================================================================================
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) APRIL 26, 2005
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
================================================================================
Check the appropriate box below if the Form 8-K is intended to simultaneously
satisfy the filing obligation of the Registrant under any of the following
provisions (see General Instruction A.2. below):
[ ] 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))
SECTION 2 - FINANCIAL INFORMATION
Item 2.02. Results of Operations and Financial Condition
- ---------- ---------------------------------------------
On April 26, 2005, Occidental Petroleum Corporation released information
regarding its results of operations for the fiscal period ended March 31, 2005.
The exhibits to this Form 8-K and the information set forth in this Item 2.02
are being furnished pursuant to Item 2.02, Results of Operations and Financial
Condition. The full text of the press release is attached to this report as
Exhibit 99.1. The full text of the speeches given by Dr. Ray R. Irani and
Stephen I. Chazen are attached to this report as Exhibit 99.2. Investor
Relations Supplemental Schedules are attached to this report as Exhibit 99.3.
SECTION 8 - OTHER EVENTS
Item 8.01. Other Events
- ---------- ------------
On April 26, 2005, Occidental Petroleum Corporation announced net income
for the first quarter 2005 of $846 million ($2.11 per share), compared with $487
million ($1.24 per share) for the first quarter 2004. Core earnings for the
first quarter 2005 were $866 million ($2.16 per share), compared with $476
million ($1.22 per share) for the same period in 2004.
Oil and Gas
-----------
Oil and gas segment earnings were a record $1.3 billion for the first
quarter 2005, which was 47 percent higher than the $915 million in earnings for
the first quarter 2004. The first quarter 2005 earnings reflected a $529 million
improvement from the impact of higher energy prices, partially offset by higher
operating expenses and increased DD&A rates.
For the quarter, oil and gas production averaged 565,000 barrels of oil
equivalent, which was essentially flat with the 568,000 equivalent barrels per
day produced in the first quarter 2004, and up slightly compared to the fourth
quarter 2004 rate of 558,000 equivalent barrels per day. Compared to a year ago,
production under the company's production sharing contracts in Oman, Qatar,
Yemen and Long Beach was negatively impacted by higher prices. The average price
for West Texas Intermediate crude oil in the first quarter 2005 was $49.84 per
barrel compared to $35.15 per barrel in the first quarter 2004. If prices had
remained at first quarter 2004 levels, production in the first quarter 2005
would have been more than 13,000 equivalent barrels per day higher.
Earlier this year, Occidental's executive management said that it expected
to exit 2005 with a production level of approximately 600,000 equivalent barrels
per day. That expectation is unchanged.
At the end of the first quarter, Occidental completed two acquisitions in
the Permian Basin. These acquisitions are expected to contribute 10,000
equivalent barrels per day to the 2005 production exit rate and keep the company
on track in meeting its year-end production target.
Chemicals
---------
Chemical segment earnings were $214 million for the first quarter 2005,
nearly four times higher than the $56 million earned in the first quarter 2004.
The improvement was due to higher margins in all major products resulting from
higher sales prices, partially offset by higher energy and feedstock costs.
Financial
---------
During the first quarter, $450 million of 7.65 percent senior notes were
redeemed with a related charge of $10 million to interest expense. At March 31,
Occidental's debt was $3.5 billion compared to $3.9 billion at the end of 2004.
After taking into account the $450 million in debt retirement costs and $300
million in acquisition costs, the company had cash and short-term investments of
$1.4 billion at the end of the quarter, which was approximately the same level
as the end of 2004. Stockholders' equity was $11.2 billion, up by nearly $700
million compared to year-end 2004.
Statements in this presentation that contain words such as "will," "expect" or
"estimate," 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: exploration risks such as drilling of unsuccessful wells, global
commodity pricing fluctuations and supply/demand considerations for oil, gas and
chemicals; higher-than-expected costs; political risk; 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.
2
SUMMARY OF SEGMENT NET SALES AND EARNINGS
First Quarter
---------------------
(In millions, except per-share amounts) 2005 2004(c)
======================================== ======== ========
SEGMENT NET SALES
Oil and Gas $ 2,219 $ 1,693
Chemical 1,061 834
Other 23 30
-------- --------
Net sales $ 3,303 $ 2,557
======================================== ======== ========
SEGMENT EARNINGS
Oil and Gas $ 1,349 $ 915
Chemical 214 56
-------- --------
1,563 971
Unallocated Corporate Items
Interest expense, net (a) (61) (68)
Income taxes (b) (601) (363)
Other (51) (51)
-------- --------
Income from Continuing Operations 850 489
Discontinued operations, net (4) (2)
-------- --------
NET INCOME $ 846 $ 487
======== ========
BASIC EARNINGS PER COMMON SHARE
Income from continuing operations $ 2.12 $ 1.25
Discontinued operations, net (.01) (.01)
-------- --------
$ 2.11 $ 1.24
======== ========
DILUTED EARNINGS PER COMMON SHARE
Income from continuing operations $ 2.09 $ 1.24
Discontinued operations, net (.01) (.01)
-------- --------
$ 2.08 $ 1.23
======== ========
AVERAGE BASIC COMMON SHARES OUTSTANDING 400.4 391.5
======================================== ======== ========
See footnotes on following page.
3
(a) The first quarter 2005 includes a $10 million pre-tax interest charge to
redeem all the outstanding 7.65 percent senior notes, which were due in
February 2006. The first quarter 2004 includes an $11 million pre-tax
interest charge to redeem all the outstanding 8.16 percent Trust Preferred
Redeemable Securities.
(b) The first quarter 2005 includes a $10 million charge, net, related to a
state income tax issue. The first quarter 2004 includes a $20 million
credit related to the settlement of an issue with the Internal Revenue
Service.
(c) As of January 1, 2005, Occidental revised its reporting of segment earnings
to show segment earnings before income taxes. All domestic and foreign
income tax expense is now reflected under Unallocated Corporate Items in
the income taxes line. This reporting change has been retrospectively
applied to prior period results.
SUMMARY OF CAPITAL EXPENDITURES AND DD&A EXPENSE
First Quarter
---------------------
($ millions) 2005 2004
=================================== ======== ========
CAPITAL EXPENDITURES $ 536 $ 343
======== ========
DEPRECIATION, DEPLETION AND
AMORTIZATION OF ASSETS $ 344 $ 324
=================================== ======== ========
4
SUMMARY OF OPERATING STATISTICS
First Quarter
---------------------
2005 2004
=================================== ======== ========
NET OIL, GAS AND LIQUIDS
PRODUCTION PER DAY
United States
Crude oil and liquids (MBBL)
California 77 77
Permian 148 153
Horn Mountain 18 25
Hugoton 4 3
-------- --------
Total 247 258
Natural Gas (MMCF)
California 241 243
Hugoton 129 127
Permian 146 140
Horn Mountain 12 17
-------- --------
Total 528 527
Latin America
Crude oil (MBBL)
Colombia 32 36
Ecuador 42 43
-------- --------
Total 74 79
Middle East
Crude oil (MBBL)
Oman 23 14
Qatar 43 42
Yemen 35 39
-------- --------
Total 101 95
Natural Gas (MMCF)
Oman 56 11
Other Eastern Hemisphere
Crude oil (MBBL)
Pakistan 5 9
Natural Gas (MMCF)
Pakistan 78 75
BARRELS OF OIL EQUIVALENT (MBOE)
- --------------------------------
Subtotal consolidated subsidiaries 537 543
Colombia-minority interest (4) (4)
Russia-Occidental net interest 30 28
Yemen-Occidental net interest 2 1
-------- --------
TOTAL WORLDWIDE PRODUCTION 565 568
=================================== ======== ========
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
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) 2005 EPS 2004 EPS
=================================== ======== ======== ======== ========
TOTAL REPORTED EARNINGS $ 846 $ 2.11 $ 487 $ 1.24
======== ======== ======== ========
OIL AND GAS
Segment Earnings $ 1,349 $ 915
Less:
None -- --
-------- --------
Segment Core Earnings $ 1,349 $ 915
-------- --------
CHEMICALS
Segment Earnings $ 214 $ 56
Less:
None -- --
-------- --------
Segment Core Earnings $ 214 $ 56
-------- --------
CORPORATE
Results $ (717) $ (484)
Less:
Trust preferred
redemption charge -- (11)
7.65% debt redemption charge (10) --
Settlement of tax issues -- 20
State tax charge (10) --
Tax effect of pre-tax
adjustments 4 4
Discontinued operations, net* (4) (2)
-------- --------
Corporate Core Results $ (697) $ (495)
-------- --------
TOTAL CORE EARNINGS $ 866 $ 2.16 $ 476 $ 1.22
=================================== ======== ======== ======== ========
* These amounts are shown after-tax.
6
ITEMS AFFECTING COMPARABILITY OF CORE EARNINGS BETWEEN PERIODS
The item(s) below are included in core earnings but are shown in this table
because they affect the comparability of core earnings between periods.
First Quarter
---------------------
($ millions) 2005 2004
=================================== ======== ========
PRE-TAX
INCOME / (EXPENSE)
Corporate
Environmental remediation (9) --
7
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: April 26, 2005 S. P. Dominick, Jr.
--------------------------------------------------
S. P. Dominick, Jr., Vice President and Controller
(Chief Accounting and Duly Authorized Officer)
EXHIBIT INDEX
99.1 Press release dated April 26, 2005.
99.2 Full text of speeches given by Dr. Ray R. Irani and Stephen I.
Chazen
99.3 Investor Relations Supplemental Schedules
EXHIBIT 99.1
====================================================================
[OXY LOGO] NEWS RELEASE OCCIDENTAL PETROLEUM CORPORATION
====================================================================
10889 Wilshire Boulevard, Los Angeles, California 90024 (310) 208-8800
For Immediate Release: April 26, 2005
OCCIDENTAL PETROLEUM ANNOUNCES RECORD QUARTER
---------------------------------------------
LOS ANGELES -- Occidental Petroleum Corporation (NYSE: OXY) announced net
income for the first quarter 2005 of $846 million ($2.11 per share), compared
with $487 million ($1.24 per share) for the first quarter 2004. Core earnings
for the first quarter 2005 were $866 million ($2.16 per share), compared with
$476 million ($1.22 per share) for the same period in 2004.
In announcing the results, Dr. Ray R. Irani, chairman, president and chief
executive officer, said, "Strong oil and gas prices and improved chemical
margins were key drivers in the 74 percent increase in net income compared to
our performance a year ago, resulting in the highest quarterly income in the
company's history."
OIL AND GAS
-----------
Oil and gas segment earnings were a record $1.3 billion for the first
quarter 2005, which was 47 percent higher than the $915 million in earnings for
the first quarter 2004. The first quarter 2005 earnings reflected a $529 million
improvement from the impact of higher energy prices, partially offset by higher
operating expenses and increased DD&A rates.
For the quarter, oil and gas production averaged 565,000 barrels of oil
equivalent, which was essentially flat with the 568,000 equivalent barrels per
day produced in the first quarter 2004, and up slightly compared to the fourth
quarter 2004 rate of 558,000 equivalent barrels per day. Compared to a year ago,
production under the company's production sharing contracts in Oman, Qatar,
Yemen and Long Beach was negatively impacted by higher prices. The average price
for West Texas Intermediate crude oil in the first quarter 2005 was $49.84 per
barrel compared to $35.15 per barrel in the first quarter 2004. If prices had
remained at first quarter 2004 levels, production in the first quarter 2005
would have been more than 13,000 equivalent barrels per day higher.
Earlier this year, Occidental's executive management said that it expected
to exit 2005 with a production level of approximately 600,000 equivalent barrels
per day. That expectation is unchanged.
At the end of the first quarter, Occidental completed two acquisitions in the
Permian Basin. These acquisitions are expected to contribute 10,000 equivalent
barrels per day to the 2005 production exit rate and keep the company on track
in meeting its year-end production target.
CHEMICALS
---------
Chemical segment earnings were $214 million for the first quarter 2005,
nearly four times higher than the $56 million earned in the first quarter 2004.
The improvement was due to higher margins in all major products resulting from
higher sales prices, partially offset by higher energy and feedstock costs.
FINANCIAL
---------
During the first quarter, $450 million of 7.65 percent senior notes were
redeemed with a related charge of $10 million to interest expense. At March 31,
Occidental's debt was $3.5 billion compared to $3.9 billion at the end of 2004.
After taking into account the $450 million in debt retirement costs and $300
million in acquisition costs, the company had cash and short-term investments of
$1.4 billion at the end of the quarter, which was approximately the same level
as the end of 2004. Stockholders' equity was $11.2 billion, up by nearly $700
million compared to year-end 2004.
Statements in this presentation that contain words such as "will," "expect" or
"estimate," 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: exploration risks such as drilling of unsuccessful wells, global
commodity pricing fluctuations and supply/demand considerations for oil, gas and
chemicals; higher-than-expected costs; political risk; 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.
-0-
Contacts: Lawrence P. Meriage (media)
310-443-6562
Kenneth J. Huffman (investors)
212-603-8183
For further analysis of Occidental's performance,
please visit the website: www.oxy.com
2
SUMMARY OF SEGMENT NET SALES AND EARNINGS
First Quarter
---------------------
(In millions, except per-share amounts) 2005 2004(c)
======================================== ======== ========
SEGMENT NET SALES
Oil and Gas $ 2,219 $ 1,693
Chemical 1,061 834
Other 23 30
-------- --------
Net sales $ 3,303 $ 2,557
======================================== ======== ========
SEGMENT EARNINGS
Oil and Gas $ 1,349 $ 915
Chemical 214 56
-------- --------
1,563 971
Unallocated Corporate Items
Interest expense, net (a) (61) (68)
Income taxes (b) (601) (363)
Other (51) (51)
-------- --------
Income from Continuing Operations 850 489
Discontinued operations, net (4) (2)
-------- --------
NET INCOME $ 846 $ 487
======== ========
BASIC EARNINGS PER COMMON SHARE
Income from continuing operations $ 2.12 $ 1.25
Discontinued operations, net (.01) (.01)
-------- --------
$ 2.11 $ 1.24
======== ========
DILUTED EARNINGS PER COMMON SHARE
Income from continuing operations $ 2.09 $ 1.24
Discontinued operations, net (.01) (.01)
-------- --------
$ 2.08 $ 1.23
======== ========
AVERAGE BASIC COMMON SHARES OUTSTANDING 400.4 391.5
======================================== ======== ========
See footnotes on following page.
3
(a) The first quarter 2005 includes a $10 million pre-tax interest charge to
redeem all the outstanding 7.65 percent senior notes, which were due in
February 2006. The first quarter 2004 includes an $11 million pre-tax
interest charge to redeem all the outstanding 8.16 percent Trust Preferred
Redeemable Securities.
(b) The first quarter 2005 includes a $10 million charge, net, related to a
state income tax issue. The first quarter 2004 includes a $20 million
credit related to the settlement of an issue with the Internal Revenue
Service.
(c) As of January 1, 2005, Occidental revised its reporting of segment earnings
to show segment earnings before income taxes. All domestic and foreign
income tax expense is now reflected under Unallocated Corporate Items in
the income taxes line. This reporting change has been retrospectively
applied to prior period results.
SUMMARY OF CAPITAL EXPENDITURES AND DD&A EXPENSE
First Quarter
---------------------
($ millions) 2005 2004
=================================== ======== ========
CAPITAL EXPENDITURES $ 536 $ 343
======== ========
DEPRECIATION, DEPLETION AND
AMORTIZATION OF ASSETS $ 344 $ 324
=================================== ======== ========
4
SUMMARY OF OPERATING STATISTICS
First Quarter
---------------------
2005 2004
=================================== ======== ========
NET OIL, GAS AND LIQUIDS
PRODUCTION PER DAY
United States
Crude oil and liquids (MBBL)
California 77 77
Permian 148 153
Horn Mountain 18 25
Hugoton 4 3
-------- --------
Total 247 258
Natural Gas (MMCF)
California 241 243
Hugoton 129 127
Permian 146 140
Horn Mountain 12 17
-------- --------
Total 528 527
Latin America
Crude oil (MBBL)
Colombia 32 36
Ecuador 42 43
-------- --------
Total 74 79
Middle East
Crude oil (MBBL)
Oman 23 14
Qatar 43 42
Yemen 35 39
-------- --------
Total 101 95
Natural Gas (MMCF)
Oman 56 11
Other Eastern Hemisphere
Crude oil (MBBL)
Pakistan 5 9
Natural Gas (MMCF)
Pakistan 78 75
BARRELS OF OIL EQUIVALENT (MBOE)
- --------------------------------
Subtotal consolidated subsidiaries 537 543
Colombia-minority interest (4) (4)
Russia-Occidental net interest 30 28
Yemen-Occidental net interest 2 1
-------- --------
TOTAL WORLDWIDE PRODUCTION 565 568
=================================== ======== ========
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
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) 2005 EPS 2004 EPS
=================================== ======== ======== ======== ========
TOTAL REPORTED EARNINGS $ 846 $ 2.11 $ 487 $ 1.24
======== ======== ======== ========
OIL AND GAS
Segment Earnings $ 1,349 $ 915
Less:
None -- --
-------- --------
Segment Core Earnings $ 1,349 $ 915
-------- --------
CHEMICALS
Segment Earnings $ 214 $ 56
Less:
None -- --
-------- --------
Segment Core Earnings $ 214 $ 56
-------- --------
CORPORATE
Results $ (717) $ (484)
Less:
Trust preferred
redemption charge -- (11)
7.65% debt redemption charge (10) --
Settlement of tax issues -- 20
State tax charge (10) --
Tax effect of pre-tax
adjustments 4 4
Discontinued operations, net* (4) (2)
-------- --------
Corporate Core Results $ (697) $ (495)
-------- --------
TOTAL CORE EARNINGS $ 866 $ 2.16 $ 476 $ 1.22
=================================== ======== ======== ======== ========
* These amounts are shown after-tax.
6
ITEMS AFFECTING COMPARABILITY OF CORE EARNINGS BETWEEN PERIODS
The item(s) below are included in core earnings but are shown in this table
because they affect the comparability of core earnings between periods.
First Quarter
---------------------
($ millions) 2005 2004
=================================== ======== ========
PRE-TAX
INCOME / (EXPENSE)
Corporate
Environmental remediation (9) --
7
EXHIBIT 99.2
OCCIDENTAL PETROLEUM CORPORATION
DR. RAY R. IRANI
CHAIRMAN AND CHIEF EXECUTIVE OFFICER
- CONFERENCE CALL -
FIRST QUARTER 2005 EARNINGS ANNOUNCEMENT
APRIL 26, 2005
Los Angeles, California
Good morning and thank you for joining us.
As Steve Chazen will discuss in some detail shortly, the momentum we
developed last year has carried over into the first quarter, resulting in net
income of $846 million, the highest quarterly earnings in Oxy's history. Our
results were driven by record high quarterly oil and gas earnings and improving
earnings from our chemicals business.
Earlier this year I said that we expected to exit 2005 with an oil and gas
production rate of around 600,000 barrels of oil equivalent per day. That
expectation is unchanged. Let me tell you why.
As you saw in our announcement, our oil and gas production for the quarter
averaged 565,000 barrels of oil equivalent per day. At the end of the quarter,
we completed two Permian acquisitions for a total purchase price of $300
million. We expect these assets, which are two-thirds gas, to add production of
40 million cubic feet of gas per day and 3,300 barrels of oil per day - for a
combined year-end exit rate of 10,000 equivalent barrels per day.
In addition, we currently are in the advanced stages of negotiations for a
larger Permian acquisition. We expect this acquisition to add
1
approximately 16,000 equivalent barrels per day to our year-end exit rate. We
expect to have more to say about this within the next month.
The combined production from these acquisitions, when added to our first
quarter production of 565,000 equivalent barrels per day, would raise our total
production when fully operational to 591,000 equivalent barrels per day. And,
this will put us well within reach of our projected year-end exit rate of
600,000 equivalent barrels per day.
The combined reserves for both the small and large acquisitions are
expected to be at least 130 million equivalent barrels. So I am comfortable in
stating that we will more than replace our 2005 production.
Now let's turn briefly to two major international projects - the Dolphin
Gas Project in the Middle East and the new exploration venture in Libya. These
two projects have one important element in common - our strategic partnership
with the Government of Abu Dhabi. We believe that Oxy is the only oil and gas
company to have a business alliance with a major oil producing nation in the
Middle East.
Oxy has a 24.5 percent interest in the Dolphin project which is moving
forward toward its expected start date in late 2006. Today we can share with you
the news that commitments are in place for the full two billion cubic feet of
gas per day for the first phase of the project. Furthermore, we and our partners
are working to secure contracts for the sale of an additional billion cubic feet
per day. The second phase of this project, which will take production from two
to three billion cubic feet per day, is expected to come on stream in 2009 -
2010. The Government of Abu Dhabi holds a 51 percent majority interest in
Dolphin.
As you probably know, Oxy was the big winner in Libya's first exploration
bid round since the U.S. lifted sanctions in April 2004. Oxy
2
holds an interest in nine of the fifteen blocks that were awarded. We expect
work on the new blocks to begin soon, starting with the acquisition of
additional seismic data. Drilling could begin next year. The Government of Abu
Dhabi holds a 10 percent interest in each of the nine blocks through its
ownership of Liwa Energy.
We expect our alliance with Abu Dhabi to play an important role in Oxy's
model for future growth in the region.
Let me close my remarks by summarizing the financial impact on Oxy of
yesterday's announced sale of Premcor to Valero Energy. Oxy owned just over 9
million shares of Premcor at the end of the first quarter. At the deal price of
$73.25 per share, Oxy would realize cash proceeds of approximately $480 million
after taxes. This will result in a net gain of approximately $360 million after
taxes, or approximately $0.90 per share - based on Oxy's outstanding shares at
the end of the first quarter.
I'll now turn the call over to Steve Chazen who will discuss the details of
Occidental's record performance.
3
OCCIDENTAL PETROLEUM CORPORATION
STEPHEN CHAZEN
SENIOR EXECUTIVE VICE PRESIDENT AND CHIEF FINANCIAL OFFICER
- CONFERENCE CALL -
FIRST QUARTER 2005 EARNINGS ANNOUNCEMENT
APRIL 26, 2005
Los Angeles, California
Thank you, Ray.
Those of you who have not received a copy of the press release announcing
our first quarter earnings, along with the Investor Relations Supplemental
Schedules, can find them on our website - www.oxy.com or on the SEC's EDGAR
site.
Net income for the quarter was $846 million, 74 percent higher than the
$487 million we earned in the first quarter last year. Earnings per share for
the quarter were $2.11, compared to last year's $1.24 per share. The quarter-
to-quarter improvement was due primarily to higher oil and natural gas prices
and higher chemicals margins. The 2005 results included a one-time after-tax
charge of $6 million associated with debt retirement and a $10 million tax
charge. The 2004 first quarter reflected a net benefit of $13 million for a tax
credit partly offset by a debt retirement charge. On a core income basis, our
first quarter 2005 EPS was $2.16 versus an EPS of $1.22 in 2004.
In 2004, when Oxy elected to credit foreign taxes instead of deducting
them, we began disclosing our worldwide effective tax rate and provided a
supplemental schedule showing how it is calculated. Effective with the first
quarter of 2005, we will no longer show foreign income taxes in the oil and
4
gas segment. Instead, we will show all income taxes - federal, state and foreign
- - in the Corporate Other section of our financial statistics in the income tax
line. Segment results for prior periods will reflect the retrospective
application of this change, as required by the accounting standard governing
segment reporting. There is no change in net income. Tables showing the
quarterly numbers recalculated on a pre-tax basis are included in the Investor
Relations Supplemental Schedules.
On a segment basis, oil and gas first quarter earnings were $1.35 billion,
compared to $915 million for the first quarter of 2004.
o Worldwide oil and gas daily production for the quarter averaged
565,000 barrels of oil equivalent. This was essentially flat compared
with the 568,000 equivalent barrels per day we produced in last year's
first quarter, and up slightly compared to the fourth quarter rate of
558,000 equivalent barrels.
o As we have discussed before, under our production sharing agreements,
prices have an impact on volumes. For example, if prices had remained
at first quarter 2004 levels, this year's net first quarter production
would have been more than 13,000 barrels per day higher.
o The WTI price averaged $49.84 per barrel for the first quarter
compared with $35.15 for the comparable period last year, which is an
increase of about 42 percent.
o First quarter production costs were $7.77 per equivalent barrel
compared to average costs of $6.95 in 2004. There are a number of
items that have impacted costs in the current quarter. Increased
production-related taxes and rising utility costs are the result of
5
higher oil and gas prices. Workover and maintenance costs also are
higher than last year.
o Our DD&A rate also is higher mainly due to the accelerated drilling of
wells in Elk Hills and Yemen and a major facilities expansion project
in Qatar.
o The average NYMEX gas price for the quarter was $6.89 per million
BTUs, up 18 percent from last year's first quarter average of $5.84.
Chemical segment earnings were $214 million, nearly 4 times higher than the
$56 million we earned in last year's first quarter. The primary factor driving
the improvement was higher margins for all our major products resulting from
higher prices, partially offset by higher feedstock and energy costs.
During the quarter, cash from operations was approximately $1.2 billion.
We spent $300 million on acquisitions and we retired $450 million of 7.65
percent Senior Notes which were due in 2006. After accounting for the
acquisitions and the debt retirement, the strong cash flow from our business
segments left Oxy with $1.4 billion of cash and short-term investments at the
quarter's end. Our strong cash position speaks to Oxy's overall financial
strength and flexibility.
Turning to the balance sheet, we increased shareholders' equity by $700
million to $11.2 billion. As a result of the $450 million debt retirement, total
debt was down at the end of the quarter to $3.5 billion, compared to $3.9
billion at the end of last year.
Base interest expense for the quarter was $51 million compared to $57
million during the first quarter of 2004. Our annual run rate going forward is
$200 million.
6
Capital spending for the quarter was $536 million compared to $343 million
in last year's first quarter. Oil and gas accounted for $506 million of this
year's expenditures, including approximately $90 million for exploration lease
bonuses in Libya. We're running slightly ahead of our capital forecast of $2.1
billion for the year, so we're raising our forecast by $100 million to $2.2
billion.
As we look ahead in the second quarter:
o After taking account of the acquisitions Ray mentioned, and scheduled
pipeline maintenance during the quarter at Horn Mountain, which is
expected to result in total downtime of 20 days, we expect production
to be up slightly compared to the first quarter. As Ray noted, two-
thirds of the production from these acquisitions is gas, and there is
a one month lag in the accounting for gas production. Therefore, we
can expect third quarter production to be higher than the second
quarter. And, as I discussed earlier, production could vary due to
price-driven adjustments in the volumes under our production sharing
contracts in Oman, Qatar, Yemen and Long Beach.
o We expect exploration expense for the quarter to be about $70 million.
o We expect second quarter chemical earnings to be similar to the first
quarter, which compares favorably to the $92 million we earned in last
year's second quarter. We see no weakening in demand or margin
slippage for our major chemical products.
o We expect to close the Vulcan acquisition late in the second quarter.
This transaction will be immediately accretive to earnings.
7
o A $1.00 per barrel change in oil prices impacts segment quarterly
earnings by about $36 million. The average WTI price in the first
quarter was $49.84. We expect our realized domestic gas price to be
approximately $6.10 per million cubic feet.
o Both our U.S. and foreign tax rates are included in the "Investor
Relations Supplemental Schedule". Our worldwide effective tax rate for
the first quarter was 41 percent. We expect our second quarter rate to
be in the same range.
Now we're ready for your questions.
- --------------------------------------------------------------------------------
See the investor relations supplemental schedules for the
reconciliation of non-GAAP items. Statements in this presentation
that contain words such as "will", "expect" or "estimate", 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: exploration risks such as drilling of unsuccessful
wells; global commodity pricing fluctuations and supply/demand
considerations for oil, gas and chemicals; higher-than-expected costs;
political risk; 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. The United States Securities and Exchange Commission (SEC)
permits oil and natural gas companies, in their filings with the SEC,
to disclose only proved reserves demonstrated by actual production or
conclusive formation tests to be economically producible under
existing economic and operating conditions. We use certain terms in
this presentation, such as probable, possible and recoverable
reserves, that the SEC's guidelines strictly prohibit us from using in
filings with the SEC. U.S. investors are urged to consider carefully
the disclosure in our Form 10-K, available through the following toll-
free telephone number, 1-888-OXYPETE (1-888-699-7383) or on the
Internet at http://www.oxy.com. You also can obtain a copy from the
SEC by calling 1-800-SEC-0330.
8
EXHIBIT 99.3
Investor Relations Supplemental Schedules
[OXY LOGO]
OCCIDENTAL PETROLEUM
2005 First Quarter
Net Income (Loss)
($ millions)
REPORTED CORE
INCOME SIGNIFICANT ITEMS AFFECTING INCOME EARNINGS
---------- ---------------------------------- ----------
Oil & Gas $ 1,349 $ 1,349
Chemical 214 214
Corporate
Interest expense, net (61) 10 7.65% note redemption charge (51)
Other (51) (51)
Taxes (601) (4) Tax effect of adjustments (595)
10 State tax charge
---------- ---------- ----------
INCOME FROM CONTINUING OPERATIONS 850 16 866
Discontinued operations, net of tax (4) 4 Discontinued operations, net --
---------- ---------- ----------
NET INCOME $ 846 $ 20 $ 866
========== ========== ==========
BASIC EARNINGS PER COMMON SHARE
Income from continuing operations $ 2.12 $ 2.16
Discontinued operations, net of tax (0.01) --
---------- ----------
Net Income $ 2.11 $ 2.16
========== ==========
1
Investor Relations Supplemental Schedules
[OXY LOGO]
OCCIDENTAL PETROLEUM
2004 First Quarter
Net Income (Loss)
($ millions)
REPORTED CORE
INCOME SIGNIFICANT ITEMS AFFECTING INCOME EARNINGS
---------- ---------------------------------- ----------
Oil & Gas $ 915 $ 915
Chemical 56 56
Corporate
Interest expense, net (68) 11 Trust preferred redemption (57)
Other (51) (51)
Taxes (363) (20) Tax settlements (387)
(4) Tax effect of adjustments
---------- ---------- ----------
INCOME FROM CONTINUING OPERATIONS 489 (13) 476
Discontinued operations, net of tax (2) 2 Discontinued operations, net --
---------- ---------- ----------
NET INCOME $ 487 $ (11) $ 476
========== ========== ==========
BASIC EARNINGS PER COMMON SHARE
Income from continuing operations $ 1.25 $ 1.22
Discontinued operations, net of tax (0.01) --
---------- ----------
Net Income $ 1.24 $ 1.22
========== ==========
2
Investor Relations Supplemental Schedules
[OXY LOGO]
OCCIDENTAL PETROLEUM
Items Affecting Comparability of Core Earnings Between Periods
The item(s) are included in core earnings but are shown below because they
affect the comparability of core earnings between periods.
PRE-TAX First Quarter
------------------------------
INCOME / (EXPENSE) 2005 2004
------------ ------------
CORPORATE
Environmental remediation (9) --
3
Investor Relations Supplemental Schedules
[OXY LOGO]
OCCIDENTAL PETROLEUM
Worldwide Effective Tax Rate
----------------------------------------------
QUARTERLY
----------------------------------------------
2005 2004 2004
REPORTED INCOME QTR 1 QTR 4 QTR 1
------------ ------------ ------------
Oil & Gas (a) 1,349 1,179 915
Chemicals 214 125 56
Corporate & other (112) (64) (119)
------------ ------------ ------------
Pre-tax income 1,451 1,240 852
Income tax expense
Federal and state 349 261 193
Foreign (a) 252 205 170
------------ ------------ ------------
Total 601 466 363
------------ ------------ ------------
Income from continuing operations 850 774 489
============ ============ ============
WORLDWIDE EFFECTIVE TAX RATE 41% 38% 43%
2005 2004 2004
CORE INCOME QTR 1 QTR 4 QTR 1
------------ ------------ ------------
Oil & Gas (a) 1,349 1,179 915
Chemicals 214 125 56
Corporate & other (102) (185) (108)
------------ ------------ ------------
Pre-tax income 1,461 1,119 863
Income tax expense
Federal and state 343 244 217
Foreign (a) 252 205 170
------------ ------------ ------------
Total 595 449 387
------------ ------------ ------------
Core income 866 670 476
============ ============ ============
WORLDWIDE EFFECTIVE TAX RATE 41% 40% 45%
(a) Revenues and income tax expense include taxes owed by Occidental but paid by
governmental entities on its behalf. Oil and gas pre-tax income includes the
following revenue amounts by periods.
2005 2004 2004
QTR 1 QTR 4 QTR 1
------------ ------------ ------------
187 143 116
4
Investor Relations Supplemental Schedules
[OXY LOGO]
OCCIDENTAL PETROLEUM
2005 First Quarter Net Income (Loss)
Reported Income Comparison
FIRST FOURTH
QUARTER QUARTER
2005 2004 B / (W)
------------ ------------ ------------
Oil & Gas $ 1,349 $ 1,179 $ 170
Chemical 214 125 89
Corporate
Interest expense, net (61) (53) (8)
Other (51) (11) (40)
Taxes (601) (466) (135)
------------ ------------ ------------
Income from continuing operations 850 774 76
Discontinued operations, net (4) (32) 28
------------ ------------ ------------
Net Income $ 846 $ 742 $ 104
============ ============ ============
Basic Earnings Per Common Share
Income from continuing operations $ 2.12 $ 1.94 $ 0.18
Discontinued operations, net (0.01) (0.08) 0.07
------------ ------------ ------------
Net Income $ 2.11 $ 1.86 $ 0.25
============ ============ ============
Worldwide Effective Tax Rate 41% 38% -3%
============ ============ ============
================================================================================
OCCIDENTAL PETROLEUM
2005 First Quarter Net Income (Loss)
Core Earnings Comparison
FIRST FOURTH
QUARTER QUARTER
2005 2004 B / (W)
------------ ------------ ------------
Oil & Gas $ 1,349 $ 1,179 $ 170
Chemical 214 125 89
Corporate
Interest expense, net (51) (53) 2
Other (51) (132) 81
Taxes (595) (449) (146)
------------ ------------ ------------
Net Income $ 866 $ 670 $ 196
============ ============ ============
Basic Earnings Per Common Share $ 2.16 $ 1.68 $ 0.48
============ ============ ============
Worldwide Effective Tax Rate 41% 40% -1%
============ ============ ============
5
Investor Relations Supplemental Schedules
[OXY LOGO]
OCCIDENTAL PETROLEUM
OIL & GAS
CORE EARNINGS VARIANCE ANALYSIS
($ MILLIONS)
2005 1st Quarter $ 1,349
2004 4th Quarter 1,179
------------
$ 170
============
Sales Price $ 161
Sales Volume/Mix (6)
Exploration Expense 41
All Others (26)
------------
TOTAL VARIANCE $ 170
============
================================================================================
OCCIDENTAL PETROLEUM
CHEMICAL
CORE EARNINGS VARIANCE ANALYSIS
($ MILLIONS)
2005 1st Quarter $ 214
2004 4th Quarter 125
------------
$ 89
============
Sales Price $ 79
Sales Volume/Mix (4)
Operations/Manufacturing (5) *
All Others 19
------------
TOTAL VARIANCE $ 89
============
* Higher feedstock costs offset by lower energy costs
6
Investor Relations Supplemental Schedules
[OXY LOGO]
OCCIDENTAL PETROLEUM
2005 First Quarter Net Income (Loss)
Reported Income Comparison
FIRST FIRST
QUARTER QUARTER
2005 2004 B / (W)
------------ ------------ ------------
Oil & Gas $ 1,349 $ 915 $ 434
Chemical 214 56 158
Corporate
Interest expense, net (61) (68) 7
Other (51) (51) --
Taxes (601) (363) (238)
------------ ------------ ------------
Income from continuing operations 850 489 361
Discontinued operations, net (4) (2) (2)
------------ ------------ ------------
Net Income $ 846 $ 487 $ 359
============ ============ ============
Basic Earnings Per Common Share
Income from continuing operations $ 2.12 $ 1.25 $ 0.87
Discontinued operations, net (0.01) (0.01) --
------------ ------------ ------------
Net Income $ 2.11 $ 1.24 $ 0.87
============ ============ ============
Worldwide Effective Tax Rate 41% 43% 2%
============ ============ ============
================================================================================
OCCIDENTAL PETROLEUM
2005 First Quarter Net Income (Loss)
Core Earnings Comparison
FIRST FIRST
QUARTER QUARTER
2005 2004 B / (W)
------------ ------------ ------------
Oil & Gas $ 1,349 $ 915 $ 434
Chemical 214 56 158
Corporate
Interest expense, net (51) (57) 6
Other (51) (51) --
Taxes (595) (387) (208)
------------ ------------ ------------
Net Income $ 866 $ 476 $ 390
============ ============ ============
Basic Earnings Per Common Share $ 2.16 $ 1.22 $ 0.94
============ ============ ============
Worldwide Effective Tax Rate 41% 45% 4%
============ ============ ============
7
Investor Relations Supplemental Schedules
[OXY LOGO]
OCCIDENTAL PETROLEUM
OIL & GAS
CORE EARNINGS VARIANCE ANALYSIS
($ MILLIONS)
2005 1st Quarter $ 1,349
2004 1st Quarter 915
------------
$ 434
============
Sales Price $ 529
Sales Volume/Mix (10)
Exploration Expense 7
All Others (92)
------------
TOTAL VARIANCE $ 434
============
================================================================================
OCCIDENTAL PETROLEUM
CHEMICAL
CORE EARNINGS VARIANCE ANALYSIS
($ MILLIONS)
2005 1st Quarter $ 214
2004 1st Quarter 56
------------
$ 158
============
Sales Price $ 233
Sales Volume/Mix (6)
Operations/Manufacturing (65) *
All Others (4)
------------
TOTAL VARIANCE $ 158
============
* Higher energy, feedstock costs and other manufacturing costs
8
Investor Relations Supplemental Schedules
[OXY LOGO]
OCCIDENTAL PETROLEUM
SUMMARY OF OPERATING STATISTICS
-------------------------------
FIRST QUARTER
-----------------------------
2005 2004
------------ ------------
NET PRODUCTION PER DAY:
UNITED STATES
CRUDE OIL AND LIQUIDS (MBL)
California 77 77
Permian 148 153
Horn Mountain 18 25
Hugoton 4 3
------------ ------------
TOTAL 247 258
NATURAL GAS (MMCF)
California 241 243
Hugoton 129 127
Permian 146 140
Horn Mountain 12 17
------------ ------------
TOTAL 528 527
LATIN AMERICA
CRUDE OIL (MBL)
Colombia 32 36
Ecuador 42 43
------------ ------------
TOTAL 74 79
MIDDLE EAST
CRUDE OIL (MBL)
Oman 23 14
Qatar 43 42
Yemen 35 39
------------ ------------
TOTAL 101 95
NATURAL GAS (MMCF)
Oman 56 11
OTHER EASTERN HEMISPHERE
CRUDE OIL (MBL)
Pakistan 5 9
NATURAL GAS (MMCF)
Pakistan 78 75
BARRELS OF OIL EQUIVALENT (MBOE)
- ---------------------------------------------
SUBTOTAL CONSOLIDATED SUBSIDIARIES 537 543
OTHER INTERESTS
COLOMBIA - MINORITY INTEREST (4) (4)
RUSSIA - OCCIDENTAL NET INTEREST 30 28
YEMEN - OCCIDENTAL NET INTEREST 2 1
------------ ------------
TOTAL WORLDWIDE PRODUCTION (MBOE) 565 568
============ ============
9
Investor Relations Supplemental Schedules
[OXY LOGO]
OCCIDENTAL PETROLEUM
SUMMARY OF OPERATING STATISTICS
-------------------------------
FIRST QUARTER
-----------------------------
2005 2004
------------ ------------
OIL & GAS:
- ----------
PRICES
UNITED STATES
Crude Oil ($/BBL) 44.24 32.62
Natural gas ($/MCF) 5.94 5.00
LATIN AMERICA
Crude Oil ($/BBL) 39.87 28.99
MIDDLE EAST
Crude Oil ($/BBL) 42.00 30.08
Natural Gas ($/MCF) 0.96 0.97
OTHER EASTERN HEMISPHERE
Crude Oil ($/BBL) 37.97 29.37
Natural Gas ($/MCF) 2.21 2.23
TOTAL WORLDWIDE
Crude Oil ($/BBL) 41.71 30.44
Natural Gas ($/MCF) 4.89 4.55
FIRST QUARTER
-----------------------------
2005 2004
------------ ------------
EXPLORATION EXPENSE
Domestic $ 27 $ 38
Latin America 15 1
Middle East 1 13
Other Eastern Hemisphere 4 2
------------ ------------
TOTAL $ 47 $ 54
============ ============
10
Investor Relations Supplemental Schedules
[OXY LOGO]
OCCIDENTAL PETROLEUM
CHEMICALS
Volume (M Tons, except PVC Resins)
FIRST QUARTER
-----------------------------
MAJOR PRODUCTS 2005 2004
------------ ------------
Chlorine 705 706
Caustic soda 714 732
Ethylene Dichloride 130 122
PVC Resins (millions of pounds) 1,025 1,071
CHEMICALS
Prices (Index)
FIRST QUARTER
-----------------------------
MAJOR PRODUCTS 2005 2004
------------ ------------
Chlorine 2.56 1.60
Caustic soda 1.52 0.71
Ethylene Dichloride 1.78 1.32
PVC Resins 1.29 0.94
1987 through 1990 average price = 1.00
CHLORINE
- --------
OxyChem Commentary
- ------------------
o As contract terms permitted, OxyChem fully implemented the $20 per ton
price increase announced November 2004 effective December 2004.
o OxyChem announced an additional $20 per ton increase in February to be
effective April 1st to most accounts. Other U.S. chlor-alkali producers
announced similar increases.
o 2nd quarter industry operating rates are expected to decline slightly from
the 1st quarter due to scheduled maintenance outages. However, the
supply/demand balance is expected to tighten further as the seasonal demand
for downstream products improves.
o Order control programs for chlorine are still in effect and are expected to
remain through the 2nd quarter for OxyChem and other U.S. producers.
11
Investor Relations Supplemental Schedules
[OXY LOGO]
Influencing Factors:
- --------------------
The absence of a normal seasonal decline in 1st quarter chlorine operating rates
is indicative of sustained strong chlorine demand. There are growing concerns in
the market around 2nd quarter chlorine availability as the seasonal increase in
chlorine demand is still ahead coupled with several scheduled production
outages. As a result of the projected tightening in supply, OxyChem expects
successful implementation of the latest price increase.
CAUSTIC
- -------
OxyChem Commentary
- ------------------
o Caustic soda sales remained strong in the 1st quarter despite a seasonal
decline in the demand for bleach. Although sales demand declined marginally
in total from the 4th quarter, sales to the two largest market segments,
pulp and paper and alumina, increased versus the 4th quarter. Sales volume
is expected to increase in the 2nd quarter as seasonal demand improves.
o As contract terms permitted, OxyChem successfully implemented in the 1st
quarter the $50 DST price increase announced November 2004. An additional
increase of $40 DST was announced in February to be implemented in the 2nd
quarter. All other major U.S. producers have announced a similar increase.
Market conditions are expected to support further price improvement in the
2nd quarter as seasonal demand for caustic soda increases.
o OxyChem and other U.S. producers remain on order control programs for
liquid caustic soda.
Influencing Factors:
- --------------------
Continued strength in the U.S. manufacturing sector is expected to keep demand
and supply in balance for liquid caustic soda. Seasonal demand for liquid
caustic soda is anticipated to narrow the supply/demand balance in the U.S. Gulf
Coast and support further price improvement. However, mild temperatures
throughout the U.S. could have an impact on demand and future price improvement.
EDC
- ---
OxyChem Commentary
- ------------------
o Scheduled and unscheduled 1st quarter VCM outages coupled with increased
acetylene based VCM production out of China reduced the global demand for
EDC in the 1st quarter.
o EDC prices remained in the range of $500 - $520 per metric ton CIF Asia for
the quarter. Prices have weakened slightly going into the 2nd quarter.
Supply/demand balances will influence the direction of future pricing
movements.
12
Influencing Factors:
- --------------------
Planned and unplanned 2nd quarter VCM outages coupled with additional Chinese
acetylene based VCM production will limit EDC export demand in the 2nd quarter.
The limited EDC demand will be offset somewhat by tighter EDC supply as chlorine
is directed into its merchant market to satisfy the seasonal surge in chlorine
demand. Spot export shipments from the U.S. Gulf are expected to be minimal in
the 2nd quarter.
PVC/VCM
- -------
OxyChem Commentary
- ------------------
o OxyChem's 1st quarter PVC operating rate increased 2% over the 4th quarter
2004.
o A strong domestic market in the 1st quarter resulted in increased operating
rates for PVC and minimal inventory build by producers as they prepared for
the seasonal spring surge in demand.
o Domestic PVC resin prices increased $0.02 per pound in January, remained
flat in February and increased another $0.02 per pound in March. An
additional price increase of $0.01 per pound has been announced for April.
o Westlake has restarted the Geismar VCM and PVC plants at 50% operating
rates. It is expected that the plants will be brought up to capacity by
January 2006. The Shintech Addis facility remains idle and is not expected
to restart in 2005.
o PVC resin export prices ended the quarter at $890 - $920 per metric ton CFR
Southeast Asia. Exports for the 1st quarter were off 10% versus the prior
year.
o 1st quarter VCM demand was limited within the Americas but remained
balanced with supply due to the Pemex and Dow outages. High freight rates
and reduced demand to Asia made VCM sales from the U.S. Gulf Coast
uneconomical. Pemex resumed operation of their Pajaritos plant in late
March.
o VCM export prices ended the quarter at $810 per metric ton FOB U.S. Gulf
Coast to Latin America and $750 per metric ton CFR Southeast Asia. Demand
to Asia weakened as Chinese producers brought on additional acetylene based
VCM capacity
Influencing Factors:
- --------------------
Increased seasonal domestic demand will result in some margin improvement for
VCM and PVC in the first half of 2005. Margin improvement on the export side for
both VCM and PVC will be limited due to high freight rates from the U.S. Gulf
Coast to other parts of the world and increased production in Asia.
13
Investor Relations Supplemental Schedules
[OXY LOGO]
OCCIDENTAL PETROLEUM
SUMMARY OF OPERATING STATISTICS
-------------------------------
FIRST QUARTER
-----------------------------
CAPITAL EXPENDITURES ($MM) 2005 2004
------------ ------------
Oil & Gas
California $ 82 $ 61
Permian 63 62
Other - U.S. 29 4
Latin America 51 20
Middle East / North Africa 273 168
Other Eastern Hemisphere 8 11
Chemicals 28 16
Corporate 2 1
------------ ------------
TOTAL $ 536 $ 343
============ ============
FIRST QUARTER
DEPRECIATION, DEPLETION & -----------------------------
AMORTIZATION OF ASSETS ($MM) 2005 2004
------------ ------------
Oil & Gas
Domestic $ 154 $ 156
Latin America 25 22
Middle East 90 69
Other Eastern Hemisphere 10 12
Chemicals 59 60
Corporate 6 5
------------ ------------
TOTAL $ 344 $ 324
============ ============
14
Investor Relations Supplemental Schedules
[OXY LOGO]
OCCIDENTAL PETROLEUM
CORPORATE
($ millions)
31-MAR-05 31-DEC-04
--------------- ---------------
CAPITALIZATION
Oxy Long-Term Debt (including current maturities) $ 3,365 $ 3,804
Subsidiary Preferred Stock 75 75
Others 26 26
--------------- ---------------
TOTAL DEBT $ 3,466 $ 3,905
=============== ===============
EQUITY $ 11,241 $ 10,550
=============== ===============
Total Debt To Total Capitalization 24% 27%
=============== ===============
15
Investor Relations Supplemental Schedules
[OXY LOGO]
OCCIDENTAL PETROLEUM CORPORATION
2004 QUARTERLY FINANCIAL DATA ---------------------------------------------------------
RETROSPECTIVE APPLICATION Three Months Ended
--------------------------------------------------------- 2004
March 31 June 30 September 30 December 31 Total Year
------------ ------------ ------------ ------------ ------------
Segment net sales
Oil and gas 1,693 1,783 2,033 2,073 7,582
Chemical 834 911 945 985 3,675
Other 30 30 27 24 111
------------ ------------ ------------ ------------ ------------
Net sales 2,557 2,724 3,005 3,082 11,368
============ ============ ============ ============ ============
Gross profit 1,177 1,286 1,544 1,588 5,595
============ ============ ============ ============ ============
Segment earnings
Oil and gas 915 980 1,216 1,179 4,290
Chemical 56 92 141 125 414
------------ ------------ ------------ ------------ ------------
971 1,072 1,357 1,304 4,704
Unallocated corporate items
Interest expense
Interest expense, net (54) (59) (59) (52) (224)
Trust preferred distributions and other (14) (1) -- (1) (16)
------------ ------------ ------------ ------------ ------------
(68) (60) (59) (53) (240)
Income taxes (363) (384) (495) (466) (1,708)
Other (51) (44) (44) (11) (150)
------------ ------------ ------------ ------------ ------------
Income from continuing operations 489 584 759 774 2,606
Discontinued operations, net (2) (3) (1) (32) (38)
------------ ------------ ------------ ------------ ------------
Net income 487 581 758 742 2,568
============ ============ ============ ============ ============
Basic earnings per common share
Income from continuing operations $ 1.25 $ 1.48 $ 1.91 $ 1.94 $ 6.59
Discontinued operations, net (0.01) -- -- (0.08) (0.10)
------------ ------------ ------------ ------------ ------------
Basic earnings per common share $ 1.24 $ 1.48 $ 1.91 $ 1.86 $ 6.49
============ ============ ============ ============ ============
Diluted earnings per common share
Income from continuing operations $ 1.24 $ 1.46 $ 1.88 $ 1.91 $ 6.50
Discontinued operations, net (0.01) -- -- (0.08) (0.10)
------------ ------------ ------------ ------------ ------------
Diluted earnings per common share $ 1.23 $ 1.46 $ 1.88 $ 1.83 $ 6.40
============ ============ ============ ============ ============
Dividends per common share $ 0.275 $ 0.275 $ 0.275 $ 0.275 $ 1.10
============ ============ ============ ============ ============
16
Investor Relations Supplemental Schedules
[OXY LOGO]
OCCIDENTAL PETROLEUM CORPORATION
2004 QUARTERLY CORE FINANCIAL DATA
RETROSPECTIVE APPLICATION Three Months Ended
--------------------------------------------------------- 2004
March 31 June 30 September 30 December 31 Total Year
------------ ------------ ------------ ------------ ------------
Segment earnings
Oil and gas 915 980 1,216 1,179 4,290
Chemical 56 92 141 125 414
------------ ------------ ------------ ------------ ------------
971 1,072 1,357 1,304 4,704
Unallocated corporate items
Interest expense
Interest expense, net (54) (59) (59) (52) (224)
Trust preferred distributions and other (3) (1) -- (1) (5)
------------ ------------ ------------ ------------ ------------
(57) (60) (59) (53) (229)
Income taxes (387) (384) (495) (449) (1,715)
Other (51) (44) (44) (132) (271)
------------ ------------ ------------ ------------ ------------
CORE INCOME 476 584 759 670 2,489
Significant Items Affecting Earnings (see detail below) 11 (3) (1) 72 79
------------ ------------ ------------ ------------ ------------
Reported income 487 581 758 742 2,568
============ ============ ============ ============ ============
Basic earnings per common share
Core Income $ 1.22 $ 1.49 $ 1.92 $ 1.68 $ 6.29
============ ============ ============ ============ ============
SIGNIFICANT ITEMS AFFECTING EARNINGS
Gain on Lyondell stock issuance (SAB 51) -- -- -- 121 121
Trust preferred redemption charge (11) -- -- -- (11)
Settlement of tax issues 20 -- -- 27 47
Tax effect of adjustments 4 -- -- (44) (40)
Discontinued operations, net (a) (2) (3) (1) (32) (38)
------------ ------------ ------------ ------------ ------------
11 (3) (1) 72 79
============ ============ ============ ============ ============
(a) These amounts are shown after-tax
17
Investor Relations Supplemental Schedules
[OXY LOGO]
OCCIDENTAL PETROLEUM CORPORATION
2003 QUARTERLY FINANCIAL DATA
RETROSPECTIVE APPLICATION Three Months Ended
--------------------------------------------------------- 2003
March 31 June 30 September 30 December 31 Total Year
------------ ------------ ------------ ------------ ------------
Segment net sales
Oil and gas 1,553 1,440 1,480 1,530 6,003
Chemical 767 764 771 790 3,092
Other 28 41 46 30 145
------------ ------------ ------------ ------------ ------------
Net sales 2,348 2,245 2,297 2,350 9,240
============ ============ ============ ============ ============
Gross profit 1,075 1,005 1,038 1,088 4,206
============ ============ ============ ============ ============
Segment earnings
Oil and gas 875 755 796 787 3,213
Chemical 41 50 65 67 223
------------ ------------ ------------ ------------ ------------
916 805 861 854 3,436
Unallocated corporate items
Interest expense
Interest expense, net (124) (53) (59) (53) (289)
Trust preferred distributions and other (11) (11) (12) (10) (44)
------------ ------------ ------------ ------------ ------------
(135) (64) (71) (63) (333)
Income taxes (334) (292) (301) (304) (1,231)
Other (52) (73) (42) (104) (271)
------------ ------------ ------------ ------------ ------------
Income from continuing operations 395 376 447 383 1,601
Discontinued operations, net (2) (2) (1) (1) (6)
Cumulative effect of accounting changes, net (68) -- -- -- (68)
------------ ------------ ------------ ------------ ------------
Net income 325 374 446 382 1,527
============ ============ ============ ============ ============
Basic earnings per common share
Income from continuing operations $ 1.04 $ 0.99 $ 1.16 $ 0.99 $ 4.17
Discontinued operations, net -- (0.01) -- -- (0.01)
Cumulative effect of accounting changes, net (0.18) -- -- -- (0.18)
------------ ------------ ------------ ------------ ------------
Basic earnings per common share $ 0.86 $ 0.98 $ 1.16 $ 0.99 $ 3.98
============ ============ ============ ============ ============
Diluted earnings per common share
Income from continuing operations $ 1.03 $ 0.98 $ 1.14 $ 0.97 $ 4.12
Discontinued operations, net -- (0.01) -- -- (0.01)
Cumulative effect of accounting changes, net (0.18) -- -- -- (0.18)
------------ ------------ ------------ ------------ ------------
Diluted earnings per common share $ 0.85 $ 0.97 $ 1.14 $ 0.97 $ 3.93
============ ============ ============ ============ ============
Dividends per common share $ 0.26 $ 0.26 $ 0.26 $ 0.26 $ 1.04
============ ============ ============ ============ ============
18
Investor Relations Supplemental Schedules
[OXY LOGO]
OCCIDENTAL PETROLEUM CORPORATION
2003 QUARTERLY CORE FINANCIAL DATA
RETROSPECTIVE APPLICATION Three Months Ended
--------------------------------------------------------- 2003
March 31 June 30 September 30 December 31 Total Year
------------ ------------ ------------ ------------ ------------
Segment earnings
Oil and gas 875 755 796 787 3,213
Chemical 41 50 65 67 223
------------ ------------ ------------ ------------ ------------
916 805 861 854 3,436
Unallocated corporate items
Interest expense
Interest expense, net (63) (53) (59) (53) (228)
Trust preferred distributions and other (11) (11) (12) (10) (44)
------------ ------------ ------------ ------------ ------------
(74) (64) (71) (63) (272)
Income taxes (355) (292) (301) (304) (1,252)
Other (52) (73) (42) (104) (271)
------------ ------------ ------------ ------------ ------------
CORE INCOME 435 376 447 383 1,641
Significant Items Affecting Earnings (see detail below) (110) (2) (1) (1) (114)
------------ ------------ ------------ ------------ ------------
Reported income 325 374 446 382 1,527
============ ============ ============ ============ ============
Basic earnings per common share
Core Income $ 1.15 $ 0.98 $ 1.16 $ 0.99 $ 4.27
============ ============ ============ ============ ============
SIGNIFICANT ITEMS AFFECTING EARNINGS
Debt repayment fee (61) -- -- -- (61)
Tax effect of adjustments 21 -- -- -- 21
Discontinued operations, net (a) (2) (2) (1) (1) (6)
Cumulative effect of accounting changes, net (a) (68) -- -- -- (68)
------------ ------------ ------------ ------------ ------------
(110) (2) (1) (1) (114)
============ ============ ============ ============ ============
(a) These amounts shown after-tax
19
Investor Relations Supplemental Schedules
[OXY LOGO]
Statements in this presentation that contain words such as "will", "expect" or
"estimate", 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; political
risk; 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. The United States
Securities and Exchange Commission (SEC) permits oil and natural gas companies,
in their filings with the SEC, to disclose only proved reserves demonstrated by
actual production or conclusive formation tests to be economically producible
under existing economic and operating conditions. We use certain terms in this
presentation, such as probable, possible and recoverable reserves, that the
SEC's guidelines strictly prohibit us from using in filings with the SEC. U.S.
investors are urged to consider carefully the disclosure in our Form 10-K,
available through the following toll-free telephone number, 1-888-OXYPETE
(1-888-699-7383) or on the Internet at http://www.oxy.com. You also can obtain a
copy from the SEC by calling 1-800-SEC-0330.
20