UNITED STATES
SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

 


 

FORM 8-K

 


 

CURRENT REPORT

 

PURSUANT TO SECTION 13 OR 15(d) OF THE
SECURITIES EXCHANGE ACT OF 1934

 

Date of report (Date of earliest event reported):  October 22, 2014

 


 

OCCIDENTAL PETROLEUM CORPORATION

(Exact Name of Registrant as Specified in Charter)

 


 

Delaware

 

1-9210

 

95-4035997

(State or Other Jurisdiction
of Incorporation)

 

(Commission
File Number)

 

(IRS Employer
Identification No.)

 

 

5 Greenway Plaza, Suite 110

Houston, Texas

 

77046

(Address of Principal Executive Offices)

 

(Zip Code)

 

Registrant’s Telephone Number, Including Area Code: (713) 215-7000

 

Not Applicable

(Former Name or Former Address, if Changed Since Last Report)

 


 

Check the appropriate box below if the Form 8-K filing is intended to simultaneously satisfy the filing obligation of the registrant under any of the following provisions:

 

¨    Written communications pursuant to Rule 425 under the Securities Act (17 CFR 230.425)

 

¨    Soliciting material pursuant to Rule 14a-12 under the Exchange Act (17 CFR 240.14a-12)

 

¨    Pre-commencement communications pursuant to Rule 14d-2(b) under the Exchange Act (17 CFR 240.14d-2(b))

 

¨    Pre-commencement communications pursuant to Rule 13e-4(c) under the Exchange Act (17 CFR 240.13e-4(c))

 

 

 



 

Item 2.02.                Results of Operations and Financial Condition.

 

On October 22, 2014, California Resources Corporation, a wholly-owned subsidiary of Occidental Petroleum Corporation, issued a press release announcing its financial condition and results of operations for the quarter ended September 30, 2014.  A copy of the press release is furnished as Exhibit 99.1 to this report on Form 8-K, and is incorporated herein by reference.

 

The information contained in this report and the exhibit hereto shall not be deemed to be “filed” for purposes of Section 18 of the Securities Exchange Act of 1934, as amended, and shall not be incorporated by reference into any filings made by Occidental Petroleum Corporation under the Securities Act of 1933, as amended, or the Exchange Act, except as may be expressly set forth by specific reference in such filing.

 

Item 9.01.                Financial Statements and Exhibits.

 

(d)   Exhibits.

 

Exhibit No.

 

Description

 

 

 

99.1

 

Press Release dated October 22, 2014

 



 

SIGNATURE

 

Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned hereunto duly authorized.

 

 

Occidental Petroleum Corporation

 

 

 

 

 

 

 

/s/ JENNIFER KIRK

 

Name:

Jennifer Kirk

 

Title:

Vice President, Controller and

 

 

Principal Accounting Officer

DATED: October 22, 2014

 

 

 



 

EXHIBIT INDEX

 

Exhibit No.

 

Description

 

 

 

99.1

 

Press Release dated October 22, 2014

 




Exhibit 99.1

 

NEWS RELEASE

 

 

 

 

 

 

 

For Immediate Release: October 22, 2014

 

 

California Resources Corporation Announces 3rd Quarter

 

and Nine Month 2014 Financial Results

 

Record quarterly oil production of 100,000 barrels per day, 12% increase from Q3 2013

 

·                 Q3 2014 net income of $188 million

·                 Q3 2014 cash flow from operations of $657 million

·                 Q3 2014 EBITDAX of $648 million

 

 

LOS ANGELES, October 22, 2014 – California Resources Corporation, a subsidiary of Occidental Petroleum Corporation (NYSE:OXY), announced net income of $188 million for the third quarter of 2014, compared with $235 million for the third quarter of 2013. Net income for the first nine months of 2014 was unchanged from the same period of 2013 at $657 million.

 

In announcing the results, Todd Stevens, President and Chief Executive Officer, said, “As we near separation from Occidental, California Resources Corporation has posted robust third quarter 2014 results, including record oil production of 100,000 barrels per day and strong earnings and operating cash flow from our world class resources. Our record oil production is a result of our strategic focus on drilling for high margin oil to maximize shareholder value.”

 

In October, California Resources Corporation raised $5 billion through a senior notes offering and distributed the net proceeds to Occidental. The company also secured a term loan for $1 billion and a revolving credit facility of up to $2 billion and will make another distribution to Occidental of approximately $1 billion prior to the spin-off. Mr. Stevens noted that “The spin-off is expected to be completed as planned on November 30, 2014. We are completely focused on developing our diverse portfolio to increase shareholder value.” Once separated from Occidental, California Resources Corporation will become an independent publicly traded company on the NYSE under the symbol CRC. Occidental will initially distribute to its shareholders at least 80.1 percent of CRC common stock with the remaining up to 19.9 percent to be disposed of within eighteen months.

 

1 of 5



 

QUARTERLY RESULTS

 

Net income was $188 million for the third quarter of 2014, compared with $235 million for the third quarter of 2013. The current quarter reflects higher oil volumes and higher realized gas prices offset by lower realized oil prices and increased production costs. Excluding increases due to higher volumes, production costs increased on a dollar per barrel of oil equivalent (BOE) basis mostly due to higher costs for natural gas used in our steam flood operations and other higher energy costs. EBITDAX for the third quarter of 2014 was $648 million compared with $721 million for the third quarter of 2013.1

 

Daily oil and gas production volumes averaged 160,000 BOE in the third quarter of 2014, compared with 153,000 BOE in the third quarter of 2013. Average oil production increased 11,000 barrels per day, or by 12 percent, from 89,000 barrels per day in 2013 to 100,000 barrels per day in 2014, reflecting our focus on high margin oil drilling. NGL and natural gas production decreased by 2,000 barrels and 11 million cubic feet (MMcf) per day respectively.

 

Realized crude oil prices decreased ten percent to $96.27 per barrel for the third quarter of 2014 from $107.20 per barrel for the third quarter of 2013. The decrease reflects the drop in oil prices during this period and widening differentials to Brent. NGL prices decreased three percent to $47.20 per barrel in the third quarter of 2014, from $48.46 per barrel in the third quarter of 2013. Natural gas realized prices increased 17 percent in the third quarter of 2014 to $4.24 per thousand cubic feet (Mcf), compared with $3.61 per Mcf in the third quarter of 2013.

 

NINE-MONTH RESULTS

 

Net income for the first nine months of 2014 was unchanged from the same period of 2013 at $657 million. Higher oil production and higher realized natural gas and NGL prices in 2014 were offset by lower realized oil prices for the 2014 period and increased production costs, depletion rates, taxes other than on income and selling, general and administrative costs. Excluding increases due to higher volumes, production costs increased due to higher natural gas and other energy costs. EBITDAX for the first nine months of 2014 was $2.1 billion, compared with $2.0 billion for the first nine months of 2013.

 

For the first nine months of 2014, daily oil and gas production volumes averaged 157,000 BOE, compared with 153,000 BOE in the first nine months of 2013. Average oil production increased 9,000 barrels per day, or by 10 percent, from 88,000 barrels per day in 2013 to 97,000 barrels per day in 2014. NGL and natural gas production decreased by 2,000 barrels and 15MMcf per day, respectively.

 

Realized crude oil prices decreased five percent to $100.94 per barrel for the first nine months of 2014, compared with $105.89 per barrel for the first nine months of 2013. NGL prices increased nine percent to $52.26 per barrel for the first nine months of 2014,

 

2 of 5



 

from $48.09 per barrel for the first nine months of 2013. Natural gas prices increased 21 percent in the first nine months of 2014 to $4.53 per Mcf, compared with $3.75 per Mcf in the first nine months of 2013.

 

CURRENT MARKET CONDITIONS

 

We are closely monitoring the recent volatility in the commodity markets, in particular the recent drop in oil prices. In line with our stated goal of self-funding our operations, we are developing plans to adapt to changes that are occurring in the marketplace. Our 2015 plans will include a variety of spending levels affording us the flexibility to respond rapidly as the commodity price environment dictates.

 

OPERATIONS

 

We continued progress on our development and operating plans during the third quarter. In the San Joaquin basin, our third quarter production averaged 113,000 BOE per day, which was an increase of five percent from the prior year quarter. Almost all of this increase in production came from oil, which increased by 7,000 barrels per day or 12 percent. During the third quarter we operated 19 rigs and drilled 200 wells. We continue to emphasize oil drilling, in particular steamfloods where the favorable oil-to-gas price ratio provides attractive returns. Our third quarter capital was $379 million in the basin and we expect our activity to remain at similar levels in the fourth quarter.

 

In the Sacramento basin, we produced 56MMcf per day of gas in the third quarter, compared to 65 MMcf per day in the third quarter of last year. We did not perform any new drilling during the quarter in this predominantly gas basin. However, we are monitoring gas prices closely and continuing to build our project inventory to take advantage of a more favorable product price environment in the future.

 

In the Los Angeles basin, our operations continued to emphasize development of our waterflood opportunities. Our third quarter production was 29,000 BOE per day compared to 25,000 BOE per day in the prior year quarter. We operated seven rigs in the basin last quarter and drilled 29 wells. Our third quarter capital was $117 million in the basin and we expect our activity in the fourth quarter to remain similar to third quarter levels.

 

In our Ventura basin operations, production remained flat for the third quarter of 2014, compared to the third quarter of last year. We continue to invest in oil projects in the basin, and drilled six wells during the quarter with one rig. Our third quarter capital was $42 million in the basin and we expect our activity in the fourth quarter to be similar to third quarter levels.

 

1 For an explanation of how we calculate and use EBITDAX (non-GAAP) and a reconciliation of net income (GAAP) to EBITDAX (non-GAAP), please see “Non-GAAP Financial Measures and Reconciliations” below.

 

3 of 5



 

About California Resources Corporation

 

California Resources Corporation will, following the spin-off from Occidental Petroleum Corporation, be an independent publicly traded oil and natural gas exploration and production company and the largest combined oil and natural gas producer in California on a gross-operated basis. The Company operates its world class resource base exclusively within the State of California, and uses integrated infrastructure to gather, process and market its production. Using advanced technology, California Resources Corporation’s workforce of over 8,000 employees and contractors focuses on safely and responsibly supplying affordable energy for California by Californians.

 

About Occidental Petroleum

 

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. Headquartered in Houston, Occidental is one of the largest U.S. oil and gas companies, based on equity market capitalization. Occidental’s midstream and marketing segment gathers, processes, transports, stores, purchases and markets hydrocarbons and other commodities in support of Occidental’s businesses. The company’s wholly owned subsidiary OxyChem manufactures and markets chlor-alkali products and vinyls.

 

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. Actual results may differ from anticipated results, sometimes materially, and reported results should not be considered an indication of future performance. Factors that could cause results to differ include, but are not limited to: commodity pricing fluctuations; supply and demand considerations for California Resources Corporation’s products; higher-than-expected costs; the regulatory approval environment; any delay of, or other negative developments affecting, the spin-off of California Resources Corporation; not successfully completing, or any material delay of, field developments, expansion projects, capital investment, efficiency projects, acquisitions or dispositions; lower-than-expected production from development projects or acquisitions; exploration risks; general economic slowdowns; liability under environmental regulations including remedial actions; litigation; disruption or interruption of production, processing or marketing or facility damage due to accidents, labor unrest, weather, natural disasters or cyber attacks; 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 prospective nature of 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

 

4 of 5



 

this release. Unless legally required, California Resources Corporation 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 California Resources Corporation’s results of operations and financial position appear in “Risk Factors” in our Form 10.

 

 

Contacts

 

California Resources Corporation:

Media:

Margita Thompson

310-443-6284

Margita_Thompson@oxy.com

 

or

 

Investors:

Scott Espenshade

310-443-6348

Scott_Espenshade@oxy.com

 

On the web: www.oxy.com

 

5 of 5



 

Attachment 1

 

 

SUMMARY OF RESULTS & SELECTED PRO FORMA ITEMS

 

 

 

 

Third Quarter

 

Nine Months

 

($ millions)

 

2014

 

2013

 

2014

 

2013

 

 

 

 

 

 

 

 

 

 

 

Income Statement Data:

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Revenues

 

 

 

 

 

 

 

 

 

Oil and gas net sales to related parties

 

$

421

 

$

1,040

 

$

2,560

 

$

3,027

 

Oil and gas net sales to third parties

 

630

 

20

 

678

 

63

 

Other revenue

 

41

 

47

 

115

 

115

 

 

 

1,092

 

1,107

 

3,353

 

3,205

 

 

 

 

 

 

 

 

 

 

 

Costs and other deductions

 

 

 

 

 

 

 

 

 

Production costs

 

262

 

244

 

780

 

717

 

Selling, general and administrative expenses

 

87

 

73

 

243

 

212

 

Depreciation, depletion and amortization

 

304

 

288

 

886

 

853

 

Taxes other than on income

 

56

 

32

 

163

 

141

 

Exploration expense

 

25

 

41

 

71

 

81

 

Other expenses

 

39

 

37

 

109

 

106

 

 

 

773

 

715

 

2,252

 

2,110

 

Income before income taxes

 

319

 

392

 

1,101

 

1,095

 

Provision for income taxes

 

(131)

 

(157)

 

(444)

 

(438)

 

Net income

 

$

188

 

$

235

 

$

657

 

$

657

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Effective tax rate

 

41%

 

40%

 

40%

 

40%

 

EBITDAX

 

$

648

 

$

721

 

$

2,058

 

$

2,029

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Cash Flow Data:

 

 

 

 

 

 

 

 

 

Net cash provided by operating activities

 

$

657

 

$

726

 

$

1,891

 

$

1,903

 

Net cash used by investing activities (a)

 

$

(600)

 

$

(447)

 

$

(1,638)

 

$

(1,215)

 

Net cash provided (used) by financing activities (b)

 

$

48

 

$

(279)

 

$

(148)

 

$

(688)

 

 

(a) Includes capital expenditures of $566 million for 3Q 2014, $443 million for 3Q 2013 and $1.6 billion for nine months 2014 and $1.2 billion for nine months 2013.

 

(b) Amounts represent contributions from / (distributions to) Occidental Petroleum Corporation.

 

 

Balance Sheet Data:

 

 

 

 

 

 

 

As of September 30, 2014

 

 

 

Actual

 

Pro Forma (c)

 

Total current assets

 

$

897

 

$

897

 

Property, plant and equipment, net

 

$

14,725

 

$

14,725

 

Total current liabilities

 

$

852

 

$

852

 

Long-term debt, net

 

$

-

 

$

6,065

 

Total net investment

 

$

10,869

 

$

4,869

 

 

(c) The pro-forma adjustments reflect the issuance of notes and expected borrowings under our new credit facilities as well as distributions to Occidental.

 



 

Attachment 2

 

 

NON-GAAP FINANCIAL MEASURES AND RECONCILIATIONS

 

We define EBITDAX as earnings before interest expense; income taxes; depreciation, depletion and amortization; and exploration expense.   Our management believes EBITDAX provides useful information in assessing our results of operations and cash flows and is widely used by the industry and investment community.  The amounts included in the calculation of EBITDAX were computed in accordance with GAAP.  This measure is provided in addition to, and not as an alternative for, income and liquidity measures calculated in accordance with GAAP.

 

The following tables present a reconciliation of the non-GAAP financial measure of EBITDAX to the GAAP financial measures of net income and net cash provided by operating activities:

 

 

 

 

Third Quarter

 

Nine Months

 

($ millions)

 

2014

 

2013

 

2014

 

2013

 

 

 

 

 

 

 

 

 

 

 

Net income

 

  $

188

 

 

  $

235

 

 

  $

657

 

 

  $

657

 

Provision for income taxes

 

131

 

 

157

 

 

444

 

 

438

 

Depreciation, depletion and amortization

 

304

 

 

288

 

 

886

 

 

853

 

Exploration expense

 

25

 

 

41

 

 

71

 

 

81

 

EBITDAX

 

  $

648

 

 

  $

721

 

 

  $

2,058

 

 

  $

2,029

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Net cash provided by operating activities

 

  $

657

 

 

  $

726

 

 

  $

1,891

 

 

  $

1,903

 

Cash income taxes

 

47

 

 

86

 

 

182

 

 

241

 

Cash exploration expenses

 

5

 

 

14

 

 

19

 

 

30

 

Changes in operating assets and liabilities

 

(60

)

 

(90

)

 

(12

)

 

(103

)

Other, net

 

(1

)

 

(15

)

 

(22

)

 

(42

)

EBITDAX

 

  $

648

 

 

  $

721

 

 

  $

2,058

 

 

  $

2,029

 

 



 

Attachment 3

 

 

NET INCOME VARIANCE ANALYSIS

($ millions)

 

 

2013 3rd Quarter Net Income

 

  $

235

 

 

 

 

 

Price

 

(74

)

Volume

 

62

 

Production cost rate

 

(25

)

DD&A rate

 

(8

)

Property taxes

 

(22

)

SG&A

 

(15

)

Income tax

 

26

 

All Others

 

9

 

 

 

 

 

2014 3rd Quarter Net Income

 

  $

188

 

 

 

 

 

 

 

 

 

2013 Nine Months Net Income

 

  $

657

 

 

 

 

 

Price

 

(35

)

Volume

 

162

 

Production cost rate

 

(61

)

DD&A rate

 

(22

)

Property taxes

 

(12

)

SG&A

 

(32

)

 

 

 

 

2014 Nine Months Net Income

 

  $

657

 

 



 

Attachment 4

 

CAPITAL EXPENDITURES

 

 

 

 

Third Quarter

 

Nine Months

 

($ millions)

 

2014

 

2013

 

2014

 

2013

 

 

 

 

 

 

 

 

 

 

 

Capital Expenditures:

 

 

 

 

 

 

 

 

 

Conventional

 

  $

367

 

  $

307

 

  $

1,041

 

  $

800

 

Unconventional

 

171

 

104

 

443

 

315

 

Exploration

 

22

 

32

 

79

 

65

 

Corporate and Other

 

6

 

-

 

6

 

-

 

 

 

  $

566

 

  $

443

 

  $

1,569

 

  $

1,180

 

 



 

Attachment 5

 

PRODUCTION STATISTICS

 

 

 

 

Third Quarter

 

Nine Months

 

 

 

2014

 

2013

 

2014

 

2013

 

Net Oil, Gas and Liquids Production Per Day

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Oil (MBbl/d)

 

 

 

 

 

 

 

 

 

San Joaquin Basin

 

65

 

58

 

63

 

57

 

Los Angeles Basin

 

29

 

25

 

28

 

25

 

Ventura Basin

 

6

 

6

 

6

 

6

 

Sacramento Basin

 

 

 

 

 

Total

 

100

 

89

 

97

 

88

 

 

 

 

 

 

 

 

 

 

 

NGLs (MBbl/d)

 

 

 

 

 

 

 

 

 

San Joaquin Basin

 

18

 

20

 

18

 

20

 

Los Angeles Basin

 

 

 

 

 

Ventura Basin

 

1

 

1

 

1

 

1

 

Sacramento Basin

 

 

 

 

 

Total

 

19

 

21

 

19

 

21

 

 

 

 

 

 

 

 

 

 

 

Natural Gas (MMcf/d)

 

 

 

 

 

 

 

 

 

San Joaquin Basin

 

182

 

180

 

179

 

182

 

Los Angeles Basin

 

2

 

2

 

1

 

2

 

Ventura Basin

 

9

 

13

 

11

 

13

 

Sacramento Basin

 

56

 

65

 

55

 

64

 

Total

 

249

 

260

 

246

 

261

 

 

 

 

 

 

 

 

 

 

 

Total Barrels of Oil Equivalent (MBoe/d)

 

160

 

153

 

157

 

153

 

 



 

Attachment 6

 

PRICE STATISTICS

 

 

 

 

Third Quarter

 

Nine Months

 

 

 

2014

 

2013

 

2014

 

2013

 

Realized Prices

 

 

 

 

 

 

 

 

 

Oil ($/Bbl)

 

96.27

 

107.20

 

100.94

 

105.89

 

NGLs ($/Bbl)

 

47.20

 

48.46

 

52.26

 

48.09

 

Natural gas ($/Mcf)

 

4.24

 

3.61

 

4.53

 

3.75

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Index Prices

 

 

 

 

 

 

 

 

 

WTI oil ($/Bbl)

 

97.17

 

105.83

 

99.61

 

98.14

 

Brent oil ($/Bbl)

 

103.39

 

109.71

 

107.02

 

108.57

 

NYMEX gas ($/Mcf)

 

4.17

 

3.62

 

4.46

 

3.66

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Realized Prices as Percentage of Index Prices

 

 

 

 

 

 

 

 

 

Oil as a percentage of WTI

 

99

%

101

%

101

%

108

%

Oil as a percentage of Brent

 

93

%

98

%

94

%

98

%

NGLs as a percentage of WTI

 

49

%

46

%

52

%

49

%

NGLs as a percentage of Brent

 

46

%

44

%

49

%

44

%

Natural gas as a percentage of NYMEX

 

102

%

100

%

102

%

102

%

 


 


 

Attachment 7

 

FOURTH QUARTER GUIDANCE

 

 

The following guidance is provided using the following anticipated realizations against the prevailing index prices:

 

Oil 94% of Brent

NGLs 55% of Brent

Natural Gas 105% of NYMEX

 

 

Production

162 to 165 Mboe per day

Capital (a)

$575 million to $590 million

Production Costs

$16.25 to $16.80 per boe

Selling, general and administrative expenses

$5.95 to $6.05 per boe

Depreciation, depletion and amortization

$20.40 to $20.80 per boe

Taxes other than on income

$57 million to $62 million

Exploration expense

$40 million to $45 million

Interest expense

$75 million to $80 million

Income tax expense rate

40%

Cash income tax rate

15% to 18%

 

 

(a) Subject to further revisions as needed, based on the prevailing commodity market conditions.

 

 

 

 

Pre-tax Quarterly Price Sensitivities

On Income (b)

On Cash (b)

$1 change in Brent index

$9 million

$9 million

$1 change in NGLs

$1 million

$1 million

$.50 change in NYMEX gas

$8 million

$8 million

 

 

 

 

 

 

Quarterly Volumes Sensitivities

 

 

$1 change in the Brent index (b)

125 Boe/d

 

 

 

(b) Includes the effect of production sharing type contracts in our Long Beach operations.

 

 

Anticipated number of shares outstanding immediately after the spin

No more than 387 million shares

 


 

Occidental Petroleum (NYSE:OXY)
Historical Stock Chart
From Feb 2024 to Mar 2024 Click Here for more Occidental Petroleum Charts.
Occidental Petroleum (NYSE:OXY)
Historical Stock Chart
From Mar 2023 to Mar 2024 Click Here for more Occidental Petroleum Charts.