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Occidental Petroleum Announces Net Income for Second Quarter and First Six Months of 2009

LOS ANGELES--()--Occidental Petroleum Corporation (NYSE:OXY) announced net income of $682 million ($0.84 per diluted share) for the second quarter of 2009, compared with $2.3 billion ($2.78 per diluted share) for the second quarter of 2008.

In announcing the results, Dr. Ray R. Irani, Chairman and Chief Executive Officer, said, "Occidental achieved year-over-year production growth of 10 percent in the second quarter and nearly nine percent in the six months of 2009. Our discovery in Kern County, California which was announced yesterday should also contribute to our future growth."

QUARTERLY RESULTS

Oil and Gas

Oil and gas segment earnings were $1.1 billion for the second quarter of 2009, compared with $3.8 billion for the same period in 2008. The decrease in the second quarter 2009 segment earnings reflected lower crude oil and natural gas prices and higher DD&A rates, partially offset by higher oil and gas sales volumes and lower operating expenses.

For the second quarter of 2009, daily oil and gas sales volumes averaged 649,000 barrels of oil equivalent (BOE), compared with 588,000 BOE sold in the second quarter of 2008. Volumes increased by approximately 3 percent domestically, mainly from California and Midcontinent/Rockies, by about 37 percent in Latin America mostly in Argentina, and by 16 percent in the Middle East/North Africa largely in Oman and Dolphin. California volumes included increases in Long Beach resulting from economic arrangements similar to a production sharing contract and production from new exploration wells in Elk Hills.

Oxy's realized price for worldwide crude oil was $52.97 per barrel for the second quarter of 2009, compared with $110.12 per barrel for the second quarter of 2008. Domestic realized gas prices decreased from $9.99 per MCF in the second quarter of 2008 to $2.87 per MCF for the second quarter of 2009.

Chemicals

Chemical segment earnings for the second quarter 2009 were $115 million, compared with $144 million for the same period in 2008. The second quarter of 2009 results reflect the continued weakness in the U.S. housing, automotive and durable goods sectors resulting in lower volumes for chlorine, caustic soda and polyvinyl chloride. The lower volumes were partially offset by lower feedstock and energy costs.

Midstream, Marketing and Other

Midstream segment earnings were $63 million for the second quarter of 2009, compared with $161 million for the second quarter of 2008. The second quarter of 2009 earnings reflect lower margins in the gas processing, marketing, and power generation businesses.

SIX MONTH RESULTS

Net income for the six months of 2009 was $1.1 billion ($1.29 per diluted share), compared with $4.1 billion ($5.00 per diluted share) for the six months of 2008.

Core results were $1.1 billion ($1.34 per diluted share) for the six months of 2009, compared with $4.1 billion ($4.97 per diluted share) for the six months of 2008.

Oil and Gas

Oil and gas segment earnings were $1.6 billion for the six months of 2009, compared with $6.7 billion for the same period of 2008. The decrease in segment earnings reflected lower crude oil and natural gas prices and higher DD&A rates, partially offset by increased sales volumes and lower operating and administrative costs.

Daily oil and gas sales volumes for the first six months was 651,000 BOE for 2009, compared with 598,000 BOE per day for the same 2008 period. Volumes increased by approximately 4 percent domestically mainly from California and Midcontinent/Rockies, by about 26 percent in Latin America mostly in Argentina, and by 11 percent in the Middle East/North Africa largely due to Oman and Dolphin. Higher volumes in domestic assets included production from new exploration wells in California.

Oxy's worldwide crude oil realized price was $46.05 per barrel for the six months of 2009, compared with $98.16 per barrel for the six months of 2008. Domestic realized gas prices decreased from $9.09 per MCF in the six months of 2008 to $3.20 per MCF in the six months of 2009.

Chemicals

Chemical segment earnings for the six months of 2009 were $284 million, compared with $323 million for the same period of 2008. The 2009 six month results reflect lower volumes for chlorine, caustic soda and polyvinyl chloride due to the economic slowdown, partially offset by lower feedstock and energy costs.

Midstream, Marketing and Other

Midstream segment earnings were $77 million for the six months of 2009, compared with $284 million for the same period in 2008. The earnings decline in 2009 reflects lower margins in the gas processing, power generation, and marketing businesses.

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," "should," "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 actual results to differ materially include, but are not limited to: global commodity price fluctuations and supply/demand considerations for oil, gas and chemicals; exploration risks, such as drilling of unsuccessful wells; not successfully completing (or any material delay in) any expansions, field development, capital projects, acquisitions, or dispositions; higher-than-expected costs; political risk; operational interruptions and changes in tax rates. 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 disclosures 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
 

 

 

 

(Millions, except

Second Quarter

Six Months

per-share amounts)   2009       2008     2009       2008  
SEGMENT NET SALES
Oil and Gas $ 2,726 $ 5,501 $ 4,863 $ 10,019
Chemical 811 1,386 1,603 2,653
Midstream, Marketing and Other 250 418 478 823
Eliminations   (100 )   (189 )   (184 )   (359 )

Net sales

$ 3,687   $ 7,116   $ 6,760   $ 13,136  
SEGMENT EARNINGS
Oil and Gas (a), (b) $ 1,083 $ 3,806 $ 1,628 $ 6,694
Chemical 115 144 284 323
Midstream, Marketing and Other   63     161     77     284  
1,261 4,111 1,989 7,301
Unallocated Corporate Items
Interest expense, net (23 ) (7 ) (43 ) (7 )
Income taxes (455 ) (1,671 ) (696 ) (2,965 )
Other (c)   (99 )   (133 )   (195 )   (210 )
 

Income from Continuing Operations (a)

684

2,300 1,055 4,119
Discontinued operations, net   (2 )   (3 )   (5 )   24  
NET INCOME (a) $ 682   $ 2,297   $ 1,050   $ 4,143  
BASIC EARNINGS PER COMMON SHARE
Income from continuing
operations $ 0.84 $ 2.79 $ 1.30 $ 5.00
Discontinued operations, net   --     --     (0.01 )   0.03  
$ 0.84   $ 2.79   $ 1.29   $ 5.03  

DILUTED EARNINGS PER COMMON SHARE (d)

 

Income from continuing
operations $ 0.84 $ 2.78 $ 1.30 $ 4.97
Discontinued operations, net   --     --     (0.01 )   0.03  
$ 0.84   $ 2.78   $ 1.29   $ 5.00  

AVERAGE COMMON SHARES OUTSTANDING (d)

BASIC 811.0 821.3 810.8 822.5
DILUTED   814.0     825.2     813.7     826.6  

(a) Net Income - Net income and income from continuing operations represent amounts attributable to Common Stock, after deducting non-controlling interest of $12 million and $37 million for the second quarter and $21 million and $66 million for the six months ended June 30, 2009 and 2008, respectively. Oil and gas segment earnings are also presented net of these non-controlling interest amounts.

(b) Oil and Gas - The six months of 2009 includes an $8 million pre-tax charge for rig contract termination costs.

(c) Unallocated Corporate Items - Other - The second quarter of 2009 includes a pre-tax charge of $8 million related to severance. The first six months of 2009 includes additional pre-tax charges of $32 million for severance and $15 million for railcar leases.

(d) Earnings Per Share - The 2008 earnings per share amounts reflect the adoption on January 1, 2009 of FSP NO. EITF 03-06-1 dealing with participating securities.

SUMMARY OF CAPITAL EXPENDITURES AND DD&A EXPENSE

 
Second Quarter   Six Months
($ millions)   2009       2008     2009       2008  
CAPITAL EXPENDITURES $ 831   $ 1,038   $ 1,902   $ 1,871  
DEPRECIATION, DEPLETION
AND AMORTIZATION
OF ASSETS $ 742   $ 621   $ 1,528   $ 1,274  
 
 
ITEMS AFFECTING COMPARABILITY OF CORE EARNINGS BETWEEN PERIODS
 
Income/(Expense) Second Quarter

Six Months

($ millions)   2009     2008     2009     2008  
Foreign exchange gains and
(losses)* $ (6 ) $ (4 ) $ 31   $ (5 )
*Amounts shown after tax.
 
SUMMARY OF OPERATING STATISTICS
Second Quarter

Six Months

    2009     2008     2009     2008  
NET OIL, GAS AND LIQUIDS
SALES PER DAY
United States
Crude Oil and Liquids (MBBL)
California 90 84 93 86
Permian 167 169 168 170
Midcontinent/Rockies   10   5     10   4  
Total 267 258 271 260
Natural Gas (MMCF)
California 232 238 224 241
Permian 197 190 196 184
Midcontinent/Rockies   192     174     201     166  
Total 621 602 621 591
Latin America
Crude Oil (MBBL)
Argentina 37 22 41 29
Colombia   48     43     47     43  
Total 85 65 88 72
Natural Gas (MMCF)
Argentina 30 14 32 18
Bolivia   19     21     17     21  
Total 49 35 49 39
Middle East/North Africa
Crude Oil and Liquids (MBBL)
Oman 38 21 36 20
Dolphin 25 19 23 20
Qatar 50 45 49 46
Yemen 23 20 27 23
Libya 8     27   7     23  
Total 144 132 142 132
Natural Gas (MMCF)
Oman 23 25 23 23
Dolphin   242     163     224     182  
Total 265 188 247 205
Barrels of Oil Equivalent (MBOE)

Subtotal consolidated subsidiaries

652

593 654 603
Colombia-minority interest (6 ) (7 ) (6 ) (7 )
Yemen-Occidental net interest 3   2   3   2  
Total Worldwide Sales Volumes -
MBOE   649     588     651     598  
 

SUMMARY OF OPERATING STATISTICS - PRODUCTION

Second Quarter Six Months
    2009     2008     2009     2008  
NET OIL, GAS AND LIQUIDS
PRODUCTION PER DAY
United States
Crude Oil and Liquids (MBBL) 267 258 271 260
Natural Gas (MMCF) 621 602 621 591
 
Latin America
Crude Oil (MBBL)
Argentina 38 24 38 30
Colombia   47     43     47     42  
Total 85 67 85 72
Natural Gas (MMCF) 49 35 49 39
 
Middle East/North Africa
Crude Oil and Liquids (MBBL)
Oman 38 21 36 20
Dolphin 25 19 23 20
Qatar 46 48 49 47
Yemen 26 20 27 23
Libya 7     20   8     21  
Total 142 128 143 131
Natural Gas (MMCF) 265 188 247 205
 
Barrels of Oil Equivalent (MBOE)

Subtotal consolidated subsidiaries

650

590 652 602
Colombia-minority interest (6 ) (6 ) (6 ) (6 )
Yemen-Occidental net interest 3   2   3   2  

 

 

Total Worldwide Production Volumes - MBOE

  647     586     649     598  

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)   2009   EPS   2008   EPS
TOTAL REPORTED EARNINGS* $ 682   $ 0.84 $ 2,297   $ 2.78
Oil and Gas*
Segment Earnings $ 1,083 $ 3,806
Add:
No significant items affecting
earnings   --     --  
Segment Core Results   1,083     3,806  
Chemicals
Segment Earnings 115 144
Add:
No significant items
affecting earnings   --     --  
Segment Core Results   115     144  
Midstream, marketing and other
Segment Earnings 63 161
Add:
No significant items
affecting earnings   --     --  
Segment Core Results   63     161  
Total Segment Core Results   1,261     4,111  
Corporate
Corporate Results --
Non Segment** (579 ) (1,814 )
Add:
Severance accrual 8 --
Tax effect of pre-tax
adjustments (3 ) --
Discontinued operations, net*** 2   3  
Corporate Core Results --
Non Segment   (572 )   (1,811 )
TOTAL CORE RESULTS $ 689   $ 0.85 $ 2,300   $ 2.78

*Represents amounts attributable to common stock, after deducting

non-controlling interest of $12 million and $37 million for the

second quarter 2009 and 2008, respectively.

**Net interest expense, income taxes, G&A expense and other.

***Amounts shown after tax.
 
SIGNIFICANT TRANSACTIONS AND EVENTS AFFECTING EARNINGS (continued)
Six Months
($ millions, except Diluted Diluted
per-share amounts)   2009   EPS   2008   EPS
TOTAL REPORTED EARNINGS* $ 1,050   $ 1.29 $ 4,143   $ 5.00
Oil and Gas*
Segment Earnings $ 1,628 $ 6,694
Add:
Rig terminations 8     --  
Segment Core Results   1,636     6,694  
Chemicals
Segment Earnings 284 323
Add:
No significant items
affecting earnings   --     --  
Segment Core Results   284     323  
Midstream, marketing and other
Segment Earnings 77 284
Add:
No significant items
affecting earnings   --     --  
Segment Core Results   77     284  
Total Segment Core Results   1,997     7,301  
Corporate
Corporate Results --
Non Segment** (939 ) (3,158 )
Add:
Severance accruals 40 --
Railcar leases 15 --
Tax effect of pre-tax
adjustments (22 ) --
Discontinued operations, net*** 5     (24 )
Corporate Core Results --
Non Segment   (901 )   (3,182 )
TOTAL CORE RESULTS $ 1,096   $ 1.34 $ 4,119   $ 4.97

*Represents amounts attributable to common stock, after deducting

non-controlling interest of $21 million and $66 million for the

six months 2009 and 2008, respectively.

**Net interest expense, income taxes, G&A expense and other.

***Amounts shown after tax.

Contacts

Occidental Petroleum Corporation
Media
Richard S. Kline
310-443-6249
richard_kline@oxy.com
or
Investors
Chris Stavros
212-603-8184
chris_stavros@oxy.com

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