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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 16, 1997
OCCIDENTAL PETROLEUM CORPORATION
(Exact name of registrant as specified in its charter)
DELAWARE 1-9210 95-4035997
(State or other jurisdiction (Commission (I.R.S. Employer
of incorporation) File Number) Identification No.)
10889 WILSHIRE BOULEVARD, LOS ANGELES, CALIFORNIA 90024
(Address of principal executive offices) (ZIP code)
Registrant's telephone number, including area code:
(310) 208-8800
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Item 5. Other Events
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Occidental Petroleum Corporation reported on October 16, 1997
net income of $157 million ($.40 per share) for the third quarter of
1997, compared with net income of $194 million ($.53 per share) for
the third quarter of 1996. The third quarter of 1997 results
included a charge, net of taxes, of $54 million to extinguish
existing liabilities and open-ended financial commitments under
employment agreements with two senior executives. The third quarter
of 1996 results included a $100 million benefit from a reduction
in federal income tax liabilities no longer required and a $40
million favorable litigation settlement, partially offset by a $105
million charge for the write-down of an oil and gas project and
related tax effects. Earnings before special items for the third
quarter of 1997 were $211 million, compared with $168 million for
the third quarter of 1996. Sales were $2.6 billion for the third
quarter of 1997, compared with $2.8 billion for the third quarter
of 1996.
Oil and gas divisional earnings were $136 million for the
third quarter of 1997, compared with earnings before special items
of $125 million for the third quarter of 1996. Earnings for the
third quarter of 1996 were $20 million after including the $105
million write-down in Occidental's investment in an oil and gas
project in the Republic of Komi. The increase in 1997 earnings
resulted primarily from lower exploration and other costs, partially
offset mainly by lower prices for worldwide crude oil and domestic
natural gas.
Natural gas transmission divisional earnings for the third
quarter of 1997 were $53 million, compared with $49 million for the
third quarter of 1996. The increase in 1997 earnings reflected cost
savings, partially offset by lower gas sales margins.
Chemical divisional earnings for the third quarter of 1997
were $223 million, compared with earnings before special items
of $190 million for the third quarter of 1996. The 1996 third
quarter results were $228 million, after inclusion of a $40 million
favorable litigation settlement and the related state tax effects.
The improvement in 1997 earnings before special items resulted
primarily from improved margins in petrochemicals and chlorine,
partially offset by lower margins in caustic soda.
Unallocated other expenses were $109 million for the third
quarter of 1997, compared with $3 million for the third quarter of
1996. Included in 1997 is a charge of $75 million representing the
amount required in excess of pre-existing reserves for the
previously mentioned employment agreement changes with the
applicable tax benefit of $21 million included in corporate income
taxes. In addition, the higher expense in 1997 reflected lower
equity earnings from unconsolidated investments, which included
currency devaluations in our Thailand chemical joint ventures.
For the first nine months of 1997, Occidental's net income
totaled $494 million ($1.28 per share), compared with net income of
$509 million ($1.37 per share) for the first nine months of 1996.
Sales were $8.1 billion for the first nine months of 1997, compared
with $7.8 billion for the same period in 1996.
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SUMMARY OF DIVISIONAL NET SALES AND EARNINGS
(Millions, except per-share amounts)
Third Quarter Nine Months
---------------- ----------------
Periods Ended September 30 1997 1996 1997 1996
================================== ======= ======= ======= =======
DIVISIONAL NET SALES
Oil and gas $ 883 $ 1,148 $ 2,780 $ 2,780
Natural gas transmission 644 554 2,063 1,777
Chemical 1,124 1,084 3,302 3,210
Other (7) - (23) (2)
------- ------- ------- -------
$ 2,644 $ 2,786 $ 8,122 $ 7,765
================================= ======= ======= ======= =======
DIVISIONAL EARNINGS
Oil and gas $ 136 $ 20 $ 497 $ 325
Natural gas transmission (b) 53 49 183 221
Chemical 223 228 499 558
------- ------- ------- -------
412 297 1,179 1,104
UNALLOCATED CORPORATE ITEMS
Interest expense, net (100) (107) (302) (349)
Income taxes (a) (46) 7 (255) (204)
Other (109) (3) (128) (12)
------- ------- ------- -------
INCOME BEFORE EXTRAORDINARY ITEMS 157 194 494 539
Extraordinary gain(loss), net - - - (30)
------- ------- ------- -------
NET INCOME 157 194 494 509
Preferred dividends (21) (23) (67) (69)
------- ------- ------- -------
EARNINGS APPLICABLE TO COMMON STOCK $ 136 $ 171 $ 427 $ 440
======= ======= ======= =======
PRIMARY EARNINGS PER COMMON SHARE
Income before extraordinary items $ .40 $ .53 $ 1.28 $ 1.46
Extraordinary gain(loss), net - - - (.09)
------- ------- ------- -------
PRIMARY EARNINGS(LOSS) PER COMMON
SHARE $ .40 $ .53 $ 1.28 $ 1.37
======= ======= ======= =======
FULLY DILUTED EARNINGS PER COMMON SHARE
Income before extraordinary items $ .38 $ .50 $ 1.23 $ 1.41
Extraordinary gain(loss), net - - - (.08)
------- ------- ------- -------
FULLY DILUTED EARNINGS(LOSS) PER
COMMON SHARE $ .38 $ .50 $ 1.23 $ 1.33
======= ======= ======= =======
AVERAGE COMMON SHARES OUTSTANDING 336.2 325.3 332.3 322.4
================================== ======= ======= ======= =======
(a) The third quarter and nine months of 1996 include a $100 million credit
for reduction in federal income tax liabilities no longer required.
Includes an adjustment to corporate taxes, as quarterly consolidated
taxes are computed in accordance with Interpretation No. 18 of APB
Opinion No. 28 and hence are based on projections of total-year income
and taxes. Also, includes an offset for charges and credits in lieu of
U.S. federal income taxes allocated to the divisions. Divisional
earnings in the third quarters of 1997 and 1996 have benefited from
credits allocated by $3 million, $12 million and $7 million at oil and
gas, natural gas transmission and chemical, respectively.
(b) Occidental is presently soliciting bids for the divestiture of its
natural gas transmission operations. Occidental expects to complete a
formal plan of divestiture and reflect this segment as a discontinued
operation in the fourth quarter of 1997.
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SUMMARY OF OPERATING STATISTICS
Third Quarter Nine Months
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Periods Ended September 30 1997 1996 1997 1996
===================================== ====== ====== ====== ======
NET OIL, GAS AND LIQUIDS
PRODUCTION PER DAY
United States
Crude oil and condensate
(thousands of barrels) 57 57 58 56
Natural gas liquids
(thousands of barrels) 7 14 10 12
Natural gas
(millions of cubic feet) 587 588 603 605
Other Western Hemisphere
Crude oil and condensate
(thousands of barrels) 107 130 116 129
Eastern Hemisphere
Crude oil and condensate
(thousands of barrels) 108 99 103 102
Natural gas
(millions of cubic feet) 96 98 111 116
NATURAL GAS TRANSMISSION DELIVERIES
Sales (billions of cubic feet) 184 152 575 495
Transportation
(billions of cubic feet) 276 292 1,017 1,137
CAPITAL EXPENDITURES (millions) $ 378 $ 272 $1,064 $ 780
====== ====== ====== ======
DEPRECIATION, DEPLETION AND
AMORTIZATION OF ASSETS (millions) $ 226 $ 236 $ 714 $ 687
===================================== ====== ====== ====== ======
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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
(Registrant)
DATE: October 17, 1997 S. P. Dominick, Jr.
--------------------------------
S. P. Dominick, Jr.,
Vice President and Controller
(Chief Accounting and Duly
Authorized Officer)
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