LOS ANGELES, July 22, 2002 (PRIMEZONE) -- Occidental Petroleum Corporation (NYSE:OXY) announced net income for the second quarter 2002 of $240 million ($0.64 per share), compared with $473 million ($1.27 per share) for the second quarter 2001. Earnings before special items were $466 million ($1.25 per share) for the second quarter 2001. There were no special items in the second quarter 2002.
Occidental's net income for the second quarter 2002 of $240 million ($0.64 per share), improved significantly compared with $25 million ($0.07 per share) for the first quarter 2002, which included a goodwill write off and severance charges of $104 million after tax. Earnings before special items for the first quarter 2002 were $129 million ($0.34 per share).
In announcing the results, Dr. Ray R. Irani, chairman and chief executive officer, said, "Our second quarter oil and gas production increased by 14 percent compared to last year, with volumes rising from an average of 450,000 to 512,000 barrels of oil equivalent per day. Despite the sharp increase in production, our profits were down significantly due primarily to much lower gas prices. We're encouraged by the improvement in our profits compared to the first quarter. The improvement was driven by higher oil and gas prices and by strengthening chemical markets for our products. We're on target to increase oil and gas production by more than 5 percent this year, and we expect production growth to continue at an average annual rate of 5 percent through 2006 - based solely on current development projects.
Our chemical business was aided significantly by improved prices. We expect additional improvement in the chemical business in the third quarter."
Oil and Gas
Oil and gas segment earnings were $421 million for the second quarter 2002, compared with $806 million for the second quarter 2001. The decline in the second quarter 2002 earnings reflected the effect of lower prices of approximately $400 million, primarily for domestic natural gas, and higher exploration expense, partially offset by higher production volumes.
For the first quarter 2002, oil and gas segment earnings were $306 million. The increase in earnings, in the second quarter 2002 compared with the first quarter, primarily reflected higher crude oil and natural gas prices, partially offset by higher exploration expense.
For the first six months of 2002, production volumes increased approximately 12 percent to 518,000 barrels of oil equivalent per day (BOE) compared with 463,000 for the same period of 2001. The increase reflects higher worldwide crude oil and liquids production, particularly in California, Colombia and the Middle East.
Chemicals
Chemical segment earnings were $33 million for the second quarter 2002, compared with $58 million for the second quarter 2001. The decline in the second quarter 2002 earnings reflected lower sales prices for caustic soda and PVC, partially offset by higher EDC prices and lower energy and raw material costs.
The first quarter 2002 segment results after special items were a loss of $35 million. The improvement in earnings in the second quarter 2002 compared with the first quarter reflected higher sales prices for chlorine, EDC and PVC and better performance of our Equistar petrochemical investment, partially offset by lower caustic soda prices and higher energy and raw material costs. Core chemical operations, which excludes Equistar, earned $37 million in the second quarter 2002 compared with $15 million before special items in the first quarter. Equistar results in the second quarter 2002 improved to a loss of $4 million, compared with a $36 million loss in the first quarter. The sale of Occidental's Equistar interest to Lyondell is expected to close at the end of August 2002.
Six Months Results
For the first six months of 2002, net income was $265 million ($0.71 per share), compared with $957 million ($2.58 per share) for the first six months of 2001. Earnings before special items were $369 million ($0.98 per share), compared with $976 million ($2.63 per share) for the same period of 2001.
Subsequent to the appointment of KPMG to replace Arthur Andersen as the Company's independent auditor, KPMG conducted a complete re-audit of Occidental's consolidated financial statements for the previous three years. Occidental has filed a 10-K/A with the SEC that contains KPMG's unqualified report containing no changes in our balance sheet, net income, cash flow or earnings per share.
Statements in this presentation that contain words such as "will" or "expect," 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: global commodity pricing fluctuations, 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. Occidental disclaims any obligation to update any forward-looking statements.
SUMMARY OF SEGMENT NET SALES AND EARNINGS
(Millions, except per-share amounts)
Second Quarter Six Months
Periods Ended June 30 2002 2001 2002 2001
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SEGMENT NET SALES
Oil and gas $ 2,410 $ 2,964 $ 4,347 $ 6,576
Chemical 731 881 1,319 1,744
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Net sales $ 3,141 $ 3,845 $ 5,666 $ 8,320
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SEGMENT EARNINGS (LOSSES)
Oil and gas $ 421 $ 806 $ 727 $ 1,752
Chemical 33 58 (2) (21)
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454 864 725 1,731
Unallocated Corporate Items
Interest expense, net (a) (66) (71) (122) (147)
Income taxes (b) (101) (249) (144) (424)
Trust preferred distributions
& other (12) (14) (23) (30)
Other (c) (35) (57) (76) (146)
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Income before extraordinary items
and effect of changes in
accounting principles 240 473 360 984
Extraordinary loss, net - - - (3)
Cumulative effect of changes
in accounting principles, net - - (95) (24)
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NET INCOME $ 240 $ 473 $ 265 $ 957
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BASIC EARNINGS PER COMMON SHARE
Income before extraordinary
items and effect of changes
in accounting principles $ 0.64 $ 1.27 $ 0.96 $ 2.65
Extraordinary loss, net - - - (0.01)
Cumulative effect of changes
in accounting principles, net - - (.25) (0.06)
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$ 0.64 $ 1.27 $ 0.71 $ 2.58
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DILUTED EARNINGS PER COMMON SHARE
Income before extraordinary
items and effect of changes
in accounting principles $ 0.63 $ 1.26 $ 0.95 $ 2.64
Extraordinary loss, net - - - (0.01)
Cumulative effect of changes
in accounting principles, net - - (.25) (0.06)
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$ 0.63 $ 1.26 $ 0.70 $ 2.57
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AVERAGE BASIC COMMON SHARES
OUTSTANDING 375.8 372.0 375.1 371.1
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(a) Includes interest income on notes receivable from Occidental
Permian partners. The second quarter and six months year-to-date
2002 include $8 million and $22 million, respectively. The
second quarter and six months year-to-date 2001 include $28
million and $61 million, respectively.
(b) Includes an offset for (charges)/credits in lieu of U.S. federal
income taxes allocated to the divisions. Chemical divisional
earnings had credits allocated to them of $4 million in the
second quarter of 2002. The second quarter of 2001 was impacted
by a ($3) million charge at Oil and Gas and an $18 million credit
at Chemicals. The 2001 results include a ($4) million charge at
Oil and Gas related to an asset sale and a $14 million credit at
Chemicals related to asset sales.
(c) Includes preferred distributions to the Occidental Permian
partners. The second quarter and six months year-to-date 2002
include $5 million and $20 million, respectively. The second
quarter and six months year-to-date 2001 include $28 million and
$62 million, respectively. These amounts are essentially offset
by the interest income discussed in (a) above.
SUMMARY OF OPERATING STATISTICS
Second Quarter Six Months
Periods Ended June 30 2002 2001 2002 2001
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NET OIL, GAS AND LIQUIDS
PRODUCTION PER DAY
United States
Crude oil and liquids (MBBL)
California 86 72 88 72
Permian 143 137 141 136
Other 3 - 3 -
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Total 232 209 232 208
Natural Gas (MMCF)
California 290 298 298 307
Hugoton 150 163 154 165
Permian 125 146 127 147
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Total 565 607 579 619
Latin America
Crude oil and condensate (MBBL)
Colombia 37 - 34 10
Ecuador 12 14 13 13
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Total 49 14 47 23
Eastern Hemisphere
Crude oil and condensate (MBBL)
Oman 15 10 16 10
Pakistan 9 8 8 7
Qatar 43 41 43 42
Russia 28 27 27 28
Yemen 33 32 40 34
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Total 128 118 134 121
Natural Gas (MMCF)
Pakistan 50 47 50 48
Barrels of Oil Equivalent (MBOE) 512 450 518 463
CAPITAL EXPENDITURES (millions) $ 326 $ 309 $ 600 $ 547
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DEPRECIATION, DEPLETION AND
AMORTIZATION OF ASSETS (millions) $ 254 $ 237 $ 515 $ 482
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