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Occidental Petroleum Announces Third Quarter of 2012 Income

  • Q3 2012 income from continuing operations of $1.4 billion ($1.70 per diluted share)
  • Q3 2012 domestic daily oil and gas production of 469,000 barrels of oil equivalent, a record for the eighth consecutive quarter

LOS ANGELES--(BUSINESS WIRE)--Occidental Petroleum Corporation (NYSE:OXY) announced income from continuing operations of $1.4 billion ($1.70 per diluted share) for the third quarter of 2012, compared with the third quarter of 2011 income from continuing operations of $1.8 billion ($2.18 per diluted share).

In announcing the results, Stephen I. Chazen, President and Chief Executive Officer, said, "Our third quarter 2012 total company production of 766,000 barrels of oil equivalent per day was 27,000 per day, or 4 percent higher than the third quarter of 2011 production. Our domestic production of 469,000 barrels of oil equivalent was 8 percent higher than the third quarter of 2011 and was a record for the eighth consecutive quarter. Our domestic liquids production of 334,000 barrels per day, which was also a record, was 10 percent higher than last year's third quarter.

"Income from continuing operations diluted earnings per share of $1.70 was $0.06 higher than the second quarter of 2012 as a result of higher oil and gas volumes and improved results in the marketing and trading businesses, partially offset by lower oil prices. We generated cash flow from operations before working capital changes of $9.2 billion for the first nine months of 2012 and invested $7.7 billion in capital expenditures."

Oil and Gas

Oil and gas segment earnings were $2.0 billion for the third quarter of 2012, compared with $2.6 billion for the third quarter of 2011. Lower product prices and higher costs in the third quarter of 2012 were partially offset by higher oil volumes.

For the third quarter of 2012, daily oil and gas production volumes averaged 766,000 barrels of oil equivalent (BOE), compared with 739,000 BOE in the third quarter of 2011.

The third quarter 2012 production increase resulted from higher volumes of 33,000 BOE per day from domestic operations, partially offset by a decrease in international production. The international decrease included lower volumes from Dolphin, resulting from the full cost recovery of pre-startup capital, and in Yemen due to the Masila field contract expiration, partially offset by higher volumes from other international operations.

Daily sales volumes increased from 743,000 BOE in the third quarter of 2011 to 765,000 BOE in the third quarter of 2012.

Oxy’s realized price for worldwide crude oil was $96.62 per barrel for the third quarter of 2012, compared with $97.24 per barrel for the third quarter of 2011. The third quarter of 2012 realized oil price represents 105 percent of the average WTI and 88 percent of the average Brent price for the quarter. Worldwide NGL prices were $40.65 per barrel in the third quarter of 2012, compared with $56.06 per barrel in the third quarter of 2011. Domestic gas prices decreased 41 percent from $4.23 per MCF in the third quarter of 2011 to $2.48 per MCF for the third quarter of 2012.

Third quarter 2012 realized prices were lower than second quarter 2012 prices for worldwide oil and NGLs and were higher for domestic natural gas. On a sequential quarterly basis, prices decreased 3 percent for worldwide crude oil and NGLs and increased 19 percent for domestic natural gas.

Chemicals

Chemical segment earnings for the third quarter of 2012 were $162 million, compared with $245 million in the third quarter of 2011. The decrease was the result of lower prices across most product lines, particularly in polyvinyl chloride (PVC) and vinyl chloride monomer (VCM), partially offset by lower natural gas and ethylene costs.

Midstream, Marketing and Other

Midstream segment earnings were $156 million for the third quarter of 2012, compared with $77 million for the third quarter of 2011. The results reflect higher margins in the marketing and trading businesses, partially offset by lower income in the gas processing and pipeline businesses.

NINE-MONTH RESULTS

Core income for the first nine months of 2012 was $4.3 billion ($5.26 per diluted share), compared with $5.2 billion ($6.37 per diluted share) for the same period in 2011. Cash flow from operations after working capital changes was $8.5 billion.

Oil and Gas

Oil and gas segment earnings were $6.6 billion for the first nine months of 2012, compared with $7.7 billion for the same period of 2011. The decrease in 2012 reflected lower NGL and natural gas prices, higher operating costs, exploration expense and DD&A rates, partially offset by higher oil prices and domestic volumes.

Oil and gas production volumes for the nine months were 762,000 BOE per day for 2012, compared with 728,000 BOE per day for the same period in 2011. Year-over-year, our domestic production increased by nearly 10 percent, while total company production increased by nearly 5 percent. Dolphin's full cost recovery of pre-startup capital, which reduced our production, was the only operation where production sharing and similar contracts had an appreciable effect.

The nine-month 2012 production increase resulted from 41,000 BOE per day in higher domestic volumes, partially offset by lower volumes in the Middle East/North Africa and Latin America.

Daily sales volumes were 757,000 BOE in the first nine months of 2012, compared with 726,000 BOE for the same period in 2011.

Oxy's realized prices improved for crude oil but declined for natural gas and NGLs on a year-over-year basis. Worldwide crude oil prices were $101.20 per barrel for the nine months of 2012, compared with $97.33 per barrel for the nine months of 2011. Worldwide NGL prices were $45.21 per barrel for the nine months of 2012, compared with $55.63 per barrel in the nine months of 2011. Domestic gas prices declined 42 percent, from $4.24 per MCF in the nine months of 2011 to $2.47 per MCF in the nine months of 2012.

Chemicals

Chemical segment earnings were $540 million for the nine months of 2012, compared with $717 million for the same period in 2011. The reduction was primarily a result of lower export volumes and prices due to the economic conditions in Europe and Asia, partially offset by lower energy and feedstock costs.

Midstream, Marketing and Other

Midstream segment earnings were $364 million for the nine months of 2012, compared with $378 million for the same period in 2011.

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; general domestic political and regulatory approval conditions; higher-than-expected costs; international political conditions; 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 or acquisitions; exploration risks such as drilling unsuccessful wells; any changes in general economic conditions domestically or internationally; the ability to attract trained engineers; potential liability for remedial actions under existing or future environmental regulations and litigation; potential liability resulting from pending or future litigation; 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 law or regulations; or changes in tax rates. Words such as "estimate", "project", "predict", "will", "would", "should", "could", "may", "might", "anticipate", "plan", "intend", "believe", "expect", "aim", "goal", "target", "objective", "likely" 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 report. 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 2011 Form 10-K.

For further analysis of Occidental's quarterly performance, please visit the website: www.oxy.com

                       
Attachment 1
 
SUMMARY OF SEGMENT NET SALES AND EARNINGS
 
Third Quarter Nine Months
($ millions, except per-share amounts) 2012 2011 2012 2011
SEGMENT NET SALES
Oil and Gas $ 4,635 $ 4,677 $ 14,032 $ 13,635
Chemical 1,119 1,231 3,439 3,721
Midstream, Marketing and Other 389 256 1,044 1,109
Eliminations   (178 )   (158 )   (514 )   (560 )
 
Net Sales $ 5,965   $ 6,006   $ 18,001   $ 17,905  
 
SEGMENT EARNINGS
Oil and Gas (a) $ 2,026 $ 2,612 $ 6,573 $ 7,704
Chemical 162 245 540 717
Midstream, Marketing and Other   156     77     364     378  
2,344 2,934 7,477 8,799
 
Unallocated Corporate Items
Interest expense, net (b) (34 ) (23 ) (87 ) (259 )
Income taxes (c) (855 ) (1,087 ) (2,869 ) (3,252 )
Other   (76 )   (49 )   (250 )   (289 )
 
Income from Continuing Operations 1,379 1,775 4,271 4,999
Discontinued operations, net (d)   (4 )   (4 )   (9 )   138  
 
NET INCOME $ 1,375   $ 1,771   $ 4,262   $ 5,137  
 
BASIC EARNINGS PER COMMON SHARE
Income from continuing operations $ 1.70 $ 2.18 $ 5.26 $ 6.14
Discontinued operations, net   (0.01 )   (0.01 )   (0.01 )   0.17  
$ 1.69   $ 2.17   $ 5.25   $ 6.31  
 
DILUTED EARNINGS PER COMMON SHARE
Income from continuing operations $ 1.70 $ 2.18 $ 5.26 $ 6.14
Discontinued operations, net   (0.01 )   (0.01 )   (0.01 )   0.17  
$ 1.69   $ 2.17   $ 5.25   $ 6.31  
AVERAGE COMMON SHARES OUTSTANDING
BASIC 809.7 812.5 810.1 812.6
DILUTED   810.4     813.2     810.8     813.3  
 
(a) Oil and Gas - The nine months of 2011 include pre-tax charges of $35 million related to exploration write-offs in Libya and $29 million related to Colombia net worth tax. Also, included in the nine months of 2011 results is a pre-tax gain for sale of an interest in a Colombia pipeline of $22 million.
(b) Unallocated Corporate Items - Interest Expense, net - The nine months of 2011 include a pre-tax charge of $163 million related to the premium on debt extinguishment.
(c) Unallocated Corporate Items - Taxes - The nine months of 2011 include a net $21 million charge for out-of-period state income taxes.
(d) Discontinued Operations, net - The nine months of 2011 include a $144 million after-tax gain from the sale of the Argentine operations.
 
 
 
Attachment 2
 
SUMMARY OF CAPITAL EXPENDITURES AND DD&A EXPENSE
 
Third Quarter Nine Months
($ millions) 2012 2011 2012 2011
CAPITAL EXPENDITURES $ 2,591   $ 2,011   $ 7,716   $ 4,969  
 
DEPRECIATION, DEPLETION AND
AMORTIZATION OF ASSETS $ 1,149   $ 924   $ 3,320   $ 2,653  
 
 
 
Attachment 3
 
SUMMARY OF OPERATING STATISTICS - PRODUCTION
 
Third Quarter Nine Months
  2012 2011 2012 2011
NET OIL, GAS AND LIQUIDS PRODUCTION PER DAY
United States
Crude Oil (MBBL)
California 88 80 87 78
Permian 144 133 140 132
Midcontinent and Other   28     17     24     16  
Total 260 230 251 226
 
NGL (MBBL)
California 18 16 16 15
Permian 40 37 39 38
Midcontinent and Other   16     20     18     14  
Total 74 73 73 67
 
Natural Gas (MMCF)
California 247 269 261 254
Permian 151 151 153 153
Midcontinent and Other   414     379     414     357  
Total 812 799 828 764
 
Latin America
Crude Oil (MBBL) - Colombia 30 27 28 29
 
Natural Gas (MMCF) - Bolivia 12 15 13 16
 
Middle East / North Africa
Crude Oil (MBBL)
Bahrain 4 4 5 4
Dolphin 7 10 8 10
Oman 69 69 65 68
Qatar 69 73 71 72
Other   34     32     36     39  

Total

183 188 185 193
 
NGL (MBBL)
Dolphin 7 11 9 11
Other   1     -     -     -  
Total 8 11 9 11
 
Natural Gas (MMCF)
Bahrain 237 169 229 171
Dolphin 147 215 171 205
Oman   57     59     57     53  
Total 441 443 457 429
 
 
Barrels of Oil Equivalent (MBOE)   766     739     762     728  
 
 
 
Attachment 4
 
SUMMARY OF OPERATING STATISTICS - SALES
 
Third Quarter Nine Months
  2012 2011 2012 2011
NET OIL, GAS AND LIQUIDS SALES PER DAY
 
United States
Crude Oil (MBBL) 259 230 251 226
NGL (MBBL) 74 73 73 67
Natural Gas (MMCF) 807 799 825 764
 
Latin America
Crude Oil (MBBL) - Colombia 30 24 28 29
 
Natural Gas (MMCF) - Bolivia 12 15 13 16
 
Middle East / North Africa
Crude Oil (MBBL)
Bahrain 4 4 4 4
Dolphin 7 9 8 9
Oman 67 71 64 70
Qatar 68 76 70 73
Other   38     35     34     35  
Total 184 195 180 191
 
NGL (MBBL)
Dolphin 8 11 9 11
 
Natural Gas (MMCF) 441 443 457 429
 
 
Barrels of Oil Equivalent (MBOE)   765     743     757     726  
 
 
 
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)

2012

EPS

2011 EPS
TOTAL REPORTED EARNINGS $ 1,375   $ 1.69   $ 1,771   $ 2.17  
 
Oil and Gas
Segment Earnings $ 2,026 $ 2,612
Add:
No significant items affecting earnings   -     -  
 
Segment Core Results   2,026     2,612  
 
Chemicals
Segment Earnings 162 245
Add:
No significant items affecting earnings   -     -  
 
Segment Core Results   162     245  
 
Midstream, Marketing and Other
Segment Earnings 156 77
Add:
No significant items affecting earnings   -     -  
 
Segment Core Results   156     77  
 
Total Segment Core Results   2,344     2,934  
 
Corporate
Corporate Results --
Non Segment * (969 ) (1,163 )
Add:
Discontinued operations, net **   4     4  
 
Corporate Core Results - Non Segment   (965 )   (1,159 )
 
TOTAL CORE RESULTS $ 1,379   $ 1.70   $ 1,775   $ 2.18  
 
* 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)

2012

EPS

2011 EPS
TOTAL REPORTED EARNINGS $ 4,262   $ 5.25   $ 5,137   $ 6.31  
 
Oil and Gas
Segment Earnings $ 6,573 $ 7,704
Add:
Libya exploration write-off - 35
Gain on sale of Colombia pipeline interest - (22 )
Foreign tax   -     29  
 
Segment Core Results   6,573     7,746  
 
Chemicals
Segment Earnings 540 717
Add:
No significant items affecting earnings   -     -  
 
Segment Core Results   540     717  
 
Midstream, Marketing and Other
Segment Earnings 364 378
Add:
No significant items affecting earnings   -     -  
 
Segment Core Results   364     378  
 
Total Segment Core Results   7,477     8,841  
 
Corporate
Corporate Results --
Non Segment * (3,215 ) (3,662 )
Add:
Premium on debt extinguishments - 163
State income tax charge - 33
Tax effect of pre-tax adjustments - (50 )
Discontinued operations, net **   9     (138 )
 
Corporate Core Results - Non Segment   (3,206 )   (3,654 )
 
TOTAL CORE RESULTS $ 4,271   $ 5.26   $ 5,187   $ 6.37  
 
* Interest expense, income taxes, G&A expense and other
** Amounts shown after tax.

Contacts

Occidental Petroleum Corporation
Melissa E. Schoeb (media)
melissa_schoeb@oxy.com
310-443-6504
or
Chris Stavros (investors)
chris_stavros@oxy.com
212-603-8184

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