was a $3 million charge, which is net of a $1 million income tax benefit.
The twelve months of 1999 reflects the adoption of SOP 98-5 "Reporting on the Costs of Start-Up Activities", which requires expensing of start-up costs as incurred and those costs that are currently capitalized at date of adoption. The impact of SOP 98-5 is a $15 million charge which is net of an $8 million income tax benefit. Also reflects the adoption of EITF 98-10 "Accounting for Contracts Involved in Energy Trading and Risk Management Activities", which requires energy trading contracts to be marked to market. The impact of EITF 98-10 is a $2 million credit which is net of a $1 million income tax charge.
The fourth quarter of 1999 includes a $1 million gain, net of tax, related to the repurchase of 937,436 shares of 8.16 percent Trust Preferred Securities.