Occidental Petroleum Announces Second Quarter and First Six Months of 2010 Results

LOS ANGELES--(BUSINESS WIRE)--Occidental Petroleum Corporation (NYSE:OXY) announced net income of $1.1 billion ($1.31 per diluted share) for the second quarter of 2010, compared with $682 million ($0.84 per diluted share) for the second quarter of 2009.

In announcing the results, Dr. Ray R. Irani, Chairman and Chief Executive Officer, said, "The second quarter 2010 net income of $1.1 billion was a 56-percent increase over the same period of 2009. The second quarter 2010 production was 743,000 BOE per day, a 3.6-percent increase from the second quarter of 2009 despite losing 29,000 BOE per day from the effect of production sharing and similar contracts. We continue to generate significant cash flow with the first six months of 2010 results generating cash flow from operating activities of $4.3 billion. Free cash flow after capital spending and dividends was over $2 billion."

QUARTERLY RESULTS

Oil and Gas

Oil and gas segment earnings were $1.9 billion for the second quarter of 2010, compared with $1.1 billion for the same period in 2009. The increase in the second quarter of 2010 results was due to higher crude oil and natural gas prices and higher volumes.

For the second quarter of 2010, daily oil and gas sales volumes averaged 747,000 barrels of oil equivalent (BOE), compared with 719,000 BOE in the second quarter of 2009. Volumes increased in the Middle East/North Africa and California and were partially offset by decreases in Colombia. The Middle East/North Africa increase included new production from the Bahrain start-up and increased production from the Mukhaizna field in Oman. Underlying daily production volumes were 743,000 BOE in the second quarter of 2010 compared to 717,000 BOE in the second quarter of 2009, an increase of over three and one-half percent. Production was negatively impacted in the Middle East/North Africa, Long Beach and Colombia due to higher oil prices affecting our production sharing and similar contracts by a total of 29,000 BOE per day.

Oxy's realized price for worldwide crude oil was $72.13 per barrel for the second quarter of 2010, compared with $52.97 per barrel for the second quarter of 2009. Domestic realized gas prices rose from $2.87 per MCF in the second quarter of 2009 to $4.19 per MCF for the second quarter of 2010.

Chemicals

Chemical segment earnings for the second quarter 2010 were $108 million, compared with $115 million for the same period in 2009. The second quarter of 2010 results continue to reflect the significant caustic soda price erosion and higher raw material prices experienced in the second half of 2009 offset by improved volumes across most product lines.

Midstream, Marketing and Other

Midstream segment earnings were $13 million for the second quarter of 2010, compared with $63 million for the second quarter of 2009. Earnings for the second quarter of 2010 reflect lower margins in the marketing and trading businesses, partially offset by higher margins in the gas processing business and pipelines businesses.

SIX-MONTH RESULTS

Net income for the first six months of 2010 was $2.1 billion ($2.61 per diluted share), compared with $1.1 billion ($1.29 per diluted share) for the same period in 2009. Year-to-date 2010 core results were $2.1 billion ($2.63 per diluted share), compared with $1.1 billion ($1.34 per diluted share).

Oil and Gas

Oil and gas segment earnings were $3.7 billion for the six months of 2010, compared with $1.6 billion for the same period of 2009. The $2.1 billion increase in the 2010 results reflected higher crude oil and natural gas prices and higher volumes.

Daily oil and gas sales volumes for the six months were 737,000 BOE per day for 2010, compared with 716,000 BOE per day for the 2009 period. Volumes increased in the Middle East/North Africa, resulting from the new production in Bahrain and higher production in the Mukhaizna field in Oman, and domestically in California. Volumes declined in Latin America, mainly in Colombia. Underlying daily production volumes were 743,000 BOE in the first six months of 2010, compared with 713,000 BOE for 2009, an increase of over four percent. Production was negatively impacted in the Middle East/North Africa, Long Beach and Colombia resulting from higher year-over-year average oil prices affecting our production sharing and similar contracts by 28,000 BOE per day.

Oxy's realized price for worldwide crude oil was $72.01 per barrel for the six months of 2010, compared with $46.05 per barrel for the six months of 2009. Domestic realized gas prices increased from $3.20 per MCF in the six months of 2009 to $4.90 per MCF in the six months of 2010.

Chemicals

Chemical segment earnings were $138 million for the six months of 2010, compared with $284 million for the same period in 2009. The 2010 six-month results reflect the significant margin erosion in caustic soda, which began in 2009 due to the economic downturn, particularly in the housing and construction sectors, combined with higher raw material costs primarily for ethylene. Volumes and prices across most product lines are gradually recovering, resulting in the improvement in earnings from first quarter $30 million to second quarter of $108 million.

Midstream, Marketing and Other

Midstream segment earnings were $107 million for the six months of 2010, compared with $77 million for the same period in 2009. The 2010 results reflect higher margins in the gas processing business and increased earnings in the pipeline and power generation businesses, partially offset by lower marketing and trading income.

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 actual results to differ materially include, but are not limited to: global commodity price fluctuations and supply/demand considerations for oil, gas and chemicals; 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; changes in tax rates; exploration risks, such as drilling of unsuccessful wells; and commodity trading risks. 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

Attachment 1
SUMMARY OF SEGMENT NET SALES AND EARNINGS
		Second Quarter								Six Months
($ millions, except per-share amounts)		2010				2009				2010				2009
SEGMENT NET SALES
Oil and Gas		$	3,676			$	2,726			$	7,322			$	4,863
Chemical			1,013				811				1,969				1,603
Midstream, Marketing and Other			236				250				605				478
Eliminations			(164	)			(100	)			(364	)			(184	)
Net Sales		$	4,761			$	3,687			$	9,532			$	6,760
SEGMENT EARNINGS
Oil and Gas (a)		$	1,853			$	1,083			$	3,672			$	1,628
Chemical			108				115				138				284
Midstream, Marketing and Other			13				63				107				77
			1,974				1,261				3,917				1,989
Unallocated Corporate Items
Interest expense, net			(22	)			(23	)			(58	)			(43	)
Income taxes			(800	)			(455	)			(1,529	)			(696	)
Other (b)			(83	)			(99	)			(190	)			(195	)
Income from Continuing Operations (a)			1,069				684				2,140				1,055
Discontinued operations, net			(6	)			(2	)			(13	)			(5	)
NET INCOME (a)		$	1,063			$	682			$	2,127			$	1,050
BASIC EARNINGS PER COMMON SHARE
Income from continuing operations		$	1.31			$	0.84			$	2.63			$	1.30
Discontinued operations, net			-				-				(0.02	)			(0.01	)
		$	1.31			$	0.84			$	2.61			$	1.29
DILUTED EARNINGS PER COMMON SHARE
Income from continuing operations		$	1.31			$	0.84			$	2.63			$	1.30
Discontinued operations, net			-				-				(0.02	)			(0.01	)
		$	1.31			$	0.84			$	2.61			$	1.29
AVERAGE BASIC COMMON SHARES OUTSTANDING
BASIC			812.6				811.0				812.3				810.8
DILUTED			813.8				814.0				813.7				813.7
(a) Net Income - Net income and income from continuing operations represent amounts attributable to Common Stock, after deducting non-controlling interest of $12 million for the second quarter of 2010 and 2009 and $36 million and $21 million for the first six months of 2010 and 2009, respectively. Oil and gas segment earnings are presented net of these non-controlling interest amounts.
(b) 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 $15 million for railcar leases.
Attachment 2
SUMMARY OF CAPITAL EXPENDITURES AND DD&A EXPENSE
		Second Quarter								Six Months
($ millions)		2010				2009				2010				2009
CAPITAL EXPENDITURES		$	868			$	831			$	1,716			$	1,902
DEPRECIATION, DEPLETION AND
AMORTIZATION OF ASSETS		$	876			$	742			$	1,750			$	1,528
ITEMS AFFECTING COMPARABILITY OF CORE EARNINGS BETWEEN PERIODS
Income / (Expense)		Second Quarter								Six Months
($ millions)		2010				2009				2010				2009
Foreign exchange gains and (losses) *		$	4			$	(6	)		$	(1	)		$	31
* Amounts shown after tax.
Attachment 3
SUMMARY OF OPERATING STATISTICS - SALES
		Second Quarter								Six Months
		2010				2009				2010				2009
NET OIL, GAS AND LIQUIDS SALES PER DAY
United States
Crude Oil and Liquids (MBBL)
California			92				90				93				93
Permian			159				163				159				165
Midcontinent Gas			18				14				17				13
Total			269				267				269				271
Natural Gas (MMCF)
California			293				232				294				224
Permian			129				124				127				124
Midcontinent Gas			259				265				257				273
Total			681				621				678				621
Latin America
Crude Oil (MBBL)
Argentina			37				37				37				41
Colombia			27				42				30				41
Total			64				79				67				82
Natural Gas (MMCF)
Argentina			32				30				32				32
Bolivia			15				19				13				17
Total			47				49				45				49
Middle East / North Africa
Crude Oil and Liquids (MBBL)
Bahrain			3				-				3				-
Dolphin			23				29				23				26
Libya			25				14				14				10
Oman			58				49				57				48
Qatar			78				82				76				79
Yemen			32				32				33				37
Total			219				206				206				200
Natural Gas (MMCF)
Bahrain			161				-				163				-
Dolphin			235				282				232				257
Oman			48				50				50				52
Total			444				332				445				309
Barrels of Oil Equivalent (MBOE)
Total Sales - MBOE			747				719				737				716
Attachment 4
SUMMARY OF OPERATING STATISTICS - PRODUCTION
		Second Quarter								Six Months
		2010				2009				2010				2009
NET OIL, GAS AND LIQUIDS PRODUCTION PER DAY
United States
Crude Oil and Liquids (MBBL)			269				267				269				271
Natural Gas (MMCF)			681				621				678				621
Latin America
Crude Oil (MBBL)
Argentina			37				38				37				38
Colombia			32				41				33				41
Total			69				79				70				79
Natural Gas (MMCF)			47				49				45				49
Middle East / North Africa
Crude Oil and Liquids (MBBL)
Bahrain			3				-				3				-
Dolphin			23				29				24				26
Libya			15				13				15				11
Oman			60				49				58				47
Qatar			78				78				76				79
Yemen			31				35				33				37
Total			210				204				209				200
Natural Gas (MMCF)			444				332				445				309
Barrels of Oil Equivalent (MBOE)
Total Worldwide Production - MBOE			743				717				743				713
Attachment 5
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.
		Second Quarter
						Diluted								Diluted
($ millions, except per-share amounts)		2010				EPS				2009				EPS
TOTAL REPORTED EARNINGS		$	1,063			$	1.31			$	682			$	0.84
Oil and Gas
Segment Earnings		$	1,853							$	1,083
Add:
No significant items affecting earnings			-								-
Segment Core Results			1,853								1,083
Chemicals
Segment Earnings			108								115
Add:
No significant items affecting earnings			-								-
Segment Core Results			108								115
Midstream, Marketing and Other
Segment Earnings			13								63
Add:
No significant items affecting earnings			-								-
Segment Core Results			13								63
Total Segment Core Results			1,974								1,261
Corporate
Corporate Results --
Non Segment *			(911	)							(579	)
Add:
Severance accrual			-								8
Tax effect of pre-tax adjustments			-								(3	)
Discontinued operations, net **			6								2
Corporate Core Results - Non Segment			(905	)							(572	)
TOTAL CORE RESULTS		$	1,069			$	1.31			$	689			$	0.85
* Interest expense, income taxes, G&A expense and other.
** Amounts shown after tax.
Attachment 6
SIGNIFICANT TRANSACTIONS AND EVENTS AFFECTING EARNINGS (continued)
		Six Months
						Diluted								Diluted
($ millions, except per-share amounts)		2010				EPS				2009				EPS
TOTAL REPORTED EARNINGS		$	2,127			$	2.61			$	1,050			$	1.29
Oil and Gas
Segment Earnings		$	3,672							$	1,628
Add:
Rig Terminations			-								8
Segment Core Results			3,672								1,636
Chemicals
Segment Earnings			138								284
Add:
No significant items affecting earnings			-								-
Segment Core Results			138								284
Midstream, Marketing and Other
Segment Earnings			107								77
Add:
No significant items affecting earnings			-								-
Segment Core Results			107								77
Total Segment Core Results			3,917								1,997
Corporate
Corporate Results --
Non Segment *			(1,790	)							(939	)
Add:
Severance accruals			-								40
Railcar leases			-								15
Tax effect of pre-tax adjustments			-								(22	)
Discontinued operations, net **			13								5
Corporate Core Results - Non Segment			(1,777	)							(901	)
TOTAL CORE RESULTS		$	2,140			$	2.63			$	1,096			$	1.34
* Interest expense, income taxes, G&A expense and other.
** Amounts shown after tax.