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Occidental Petroleum Announces Third Quarter of 2010 Results

  • Q3 2010 income from continuing operations $1.2 billion ($1.47 per diluted share)
  • Quarterly year-over-year production volume growth of 6.5 percent
  • Quarterly oil and gas production average of 751,000 BOE per day

LOS ANGELES--(BUSINESS WIRE)--Occidental Petroleum Corporation (NYSE:OXY) announced income from continuing operations for the third quarter of 2010 of $1.2 billion ($1.47 per diluted share), compared with $929 million ($1.14 per diluted share) for the third quarter of 2009. Net income was $1.2 billion ($1.46 per diluted share) for the third quarter of 2010, compared with $927 million ($1.14 per diluted share) for the third quarter of 2009.

In announcing the results, Dr. Ray R. Irani, Chairman and Chief Executive Officer, said, "The third quarter 2010 net income of $1.2 billion was 28 percent higher than the same period of 2009. Our oil & gas production of 751,000 BOE per day was the highest in Oxy's history and reflected our continuing growth representing a 6.5-percent increase over 2009. We continue to generate significant cash flow with the first nine months of 2010 results generating cash flow from operating activities of $6.6 billion. Free cash flow after capital spending and dividends was $3.1 billion.”

QUARTERLY RESULTS

Oil and Gas

Oil and gas segment earnings were $1.7 billion for the third quarter of 2010, compared with $1.5 billion for the same period in 2009. The increase in the third quarter of 2010 results was due to higher crude oil and natural gas prices and higher volumes, partially offset by higher operating costs and DD&A rates.

For the third quarter of 2010, daily oil and gas production volumes averaged 751,000 barrels of oil equivalent (BOE), compared with 705,000 BOE in the third quarter of 2009. Volumes increased 6.5 percent, primarily in the Middle East/North Africa, with smaller increases in Argentina and the United States. The Middle East/North Africa increase included new production from the Bahrain start-up and increased production from the Mukhaizna field in Oman. Daily sales volumes were 749,000 BOE in the third quarter of 2010, compared to 702,000 BOE in the third quarter of 2009.

Oxy's realized price for worldwide crude oil was $70.71 per barrel for the third quarter of 2010, compared with $62.79 per barrel for the third quarter of 2009. Domestic realized gas prices rose from $3.04 per MCF in the third quarter of 2009 to $4.20 per MCF for the third quarter of 2010.

Chemicals

Chemical segment earnings for the third quarter 2010 were $189 million, compared with $72 million for the same period in 2009. The third quarter of 2010 results reflect improved margins and volumes across chlor-alkali and vinyl products. Export volumes also increased by 22 percent compared to 2009.

Midstream, Marketing and Other

Midstream segment earnings were $163 million for the third quarter of 2010, compared with $77 million for the third quarter of 2009. Earnings for the third quarter of 2010 reflect higher margins in the trading and marketing businesses and higher pipeline income.

NINE-MONTH RESULTS

Year-to-date 2010 income from continuing operations was $3.3 billion ($4.09 per diluted share), compared with $2.0 billion ($2.44 per diluted share) for 2009. Net income for the first nine months of 2010 was $3.3 billion ($4.07 per diluted share), compared with $2.0 billion ($2.43 per diluted share) for the same period in 2009.

Oil and Gas

Oil and gas segment earnings were $5.4 billion for the nine months of 2010, compared with $3.1 billion for the same period of 2009. The $2.3 billion increase in the 2010 results reflected higher crude oil and natural gas prices and higher volumes, partially offset by higher operating costs and DD&A rates.

Daily oil and gas production volumes for the nine months were 746,000 BOE for 2010, compared with 711,000 BOE for the 2009 period, an increase of nearly 5 percent. 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. Production was negatively impacted in the Middle East/North Africa, Long Beach and Colombia resulting from higher year-over-year average oil prices affecting production sharing and similar contracts by 21,000 BOE per day. Daily sales volumes were 741,000 BOE in the first nine months of 2010, compared with 711,000 BOE for 2009.

Oxy's realized price for worldwide crude oil was $71.57 per barrel for the nine months of 2010, compared with $51.44 per barrel for the nine months of 2009. Domestic realized gas prices increased from $3.15 per MCF in the nine months of 2009 to $4.67 per MCF in the nine months of 2010.

Chemicals

Chemical segment earnings were $327 million for the nine months of 2010, compared with $356 million for the same period in 2009. The 2010 nine-month results reflect improving market conditions, with global markets outpacing domestic markets in the recovery resulting in 16 percent higher export volumes compared to 2009.

Midstream, Marketing and Other

Midstream segment earnings were $270 million for the nine months of 2010, compared with $154 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.

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

Portions of this press release contain forward-looking statements and involve risks and uncertainties that could materially affect expected results of operations, liquidity, cash flows and business prospects. Factors that could cause results to differ materially include, but are not limited to: global commodity pricing fluctuations; supply and demand considerations for Occidental’s products; not successfully completing, or any material delay of, any development of new fields, expansion projects, capital expenditures, efficiency-improvement projects, acquisitions or dispositions; potential failure to achieve expected production from existing and future oil and gas development projects; exploration risks such as drilling unsuccessful wells; any general economic recession or slowdown domestically or internationally; higher-than-expected costs; potential liability for remedial actions under existing or future environmental regulations and litigation; potential liability resulting from pending or future litigation; general domestic and international political conditions; potential disruption or interruption of Occidental’s production or manufacturing or damage to facilities due to accidents, chemical releases, labor unrest, weather, natural disasters, political events or insurgent activity; failure of risk management; changes in laws or regulations; or changes in tax rates. Words such as “estimate”, “project”, “predict”, “will”, “would”, “should”, “could”, “may”, “might”, “anticipate”, “plan”, “intend”, “believe”, “expect” or similar expressions that convey the uncertainty of future events or outcomes generally indicate forward-looking statements. You should not place undue reliance on these forward-looking statements, which speak only as of the date of this press 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. Material risks that may affect Occidental’s results of operations and financial position appear in Part 1, Item 1A “Risk Factors” of the 2009 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
       
Third Quarter Nine Months
($ millions, except per-share amounts)  

2010

    2009     2010     2009  
SEGMENT NET SALES
Oil and Gas $ 3,641 $ 3,089 $ 10,963 $ 7,952
Chemical 1,051 842 3,020 2,445
Midstream, Marketing and Other 388 285 993 763
Eliminations   (184 )   (112 )   (548 )   (296 )
 
Net Sales $ 4,896   $ 4,104   $ 14,428   $ 10,864  
 
SEGMENT EARNINGS
Oil and Gas (a) $ 1,745 $ 1,464 $ 5,417 $ 3,092
Chemical 189 72 327 356
Midstream, Marketing and Other   163     77     270     154  
2,097 1,613 6,014 3,602
 
Unallocated Corporate Items
Interest expense, net (19 ) (33 ) (77 ) (76 )
Income taxes (816 ) (549 ) (2,345 ) (1,245 )
Other (b)   (66 )   (102 )   (256 )   (297 )
 
Income from Continuing Operations (a) 1,196 929 3,336 1,984
Discontinued operations, net   (5 )   (2 )   (18 )   (7 )
 
NET INCOME (a) $ 1,191   $ 927   $ 3,318   $ 1,977  
 
BASIC EARNINGS PER COMMON SHARE
Income from continuing operations $ 1.47 $ 1.14 $ 4.10 $ 2.44
Discontinued operations, net   (0.01 )   -     (0.02 )   (0.01 )
$ 1.46   $ 1.14   $ 4.08   $ 2.43  
 
DILUTED EARNINGS PER COMMON SHARE
Income from continuing operations $ 1.47 $ 1.14 $ 4.09 $ 2.44
Discontinued operations, net   (0.01 )   -     (0.02 )   (0.01 )
$ 1.46   $ 1.14   $ 4.07   $ 2.43  
AVERAGE BASIC COMMON SHARES OUTSTANDING
BASIC 812.7 811.8 812.4 811.1
DILUTED   813.9     814.4     813.8     813.9  
 
(a) Net Income - Net income and income from continuing operations represent amounts attributable to Common Stock, after deducting non-controlling interest of $21 million for the third quarter of 2010, $14 million for the third quarter of 2009 and $57 million and $35 million for the first nine 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 first nine months of 2009 includes pre-tax charges of $40 million for severance and $15 million for railcar leases.
 
 
 
Attachment 2
                 
SUMMARY OF CAPITAL EXPENDITURES AND DD&A EXPENSE
 
Third Quarter Nine Months
($ millions)   2010     2009     2010     2009  
CAPITAL EXPENDITURES $ 1,100   $ 746   $ 2,816   $ 2,649  
 
DEPRECIATION, DEPLETION AND
AMORTIZATION OF ASSETS $ 858   $ 769   $ 2,608   $ 2,297  
 
 
 
                 
ITEMS AFFECTING COMPARABILITY OF CORE EARNINGS BETWEEN PERIODS
 
Income / (Expense) Third Quarter Nine Months
($ millions)   2010     2009     2010     2009  
 
Foreign exchange gains and (losses) * $ 2   $ (3 ) $ 1   $ 28  
 
* Amounts shown after tax.
 
 
 
 
Attachment 3
                 
SUMMARY OF OPERATING STATISTICS - SALES
 
Third Quarter Nine Months
    2010     2009     2010     2009  
NET OIL, GAS AND LIQUIDS SALES PER DAY
United States
Crude Oil and Liquids (MBBL)
California 92 92 92 93
Permian 160 162 160 164
Midcontinent Gas   18     15     18     14  
Total 270 269 270 271
 
Natural Gas (MMCF)
California 276 269 288 240
Permian 122 133 126 127
Midcontinent Gas   258     251     257     265  
Total 656 653 671 632
 
Latin America
Crude Oil (MBBL)
Argentina 30 30 34 37
Colombia   36     39     32     40  
Total 66 69 66 77
 
Natural Gas (MMCF)
Argentina 35 27 33 30
Bolivia   19     18     15     17  
Total 54 45 48 47
 
Middle East / North Africa
Crude Oil and Liquids (MBBL)
Bahrain 3 - 3 -
Dolphin 25 26 24 26
Libya 12 9 13 10
Oman 66 50 60 48
Qatar 79 77 77 78
Yemen   30     34     32     36  
Total 215 196 209 198
 
Natural Gas (MMCF)
Bahrain 181 - 169 -
Dolphin 250 258 238 258
Oman   47     48     49     50  
Total 478 306 456 308
 
Barrels of Oil Equivalent (MBOE)
 
Total Sales - MBOE   749     702     741     711  
 
 
Attachment 4
                 
SUMMARY OF OPERATING STATISTICS - PRODUCTION
 
Third Quarter Nine Months
    2010     2009     2010     2009  
NET OIL, GAS AND LIQUIDS PRODUCTION
PER DAY
United States
Crude Oil and Liquids (MBBL) 270 269 270 271
Natural Gas (MMCF) 656 653 671 632
 
Latin America
Crude Oil (MBBL)
Argentina 39 31 37 36
Colombia   33     38     33     40  
Total 72 69 70 76
 
Natural Gas (MMCF) 54 45 48 47
 
Middle East / North Africa
Crude Oil and Liquids (MBBL)
Bahrain 3 - 3 -
Dolphin 25 26 24 26
Libya 12 10 14 11
Oman 63 51 60 48
Qatar 78 79 77 79
Yemen   30     34     32     36  
Total 211 200 210 200
 
Natural Gas (MMCF) 478 306 456 308
 
Barrels of Oil Equivalent (MBOE)
 
Total Worldwide Production - MBOE   751     705     746     711  
 
 
 
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.
 
Third Quarter

 

Diluted Diluted

($ millions, except per-share amounts)

  2010   EPS   2009   EPS
TOTAL REPORTED EARNINGS $ 1,191   $ 1.46   $ 927   $ 1.14  
 
Oil and Gas
Segment Earnings $ 1,745 $ 1,464
Add:
No significant items affecting earnings   -     -  
 
Segment Core Results   1,745     1,464  
 
Chemicals
Segment Earnings 189 72
Add:
No significant items affecting earnings   -     -  
 
Segment Core Results   189     72  
 
Midstream, Marketing and Other
Segment Earnings 163 77
Add:
No significant items affecting earnings   -     -  
 
Segment Core Results   163     77  
 
Total Segment Core Results   2,097     1,613  
 
Corporate
Corporate Results --
Non Segment * (906 ) (686 )
Add:
Discontinued operations, net **   5     2  
 
Corporate Core Results - Non Segment   (901 )   (684 )
 
TOTAL CORE RESULTS $ 1,196   $ 1.47   $ 929   $ 1.14  
 
* Interest expense, income taxes, G&A expense and other.
** Amounts shown after tax.
 
Attachment 6
                 
SIGNIFICANT TRANSACTIONS AND EVENTS AFFECTING EARNINGS (continued)
 
Nine Months

 

Diluted Diluted

($ millions, except per-share amounts)

  2010   EPS   2009   EPS
TOTAL REPORTED EARNINGS $ 3,318   $ 4.07   $ 1,977   $ 2.43  
 
Oil and Gas
Segment Earnings $ 5,417 $ 3,092
Add:
Rig Terminations   -     8  
 
Segment Core Results   5,417     3,100  
 
Chemicals
Segment Earnings 327 356
Add:
No significant items affecting earnings   -     -  
 
Segment Core Results   327     356  
 
Midstream, Marketing and Other
Segment Earnings 270 154
Add:
No significant items affecting earnings   -     -  
 
Segment Core Results   270     154  
 
Total Segment Core Results   6,014     3,610  
 
Corporate
Corporate Results --
Non Segment * (2,696 ) (1,625 )
Add:
Severance accruals - 40
Railcar leases - 15
Tax effect of pre-tax adjustments - (22 )
Discontinued operations, net **   18     7  
 
Corporate Core Results - Non Segment   (2,678 )   (1,585 )
 
TOTAL CORE RESULTS $ 3,336   $ 4.09   $ 2,025   $ 2.48  
 
* Interest expense, income taxes, G&A expense and other.
** Amounts shown after tax.
 
    Occidental Petroleum Corporation                  
Free Cash Flow
Reconciliation to Generally Accepted Accounting Principles (GAAP)
($ Millions)
                    Nine Months
2010
Consolidated Statement of Cash Flows
Cash flow from operating activities 6,607
Cash flow from investing activities (4,574 )
Cash flow from financing activities (1,154 )
Change in cash 879  
 
 
Free Cash Flow
Cash flow from operating activities 6,607
Capital spending (2,814 )
Cash dividends paid (848 )
Equity method investment dividends 133  
Free cash flow 3,078  

Contacts

Occidental Petroleum Corporation
Richard S. Kline (media)
richard_kline@oxy.com
310-443-6249
or
Chris Stavros (investors)
chris_stavros@oxy.com
212-603-8184

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