LOS ANGELES, April 23, 2004 (PRIMEZONE) -- Occidental Petroleum Corporation (NYSE:OXY) announced net income for the first quarter 2004 of $487 million ($1.24 per share), compared with $325 million ($0.86 per share) for the first quarter 2003. The 2003 income included net after-tax charges of $108 million for changes in accounting principles and a debt-remarketing fee.
In announcing the results, Dr. Ray R. Irani, chairman and chief executive officer, said, "Higher oil and gas prices and increased production were key drivers of our financial performance. In addition, we reduced our total debt by nine percent during the quarter, lowering our debt to total capitalization to 33 percent."
Oil and Gas
Oil and gas segment earnings were $750 million for the first quarter 2004, compared with $727 million for the first quarter 2003. The improvement in the first quarter 2004 earnings reflected the impact of higher energy prices and increased crude oil volumes. This was partially offset by higher exploration expense, operating expense -- particularly energy-related production taxes and other costs -- and increased DD&A rates, due to accelerated drilling in Colombia and Yemen and a facility expansion project in Qatar. Daily production increased to 568,000 barrels of oil equivalent (BOE) for the first quarter 2004 from 532,000 BOE for the first quarter 2003.
Chemicals
Chemical segment earnings were $50 million for the first quarter 2004, compared with $35 million for the first quarter 2003. The improvement was due primarily to higher margins and volumes in vinyls, which were partially offset by higher ethylene costs and also by lower caustic soda margins.
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.
SUMMARY OF SEGMENT NET SALES AND EARNINGS
First Quarter
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(In millions, except per-share amounts) 2004 2003
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SEGMENT NET SALES
Oil and gas $ 1,693 $ 1,553
Chemical 857 790
Other 30 28
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Net sales $ 2,580 $ 2,371
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SEGMENT EARNINGS
Oil and gas $ 750 $ 727
Chemical 50 35
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800 762
Unallocated Corporate Items
Interest expense, net (a)
Debt, net (54) (124)
Trust preferred distributions & other (14) (11)
Income taxes (b) (190) (178)
Other (55) (56)
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Income from Continuing Operations 487 393
Cumulative effect of changes in
accounting principles, net - (68)
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NET INCOME $ 487 $ 325
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BASIC EARNINGS PER COMMON SHARE
Income from continuing operations $ 1.24 $ 1.04
Cumulative effect of changes in
accounting principles, net - (0.18)
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$ 1.24 $ 0.86
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DILUTED EARNINGS PER COMMON SHARE
Income from continuing operations $ 1.23 $ 1.03
Cumulative effect of changes in
accounting principles, net - (0.18)
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$ 1.23 $ 0.85
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AVERAGE BASIC COMMON SHARES OUTSTANDING 391.5 379.1
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See footnotes on following page.
(a) The first quarter 2004 includes an $11 million pre-tax interest charge to redeem all the outstanding 8.16 percent Trust Preferred Redeemable Securities on January 20, 2004. 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.
(b) The first quarter 2004 includes a $20 million credit related to the settlement of an issue with the Internal Revenue Service.
SUMMARY OF OPERATING STATISTICS
First Quarter
----------------
2004 2003
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NET OIL, GAS AND LIQUIDS
PRODUCTION PER DAY
United States
Crude oil and liquids (MBBL)
California 77 78
Permian 153 144
Horn Mountain 25 15
Hugoton 3 4
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Total 258 241
Natural Gas (MMCF)
California 243 262
Hugoton 127 144
Permian 140 117
Horn Mountain 17 5
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Total 527 528
Latin America
Crude oil (MBBL)
Colombia 36 37
Ecuador 43 16
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Total 79 53
Middle East
Crude oil (MBBL)
Oman 14 13
Qatar 42 47
Yemen 39 39
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Total 95 99
Natural Gas (MMCF)
Oman 11 -
Other Eastern Hemisphere
Crude oil (MBBL)
Pakistan 9 10
Natural Gas (MMCF)
Pakistan 75 75
Barrels of Oil Equivalent (MBOE)
Subtotal consolidated subsidiaries 543 504
Colombia-minority interest (4) (4)
Russia-Occidental net interest 28 30
Yemen-Occidental net interest 1 2
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Total Worldwide Production 568 532
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CAPITAL EXPENDITURES (millions) $ 343 $ 298
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DEPRECIATION, DEPLETION AND
AMORTIZATION OF ASSETS (millions) $ 325 $ 285
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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:
First Quarter
($ millions, except ----------------------------------
per-share amounts) 2004 EPS 2003 EPS
================================ ======= ======= ======= =======
TOTAL REPORTED EARNINGS $ 487 $ 1.24 $ 325 $ 0.86
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Oil and Gas
Segment Earnings $ 750 $ 727
Less:
None - --
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Segment Core Earnings $ 750 $ 727
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Chemicals
Segment Earnings $ 50 $ 35
Less:
None - --
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Segment Core Earnings $ 50 $ 35
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Corporate
Results $ (313) $ (437)
Less:
Trust preferred
redemption charge (11) -
IRS settlement 20 -
6.4% senior note remarket fee - (61)
Tax effect of pre-tax
adjustments 4 21
Changes in accounting
principles, net* - (68)
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TOTAL CORE EARNINGS $ 474 $ 1.21 $ 433 $ 1.14
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* These amounts are shown after tax.
ITEMS AFFECTING COMPARABILITY OF CORE EARNINGS BETWEEN PERIODS
First Quarter
----------------
($ millions) 2004 2003
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PRE-TAX
INCOME / (EXPENSE)
Corporate
Equity earnings (3) (21)