1st Quarter Results
April 22 2003 - 9:52AM
UK Regulatory
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Occidental Petroleum Announces First Quarter 2003 Results
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LOS ANGELES, April 22, 2003 (PRIMEZONE) -- Occidental Petroleum
Corporation (NYSE:OXY) (LSE:OCP) announced net income for the first
quarter 2003 of $325 million ($0.86 per share), compared with $25
million ($0.07 per share) for the first quarter 2002.
In announcing the results, Dr. Ray R. Irani, chairman and chief
executive officer, said, "Oil and natural gas production for the quarter
averaged 532,000 barrels of oil equivalent - the highest level for any
quarter in the company's history. Our core earnings, which were driven
by high oil and natural gas prices, hit their highest level in the last
six quarters. Strong cash flow during the quarter resulted in
additional debt reduction of $182 million which in turn lowered our debt-
to-total-capitalization to 41 percent compared to 43 percent at the end
of last year. Core earnings, as shown on the attached schedule, were
$433 million for the first quarter 2003 ($1.14 per share)."
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Oil and Gas
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Oil and gas segment and core earnings were $727 million for the first
quarter 2003, compared with $306 million for the first quarter 2002.
The improvement in the first quarter 2003 earnings reflected $440
million from higher worldwide crude oil and natural gas prices.
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Chemicals
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Chemical segment and core earnings were $35 million for the first
quarter 2003, compared with a $31 million loss for the first quarter
2002. The improvement in the first quarter 2003 results reflected
higher sales prices for PVC, chlorine and EDC; partially offset by
higher energy and raw material costs and lower caustic soda sales
prices. The first quarter 2002 included a $36 million pre-tax loss for
Equistar, which was sold in the third quarter 2002, and a $14 million
pre-tax charge for severance.
Statements in this presentation that contain words such as "will" or
"expect", or otherwise relate to the future, are forward-looking and
involve risks and uncertainties that could significantly affect expected
results. Factors that could cause results to differ materially include,
but are not limited to: global commodity pricing fluctuations, and
supply/demand considerations, for oil, gas and chemicals; higher-than-
expected costs; and not successfully completing (or any material delay
in) any expansion, capital expenditure, acquisition, or disposition.
Occidental disclaims any obligation to update any forward-looking
statements.
For further analysis of Occidental's quarterly performance, please visit
the website: www.oxy.com
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SUMMARY OF SEGMENT NET SALES AND EARNINGS
($ millions, except per-share amounts)
First Quarter
2003 2002
_______ _______
SEGMENT NET SALES
Oil and gas $ 1,553 $ 958
Chemical 790 565
Corporate and other 28 -
_______ _______
Net sales $ 2,371 $ 1,523
________ _______
SEGMENT EARNINGS (LOSSES)
Oil and gas $ 727 $ 306
Chemical 35 (31)
_______ _______
762 275
Unallocated Corporate Items
Interest expense, net (a) (124) (56)
Income taxes (b) (178) (44)
Trust preferred distributions
& other (11) (11)
Other (c) (56) (41)
_______ _______
Income from continuing operations 393 123
Discontinued operations, net - (3)
Cumulative effect of changes in
accounting principles, net (d) (68) (95)
_______ _______
NET INCOME $ 325 $ 25
_______ _______
_______ _______
BASIC EARNINGS PER COMMON SHARE
Income from continuing operations $ 1.04 $ 0.33
Discontinued operations, net - (0.01)
Cumulative effect of changes in
accounting principles, net (0.18) (0.25)
_______ _______
$ 0.86 $ 0.07
_______ _______
_______ _______
DILUTED EARNINGS PER COMMON SHARE
Income from continuing operations $ 1.03 $ 0.33
Discontinued operations, net - $ (0.01)
Cumulative effect of changes
in accounting principles, net (0.18) (0.25)
_______ _______
$ 0.85 $ 0.07
_______ _______
_______ _______
AVERAGE BASIC COMMON SHARES
OUTSTANDING 379.1 374.5
________ _______
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See footnotes on following page.
(a) The first quarter 2003 includes a $61 million pre-tax interest
charge to repay a $450 million 6.4 percent senior notes issue that had
ten years of remaining life, but was subject to re-marketing on April 1,
2003. The three months 2002 includes interest income on notes receivable
from Altura partners of $14 million. The partnership exercised an
option in May 2002 to redeem the sellers' remaining partnership
interests in exchange for the outstanding balance on the notes.
(b) Excludes U.S. federal income tax charges and credits allocated to
the segments and foreign taxes. Oil and gas segment earnings include
credits of $1 million for each of the three months 2003 and 2002.
Chemical segment earnings have been impacted by credits of $4 million
for the three months 2002.
(c) The three months 2002 includes preferred distributions to the
Occidental Permian Partners of $15 million. This is essentially offset
by the interest income discussed in (a) above. The partnership
exercised an option in May 2002 to redeem the sellers' remaining
partnership interests in exchange for the outstanding balance on the
notes.
(d) Effective January 1, 2003, Occidental implemented SFAS No. 143 -
"Accounting for Asset Retirement Obligations." Adoption of this new
accounting standard resulted in a cumulative after-tax reduction in net
income of $50 million. Also effective January 1, 2003, Occidental
implemented the rescission of EITF 98-10, which precludes mark-to-market
accounting for all energy-trading contracts that are not derivatives and
fair-value accounting for inventories purchased from third parties.
Adoption of this accounting change resulted in a cumulative after-tax
reduction in net income of $18 million. Effective January 1, 2002,
Occidental implemented SFAS No. 142 - "Goodwill and Other Intangible
Assets." Adoption of this new accounting standard resulted in a
cumulative after-tax reduction in net income of $95 million in the first
quarter 2002.
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SUMMARY OF OPERATING STATISTICS
First Quarter
2003 2002
________ _______
NET OIL, GAS AND LIQUIDS
PRODUCTION PER DAY
United States
Crude oil and liquids (MBBL)
California 78 90
Permian 144 140
Horn Mountain 15 -
Hugoton 4 3
_______ _______
Total 241 233
Natural Gas (MMCF)
California 262 305
Hugoton 144 157
Permian 117 129
Horn Mountain 5 -
_______ _______
Total 528 591
Latin America
Crude oil (MBBL)
Colombia 37 36
Ecuador 16 13
_______ _______
Total 53 49
Middle East and
Other Eastern Hemisphere
Crude oil (MBBL)
Oman 13 17
Pakistan 10 8
Qatar 47 44
Yemen 39 47
_______ _______
Total 109 116
Natural Gas (MMCF)
Pakistan 75 50
Barrels of Oil Equivalent (MBOE)
Subtotal consolidated subsidiaries 504 505
Colombia-minority interest (4) (5)
Russia-Occidental net interest 30 25
Yemen-Occidental net interest 2 -
_______ _______
Subtotal other interests 28 20
_______ _______
Total worldwide production 532 525
_______ _______
_______ _______
CAPITAL EXPENDITURES (millions) $ 298 $ 254
_______ _______
_______ _______
DEPRECIATION, DEPLETION AND
AMORTIZATION OF ASSETS (millions) $ 285 $ 261
________ _______
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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 earnings", 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
earnings is not considered to be an alternative to operating income in
accordance with generally accepted accounting principles.
The following table sets forth the core earnings and significant items
affecting earnings for each operating segment and corporate:
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First Quarter
($ millions, except per share amounts)
2003 EPS 2002 EPS
_____ _____ _____ _____
TOTAL REPORTED EARNINGS $ 325 $0.86 $ 25 $0.07
______ _____ _____ _____
______ _____ _____ _____
Oil and Gas
Segment Earnings $ 727 $ 306
Less:
None - -
_____ _____
Segment Core Earnings 727 306
_____ _____
Chemicals
Segment Earnings (Loss) 35 (31)
Less:
None - -
_____ _____
Segment Core Earnings (Loss) 35 (31)
_____ _____
Corporate
Results (437) (250)
Less:
Debt repayment charge (61) -
Tax effect of pre-tax
adjustments 21 -
Discontinued operations, net* - (3)
Changes in accounting
principles, net* (68) (95)
_____ _____
TOTAL CORE EARNINGS $ 433 $1.14 $ 123 $0.33
_____ _____ _____ _____
* These amounts are shown after tax.
ITEMS AFFECTING COMPARABILITY OF CORE EARNINGS BETWEEN PERIODS
First Quarter
($ millions) 2003 2002
_______ _______
INCOME / (EXPENSE)
(Pre-tax)
Oil and Gas
On-going quarterly impact of adopting asset
retirement obligations (4) -
Chemicals
Reorganizations/severance - (14)
Equistar equity results - (36)
Corporate
Equity results (23) -
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CONTACT: Occidental
Lawrence P. Meriage (media)
(310) 443-6562
Kenneth J. Huffman (investors)
(212) 603-8183
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