LOS ANGELES, July 24, 2008 (PRIME NEWSWIRE) -- Occidental Petroleum Corporation (NYSE: OXY) announced net income of $2.297 billion ($2.78 per diluted share) for the second quarter of 2008, compared with $1.412 billion ($1.68 per diluted share) for the second quarter of 2007.
Core results for the second quarter of 2008 were $2.300 billion ($2.79 per diluted share), compared with $943 million ($1.12 per diluted share) for the second quarter of 2007. See the attached schedule for a reconciliation of net income to core results.
In announcing the results, Dr. Ray R. Irani, Chairman and Chief Executive Officer, said, "Oxy's record net income for the second quarter of 2008 beat the previous record set during the first quarter of 2008 by 24 percent. Occidental's first six months of 2008 net income was 58 percent higher than our previous record first six month income achieved in 2007.
"Our production grew by 5 percent for the second quarter, and nearly 7 percent for the first six months compared to last year, and we plan to increase capital expenditures to $4.7 billion in 2008 to accelerate growth. The additional capital funds will be used to drill and recomplete approximately 400 wells, mainly in California, Texas and Colorado, as well as in Argentina, Colombia and Libya."
QUARTERLY RESULTS
Oil and Gas
Oil and gas segment earnings were $3.806 billion for the second quarter of 2008, compared with $1.658 billion for the same period in 2007. The $2.1 billion increase in the second quarter 2008 segment earnings reflected $2.2 billion of increases from record crude oil and higher natural gas prices, higher oil and gas production and lower exploration expense, partially offset by increased DD&A rates and higher operating expenses.
For the second quarter of 2008, daily oil and gas production averaged 588,000 barrels of oil equivalent (BOE), compared with 558,000 BOE per day produced in the second quarter of 2007. The bulk of the production increase was the result of 46,000 BOE per day from the Dolphin project, which began production in the third quarter of 2007, and 11,000 BOE per day from recently acquired domestic assets, partially offset by lower production from Argentina as a result of a strike in May and by 19,000 BOE per day lower production caused by higher oil prices affecting our production sharing contracts. Argentina production was impacted by 15,000 BOE per day from the strike which lasted approximately five weeks and also halted all drilling programs. Production is now back at approximately pre-strike levels.
Oxy's realized price for worldwide crude oil was $110.12 per barrel for the second quarter of 2008, compared with $59.11 per barrel for the second quarter of 2007. Domestic realized gas prices increased from $7.07 per MCF in the second quarter of 2007 to $9.99 per MCF for the second quarter of 2008.
Chemicals
Chemical segment earnings for the second quarter of 2008 were $144 million, compared with $158 million for the same period in 2007. The second quarter of 2008 results reflect lower volumes and margins for chlorine and polyvinyl chloride, partially offset by higher margins for caustic soda.
Midstream, Marketing and Other
Midstream segment earnings were $161 million for the second quarter of 2008, compared with $25 million for the second quarter of 2007. The second quarter of 2008 reflects higher pipeline income from Dolphin, which came on line in the second half of 2007, and higher margins in gas processing and marketing. Positive mark to market adjustments also contributed to pipeline and storage earnings during the second quarter of 2008.
SIX MONTHS RESULTS
Net income for the six months of 2008 was $4.143 billion ($5.01 per diluted share), compared with $2.624 billion ($3.11 per diluted share) for the six months of 2007.
Core results were $4.119 billion ($4.98 per diluted share) for the six months of 2008, compared with $1.731 billion ($2.05 per diluted share) for the six months of 2007. See the attached schedule for a reconciliation of net income to core results.
Oil and Gas
Oil and gas segment earnings were $6.694 billion for the six months of 2008, compared with $3.541 billion for the same period of 2007. Oil and gas core results were $2.994 billion for the six months of 2007 after excluding a gain from the sale of Occidental's Russian joint venture interests of $412 million, a $23 million gain from the sale of other oil and gas interests and $112 million income from the resolution of certain legal disputes. The $3.7 billion increase in the 2008 core results from $2.994 billion in 2007 reflected $3.8 billion from higher crude oil and natural gas prices, increased oil and gas production and lower exploration expense, partially offset by higher operating expenses and increased DD&A rates.
Daily oil and gas production for the first six months was 598,000 BOE per day for 2008, compared with 559,000 BOE per day for the same 2007 period. The nearly 7-percent increase was largely the result of 50,000 BOE per day from the Dolphin project and 7,000 BOE from recently acquired domestic assets, partially offset by 14,000 BOE per day from production sharing contracts, where volumes decrease with higher oil prices, and 7,000 BOE per day decrease in Argentina due to the strike.
Oxy's realized price for worldwide crude oil was $98.16 per barrel for the six months of 2008, compared with $55.34 per barrel for the six months of 2007. Domestic realized gas prices increased from $6.74 per MCF in the six months of 2007 to $9.09 per MCF in the six months of 2008.
Chemicals
Chemical segment earnings were $323 million for the six months of 2008, compared with $295 million for the six months of 2007. The six months 2008 results reflect higher margins for caustic soda, partially offset by lower margins for polyvinyl chloride.
Midstream, Marketing and Other
Midstream segment earnings were $284 million for the six months of 2008, compared with $143 million for the same period in 2007. The improvement in 2008 reflected higher pipeline income from the Dolphin Pipeline and higher margins in gas processing and power generation.
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
Second Quarter Six Months
(Millions, except ---------------- ----------------
per-share amounts) 2008 2007 2008 2007
================================ ======= ======= ======= =======
SEGMENT NET SALES
Oil and Gas $ 5,501 $ 3,061 $10,019 $ 5,781
Chemical 1,386 1,229 2,653 2,289
Midstream, Marketing and Other 418 280 823 638
Eliminations (189) (159) (359) (282)
------- ------- ------- -------
Net sales $ 7,116 $ 4,411 $13,136 $ 8,426
================================ ======= ======= ======= =======
SEGMENT EARNINGS
Oil and Gas (a) $ 3,806 $ 1,658 $ 6,694 $ 3,541
Chemical 144 158 323 295
Midstream, Marketing and Other 161 25 284 143
------- ------- ------- -------
4,111 1,841 7,301 3,979
Unallocated Corporate Items
Interest expense, net (b) (7) 6 (7) (175)
Income taxes (1,671) (904) (2,965) (1,588)
Other (c) (133) 202 (210) 98
------- ------- ------- -------
Income from Continuing Operations 2,300 1,145 4,119 2,314
Discontinued operations, net (d) (3) 267 24 310
------- ------- ------- -------
NET INCOME $ 2,297 $ 1,412 $ 4,143 $ 2,624
======= ======= ======= =======
BASIC EARNINGS PER COMMON SHARE
Income from continuing
operations $ 2.80 $ 1.36 $ 5.01 $ 2.76
Discontinued operations, net (d) -- 0.32 0.03 0.37
------- ------- ------- -------
$ 2.80 $ 1.68 $ 5.04 $ 3.13
======= ======= ======= =======
DILUTED EARNINGS PER COMMON SHARE
Income from continuing
operations $ 2.78 $ 1.36 $ 4.98 $ 2.74
Discontinued operations, net (d) -- 0.32 0.03 0.37
------- ------- ------- -------
$ 2.78 $ 1.68 $ 5.01 $ 3.11
======= ======= ======= =======
AVERAGE COMMON SHARES OUTSTANDING
BASIC 821.3 837.7 822.5 839.3
DILUTED 825.5 841.8 826.9 843.2
================================ ======= ======= ======= =======
(a) Oil and Gas - The second quarter of 2007 includes a pre-tax
gain from the sale of oil and gas interests. The six months of
2007 also includes after-tax gains of $412 million from the sale
of Occidental's Russian joint venture interests and $112 million
resulting from the resolution of certain legal disputes.
(b) Interest Expense, net - The first six months of 2007 includes
$167 million of pre-tax interest charges for the purchase of
various debt issues in the open market.
(c) Unallocated Corporate Items -- Other - The second quarter of
2007 includes a $284 million pre-tax gain from the sale of
Lyondell shares. The first six months of 2007 also includes a $47
million pre-tax charge for a plant closure and related
environmental remediation reserve.
(d) Discontinued Operations, net - In the first half of 2008,
Occidental received payment from Ecuador for tax refunds. In
2007, Occidental completed an exchange of oil and gas interests
in Horn Mountain with BP p.l.c. (BP) for oil and gas interests in
the Permian Basin and a gas processing plant in Texas. Occidental
also sold its oil and gas interests in Pakistan to BP.
SUMMARY OF CAPITAL EXPENDITURES AND DD&A EXPENSE
Second Quarter Six Months
---------------- ----------------
($ millions) 2008 2007 2008 2007
================================ ======= ======= ======= =======
CAPITAL EXPENDITURES $ 1,116 $ 850 $ 1,984 $ 1,630
======= ======= ======= =======
DEPRECIATION, DEPLETION AND
AMORTIZATION OF ASSETS $ 621 $ 564 $ 1,274 $ 1,138
================================ ======= ======= ======= =======
SUMMARY OF OPERATING STATISTICS
Second Quarter Six Months
---------------- ----------------
2008 2007 2008 2007
================================ ======= ======= ======= =======
NET OIL, GAS AND LIQUIDS
PRODUCTION PER DAY
United States
Crude Oil and Liquids (MBBL)
California 84 93 86 89
Permian 169 163 170 164
Midcontinent and Rockies 5 3 4 4
------- ------- ------- -------
Total 258 259 260 257
Natural Gas (MMCF)
California 238 268 241 250
Permian 190 187 184 192
Midcontinent and Rockies 174 154 166 152
------- ------- ------- -------
Total 602 609 591 594
Latin America
Crude Oil (MBBL)
Argentina 22 34 29 33
Colombia 43 44 43 43
------- ------- ------- -------
Total 65 78 72 76
Natural Gas (MMCF)
Argentina 14 28 18 25
Bolivia 21 18 21 16
------- ------- ------- -------
Total 35 46 39 41
Middle East/North Africa
Crude Oil and Liquids (MBBL)
Oman 21 19 20 21
Dolphin 19 -- 20 --
Qatar 45 47 46 46
Yemen 20 25 23 28
Libya 27 19 23 23
------- ------- ------- -------
Total 132 110 132 118
Natural Gas (MMCF)
Oman 25 32 23 29
Dolphin 163 -- 182 --
------- ------- ------- -------
Total 188 32 205 29
Barrels of Oil Equivalent (MBOE)
Subtotal consolidated subsidiaries 593 561 603 562
Colombia-minority interest (7) (6) (7) (6)
Yemen-Occidental net interest 2 3 2 3
------- ------- ------- -------
Total Worldwide Production-
MBOE 588 558 598 559
================================ ======= ======= ======= =======
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.
SIGNIFICANT TRANSACTIONS AND EVENTS AFFECTING EARNINGS
Second Quarter
----------------------------------
($ millions, except Diluted Diluted
per-share amounts) 2008 EPS 2007 EPS
================================ ======= ======= ======= =======
TOTAL REPORTED EARNINGS $ 2,297 $ 2.78 $ 1,412 $ 1.68
======= ======= ======= =======
Oil and Gas
Segment Earnings $ 3,806 $ 1,658
Less:
Gain on sale of oil & gas
interests -- 23
Legal settlements** -- 3
------- -------
Segment Core Results 3,806 1,632
------- -------
Chemicals
Segment Earnings 144 158
Less:
No significant items
affecting earnings -- --
------- -------
Segment Core Results 144 158
------- -------
Midstream, marketing and other
Segment Earnings 161 25
Less:
No significant items
affecting earnings -- --
------- -------
Segment Core Results 161 25
------- -------
Total Segment Core Results 4,111 1,815
------- -------
Corporate
Corporate Results --
Non Segment* (1,814) (429)
Less:
Debt purchase expense -- 5
Gain on sale of Lyondell shares -- 284
Tax effect of pre-tax
adjustments -- (113)
Discontinued operations, net** (3) 267
------- -------
Corporate Core Results --
Non Segment (1,811) (872)
------- -------
TOTAL CORE RESULTS $ 2,300 $ 2.79 $ 943 $ 1.12
=============================== ======= ======= ======= =======
* Interest expense, income taxes, G&A expense and other, and
non-core items.
** Amounts shown after tax.
Six Months
----------------------------------
($ millions, except Diluted Diluted
per-share amounts) 2008 EPS 2007 EPS
================================ ======= ======= ======= =======
TOTAL REPORTED EARNINGS $ 4,143 $ 5.01 $ 2,624 $ 3.11
======= ======= ======= =======
Oil and Gas
Segment Earnings $ 6,694 $ 3,541
Less:
Gain on sale of oil & gas
interests -- 23
Russia joint venture** -- 412
Legal settlements** -- 112
------- -------
Segment Core Results 6,694 2,994
------- -------
Chemicals
Segment Earnings 323 295
Less:
No significant items
affecting earnings -- --
------- -------
Segment Core Results 323 295
------- -------
Midstream, marketing and other
Segment Earnings 284 143
Less:
No significant items
affecting earnings -- --
------- -------
Segment Core Results 284 143
------- -------
Total Segment Core Results 7,301 3,432
------- -------
Corporate
Corporate Results --
Non Segment* (3,158) (1,355)
Less:
Debt purchase expense -- (167)
Facility closure -- (47)
Gain on sale of Lyondell shares -- 284
Tax effect of pre-tax
adjustments -- (34)
Discontinued operations, net** 24 310
------- -------
Corporate Core Results --
Non Segment (3,182) (1,701)
------- -------
TOTAL CORE RESULTS $ 4,119 $ 4.98 $ 1,731 $ 2.05
================================ ======= ======= ======= =======
* Interest expense, income taxes, G&A expense and other, and
non-core items.
** Amounts shown after tax.