================================================================================
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) FEBRUARY 8, 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 February 8, 2005, Occidental Petroleum Corporation released information
regarding the revision upward of its earnings for the fiscal quarter ended
December 31, 2004. 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. Updated Investor Relations Supplemental
Schedules are attached to this report as Exhibit 99.2.
1
SECTION 8 - OTHER EVENTS
Item 8.01. Other Events
- ---------- ------------
Occidental Petroleum Corporation announced on February 8, 2005 that its
fourth quarter net income was $77 million higher ($0.19 per share) than the $665
million ($1.67 per share) the company disclosed on January 24, 2005. The
improvement in income is due to an increase in the carrying value of
Occidental's investment in Lyondell Chemical Company because of an increase in
Lyondell's book value resulting from its November 30, 2004 acquisition of
Millennium Chemical Company. There is no cash effect to this non-core earnings
item.
Lyondell acquired Millennium Chemical Company by issuing additional shares
of Lyondell common stock. Under current accounting rules (SEC Staff Accounting
Bulletin No. 51), Occidental is required to record its share of the increase in
Lyondell's net equity resulting from this issuance. The effect of this is an
increase of $121 million in the carrying value of Occidental's investment in
Lyondell and an increase in Occidental's net income of $77 million after-tax
($0.19 per share). At the time Occidental issued its earnings press release on
January 24, Lyondell had not announced its fourth quarter and total-year 2004
results, and a year-end balance sheet was not available until Lyondell released
its results on February 3, 2005. In its earnings press release, Occidental
stated that earnings from an equity investment were based on a preliminary
estimate of their earnings. Also, in its conference call regarding fourth
quarter results, Occidental commented that Lyondell had not yet reported its
results.
Occidental owns 41 million shares of Lyondell common stock. As a result of
the Millennium acquisition, Occidental's ownership percentage of Lyondell has
decreased from approximately 22 percent to 17 percent.
2
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: January 24, 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 February 8, 2005.
99.2 Updated Investor Relations Supplemental Schedules
EXHIBIT 99.1
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[OXY LOGO] NEWS RELEASE OCCIDENTAL PETROLEUM CORPORATION
====================================================================
10889 Wilshire Boulevard, Los Angeles, California 90024 (310) 208-8800
For Immediate Release: February 8, 2005
Occidental Revises 4th Quarter Earnings Upward by 11 Percent
------------------------------------------------------------
LOS ANGELES -- Occidental Petroleum Corporation (NYSE: OXY) today announced
that its fourth quarter net income was $77 million higher ($0.19 per share) than
the $665 million ($1.67 per share) the company disclosed on January 24, 2005.
The improvement in income is due to an increase in the carrying value of
Occidental's investment in Lyondell Chemical Company because of an increase in
Lyondell's book value resulting from its November 30, 2004 acquisition of
Millennium Chemical Company. There is no cash effect to this non-core earnings
item.
Occidental's fourth quarter net income is $742 million ($1.86 per share,)
thereby increasing total net income for the year from $2.491 billion ($6.30 per
share) to $2.568 billion ($6.49 per share).
-0-
Contacts: Lawrence P. Meriage (media)
310-443-6562
Kenneth J. Huffman (investors)
212-603-8183
On the web: www.oxy.com
EXHIBIT 99.2
Investor Relations Supplemental Schedules
[OXY LOGO]
Occidental's results of operations often include the effects of significant
transactions and events affecting earnings that vary widely and unpredictably in
nature, timing, and amount. Therefore, management uses a measure called "core
earnings", which excludes those items. This non-GAAP measure is not meant to
disassociate those items from management's performance, but rather is meant to
provide useful information to investors interested in comparing Occidental's
earnings performance between periods. Reported earnings are considered
representative of management's performance over the long term. Core earnings is
not considered to be an alternative to operating income in accordance with
generally accepted accounting principles.
REVISED FEBRUARY 8, 2005
OCCIDENTAL PETROLEUM
2004 Fourth Quarter
Net Income (Loss)
($ millions)
REPORTED CORE
INCOME SIGNIFICANT ITEMS AFFECTING INCOME EARNINGS
---------- ---------------------------------- ----------
Oil & Gas $ 977 $ 977
Chemical 130 130
Corporate
Interest expense, net - debt and
trust preferred distributions (53) (53)
Other (18) (121) Lyondell SAB 51 gain (139)
Taxes (262) (27) IRS settlements (245)
44 Tax effect of adjustments
---------- ---------- ----------
INCOME FROM CONTINUING OPERATIONS 774 (148) 670
Discontinued operations, net of tax (32) 32 Discontinued operations, net --
---------- ---------- ----------
NET INCOME $ 742 $ (116) $ 670
========== ========== ==========
BASIC EARNINGS PER COMMON SHARE
Income from continuing operations $ 1.94 $ 1.68
Discontinued operations, net of tax (0.08) --
---------- ----------
Net Income $ 1.86 $ 1.68
========== ==========
1
Investor Relations Supplemental Schedules
[OXY LOGO]
OCCIDENTAL PETROLEUM
2003 Fourth Quarter
Net Income (Loss)
($ millions)
REPORTED CORE
INCOME SIGNIFICANT ITEMS AFFECTING INCOME EARNINGS
---------- ---------------------------------- ----------
Oil & Gas $ 640 $ 640
Chemical 72 72
Corporate
Interest expense, net - debt and
trust preferred distributions (63) (63)
Other (109) (109)
Taxes (157) (157)
---------- ---------- ----------
INCOME FROM CONTINUING OPERATIONS 383 -- 383
Discontinued operations, net of tax (1) 1 Discontinued operations, net --
---------- ---------- ----------
NET INCOME $ 382 $ 1 $ 383
========== ========== ==========
BASIC EARNINGS PER COMMON SHARE $ 0.99 $ 0.99
========== ==========
2
Investor Relations Supplemental Schedules
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REVISED FEBRUARY 8, 2005
OCCIDENTAL PETROLEUM
2004 Twelve Months
Net Income (Loss)
($ millions)
REPORTED CORE
INCOME SIGNIFICANT ITEMS AFFECTING INCOME EARNINGS
---------- ---------------------------------- ----------
Oil & Gas $ 3,544 $ 3,544
Chemical 412 412
Corporate
Interest expense, net - debt and
trust preferred distributions (240) 11 Trust pfd redemption charge (229)
Other (171) (121) Lyondell SAB 51 gain (292)
Taxes (939) (47) IRS settlements (946)
40 Tax effect of adjustments
---------- ---------- ----------
INCOME FROM CONTINUING OPERATIONS $ 2,606 $ (117) $ 2,489
Discontinued operations, net of tax (38) 38 Discontinued operations, net --
---------- ---------- ----------
NET INCOME $ 2,568 $ (79) $ 2,489
========== ========== ==========
BASIC EARNINGS PER COMMON SHARE
Income from continuing operations $ 6.59 $ 6.29
Discontinued operations, net of tax (0.10) --
---------- ----------
Net Income $ 6.49 $ 6.29
========== ==========
3
Investor Relations Supplemental Schedules
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OCCIDENTAL PETROLEUM
2003 Twelve Months
Net Income (Loss)
($ millions)
REPORTED CORE
INCOME SIGNIFICANT ITEMS AFFECTING INCOME EARNINGS
---------- ---------------------------------- ----------
Oil & Gas $ 2,664 $ 2,664
Chemical 220 220
Corporate
Interest expense, net - debt and
trust preferred distributions (333) 61 Debt repayment fee (272)
Other (284) (284)
Taxes (666) (21) Tax effect of adjustments (687)
---------- ---------- ----------
Income from continuing operations 1,601 40 1,641
Discontinued operations, net (6) 6 Discontinued operations, net --
Cumulative effect of accounting (68) 68 Cumulative effect of acct --
changes, net changes, net
---------- ---------- ----------
NET INCOME $ 1,527 $ 114 $ 1,641
========== ========== ==========
BASIC EARNINGS PER COMMON SHARE
Income from continuing operations $ 4.17 $ 4.27
Discontinued operations (0.01) --
Cumulative effect of accounting changes (0.18) --
---------- ----------
$ 3.98 $ 4.27
========== ==========
4
Investor Relations Supplemental Schedules
[OXY LOGO]
OCCIDENTAL PETROLEUM
Items Affecting Comparability of Core Earnings Between Periods
PRE-TAX
INCOME / (EXPENSE) FOURTH QUARTER TWELVE MONTHS
------------------------- -------------------------
2004 2003 2004 2003
---------- ---------- ---------- ----------
OIL & GAS
Gain on sale of GOM assets (a) -- -- -- 14
Property tax refund -- 38 -- 38
Insurance and litigation reserves (6) -- (6) --
CHEMICALS
Reorganizations / severance -- -- -- (15)
Chlorine derivatives asset impairment -- -- -- (9)
Production process write-off (12) -- (12) --
Insurance reserves (2) -- (2) --
CORPORATE
Equity earnings 9 (16) 22 (58)
Environmental remediation (59) (50) (59) (63)
Insurance and litigation reserves (31) -- (31) --
Interest expense - early debt (1) -- (6) 6
extinguishments - 2004 / consolidation
of variable interest entity - 2003
(a) Amount shown after-tax
5
Investor Relations Supplemental Schedules
[OXY LOGO]
REVISED FEBRUARY 8, 2005
OCCIDENTAL PETROLEUM
WORLDWIDE EFFECTIVE TAX RATE
---------------------------------------- -------------------------
QUARTERLY YEAR TO-DATE
---------------------------------------- -------------------------
2004 2004 2003 2004 2003
REPORTED INCOME QTR 4 QTR 3 QTR 4 12 MONTHS 12 MONTHS
---------- ---------- ---------- ---------- ----------
Oil & Gas (a) 1,186 1,221 793 4,311 3,228
Chemicals 125 141 67 414 224
Corporate & other (71) (108) (172) (411) (620)
---------- ---------- ---------- ---------- ----------
Pre-tax income 1,240 1,254 688 4,314 2,832
Income tax expense
Federal and state 260 278 153 945 673
Foreign (included in segments) (a) 206 217 152 763 558
---------- ---------- ---------- ---------- ----------
Total 466 495 305 1,708 1,231
---------- ---------- ---------- ---------- ----------
Income from continuing operations 774 759 383 2,606 1,601
========== ========== ========== ========== ==========
WORLDWIDE EFFECTIVE TAX RATE 38% 39% 44% 40% 43%
2004 2004 2003 2004 2003
CORE INCOME QTR 4 QTR 3 QTR 4 12 MONTHS 12 MONTHS
---------- ---------- ---------- ---------- ----------
Oil & Gas (a) 1,186 1,221 793 4,311 3,228
Chemicals 125 141 67 414 224
Corporate & other (192) (108) (172) (521) (559)
---------- ---------- ---------- ---------- ----------
Pre-tax income 1,119 1,254 688 4,204 2,893
Income tax expense
Federal and state 243 278 153 952 694
Foreign (included in segments) (a) 206 217 152 763 558
---------- ---------- ---------- ---------- ----------
Total 449 495 305 1,715 1,252
---------- ---------- ---------- ---------- ----------
Income from continuing operations 670 759 383 2,489 1,641
========== ========== ========== ========== ==========
WORLDWIDE EFFECTIVE TAX RATE 40% 39% 44% 41% 43%
(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.
2004 2004 2003 2004 2003
QTR 4 QTR 3 QTR 4 12 MONTHS 12 MONTHS
---------- ---------- ---------- ---------- ----------
143 149 102 525 397
6
Investor Relations Supplemental Schedules
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REVISED FEBRUARY 8, 2005
OCCIDENTAL PETROLEUM
2004 Fourth Quarter Net Income (Loss)
Reported Income Comparison
FOURTH THIRD
QUARTER QUARTER
2004 2004 B / (W)
---------- ---------- ----------
Oil & Gas $ 977 $ 1,003 $ (26)
Chemical 130 139 (9)
Corporate
Interest expense, net - debt and
trust preferred distributions (53) (59) 6
Other (18) (49) 31
Taxes (262) (275) 13
---------- ---------- ----------
Income from continuing operations 774 759 15
Discontinued operations, net (32) (1) (31)
---------- ---------- ----------
Net Income $ 742 $ 758 $ (16)
========== ========== ==========
Basic Earnings Per Common Share
Income from continuing operations $ 1.94 $ 1.91 $ (0.03)
Discontinued operations, net (0.08) -- $ (0.08)
---------- ---------- ----------
Net Income $ 1.86 $ 1.91 $ (0.05)
========== ========== ==========
Worldwide Effective Tax Rate 38% 39% 1%
========== ========== ==========
================================================================================
OCCIDENTAL PETROLEUM
2004 Fourth Quarter Net Income (Loss)
Core Earnings Comparison
FOURTH THIRD
QUARTER QUARTER
2004 2004 B / (W)
---------- ---------- ----------
Oil & Gas $ 977 $ 1,003 $ (26)
Chemical 130 139 (9)
Corporate
Interest expense, net - debt and
trust preferred distributions (53) (59) 6
Other (139) (49) (90)
Taxes (245) (275) 30
---------- ---------- ----------
Net Income $ 670 $ 759 $ (89)
========== ========== ==========
Basic Earnings Per Common Share $ 1.68 $ 1.92 $ (0.24)
========== ========== ==========
Worldwide Effective Tax Rate 40% 39% -1%
========== ========== ==========
7
Investor Relations Supplemental Schedules
[OXY LOGO]
OCCIDENTAL PETROLEUM
OIL & GAS
CORE EARNINGS VARIANCE ANALYSIS
($ MILLIONS)
2004 4th Quarter $ 977
2004 3rd Quarter 1,003
----------
$ (26)
==========
Price Variance $ 36
Volume/Mix Variance (3)
Exploration Expense Variance (51)
All Others (8)
----------
TOTAL VARIANCE $ (26)
==========
================================================================================
OCCIDENTAL PETROLEUM
CHEMICAL
CORE EARNINGS VARIANCE ANALYSIS
($ MILLIONS)
2004 4th Quarter $ 130
2004 3rd Quarter 139
----------
$ (9)
==========
Sales Price $ 74
Sales Volume/Mix (8)
Operations/Manufacturing (62) *
All Others (13)
----------
TOTAL VARIANCE $ (9)
==========
* Higher energy, feedstock costs and other manufacturing costs
8
Investor Relations Supplemental Schedules
[OXY LOGO]
REVISED FEBRUARY 8, 2005
OCCIDENTAL PETROLEUM
2004 Fourth Quarter Net Income (Loss)
Reported Income Comparison
FOURTH THIRD
QUARTER QUARTER
2004 2004 B / (W)
---------- ---------- ----------
Oil & Gas $ 977 $ 640 $ 337
Chemical 130 72 58
Corporate
Interest expense, net - debt and
trust preferred distributions (53) (63) 10
Other (18) (109) 91
Taxes (262) (157) (105)
---------- ---------- ----------
Income from continuing operations 774 383 391
Discontinued operations, net (32) (1) (31)
---------- ---------- ----------
Net Income $ 742 $ 382 $ 360
========== ========== ==========
Basic Earnings Per Common Share
Income from continuing operations $ 1.94 $ 0.99 $ 0.95
Discontinued operations, net (0.08) -- $ (0.08)
---------- ---------- ----------
Net Income $ 1.86 $ 0.99 $ 0.87
========== ========== ==========
Worldwide Effective Tax Rate 38% 44% 6%
========== ========== ==========
================================================================================
OCCIDENTAL PETROLEUM
2004 Fourth Quarter Net Income (Loss)
Core Earnings Comparison
FOURTH THIRD
QUARTER QUARTER
2004 2004 B / (W)
---------- ---------- ----------
Oil & Gas $ 977 $ 640 $ 337
Chemical 130 72 58
Corporate
Interest expense, net - debt and
trust preferred distributions (53) (63) 10
Other (139) (109) (30)
Taxes (245) (157) (88)
---------- ---------- ----------
Net Income $ 670 $ 383 $ 287
========== ========== ==========
Basic Earnings Per Common Share $ 1.68 $ 0.99 $ 0.69
========== ========== ==========
Worldwide Effective Tax Rate 40% 44% 4%
========== ========== ==========
9
Investor Relations Supplemental Schedules
[OXY LOGO]
OCCIDENTAL PETROLEUM
OIL & GAS
CORE EARNINGS VARIANCE ANALYSIS
($ MILLIONS)
2004 4th Quarter $ 977
2003 4th Quarter 640
----------
$ 337
==========
Price Variance $ 496
Volume/Mix Variance (31)
Exploration Expense Variance (43)
All Others (85)
----------
TOTAL VARIANCE $ 337
==========
================================================================================
OCCIDENTAL PETROLEUM
CHEMICAL
CORE EARNINGS VARIANCE ANALYSIS
($ MILLIONS)
2004 4th Quarter $ 130
2003 4th Quarter 72
----------
$ 58
==========
Sales Price $ 182
Sales Volume/Mix (3)
Operations/Manufacturing (116) *
All Others (5)
----------
TOTAL VARIANCE $ 58
==========
* Higher energy, feedstock costs and other manufacturing costs
10
Investor Relations Supplemental Schedules
[OXY LOGO]
OCCIDENTAL PETROLEUM
SUMMARY OF OPERATING STATISTICS
FOURTH QUARTER TWELVE MONTHS
------------------------- -------------------------
2004 2003 2004 2003
---------- ---------- ---------- ----------
NET PRODUCTION PER DAY:
United States
Crude Oil and Liquids (MBL)
California 81 82 78 81
Permian 152 152 154 150
Horn Mountain 13 25 19 21
Hugoton 3 4 3 4
---------- ---------- ---------- ----------
TOTAL 249 263 254 256
Natural Gas (MMCF)
California 242 246 237 252
Hugoton 125 130 127 138
Permian 125 133 130 129
Horn Mountain 7 16 13 13
---------- ---------- ---------- ----------
TOTAL 499 525 507 532
Latin America
Crude Oil (MBL)
Colombia 37 44 37 37
Ecuador 44 39 46 25
---------- ---------- ---------- ----------
TOTAL 81 83 83 62
Middle East
Crude Oil (MBL)
Oman 13 12 13 12
Qatar 48 40 45 45
Yemen 30 33 32 35
---------- ---------- ---------- ----------
TOTAL 91 85 90 92
Natural Gas (MMCF)
Oman 66 -- 55 -
Other Eastern Hemisphere
Crude Oil (MBL)
Pakistan 6 9 7 9
Natural Gas (MMCF)
Pakistan 79 72 75 74
Barrels of Oil Equivalent (MBOE)
- ---------------------------------------------
Subtotal consolidated subsidiaries 534 540 540 520
Other interests
Colombia - minority interest (5) (7) (4) (5)
Russia - Occidental net interest 27 30 29 30
Yemen - Occidental net interest 2 2 1 2
---------- ---------- ---------- ----------
Total worldwide production (MBOE) 558 565 566 547
========== ========== ========== ==========
11
Investor Relations Supplemental Schedules
[OXY LOGO]
OCCIDENTAL PETROLEUM
SUMMARY OF OPERATING STATISTICS
FOURTH QUARTER TWELVE MONTHS
------------------------- -------------------------
2004 2003 2004 2003
---------- ---------- ---------- ----------
OIL & GAS:
- ----------
PRICES
UNITED STATES
Crude Oil ($/BBL) 42.76 28.47 37.72 28.74
Natural gas ($/MCF) 5.65 4.42 5.35 4.81
LATIN AMERICA
Crude Oil ($/BBL) 36.47 27.05 33.09 27.21
MIDDLE EAST
Crude Oil ($/BBL) 37.44 28.57 34.88 27.81
Natural Gas ($/MCF) 0.96 -- 0.97 --
OTHER EASTERN HEMISPHERE
Crude Oil ($/BBL) 37.09 26.98 33.13 26.61
Natural Gas ($/MCF) 2.01 2.25 2.25 2.04
TOTAL WORLDWIDE
Crude Oil ($/BBL) 39.11 27.40 35.09 27.25
Natural Gas ($/MCF) 4.68 4.13 4.56 4.45
FOURTH QUARTER TWELVE MONTHS
------------------------- -------------------------
2004 2003 2004 2003
---------- ---------- ---------- ----------
EXPLORATION EXPENSE
Domestic $ 53 $ 32 $ 136 $ 102
Latin America 19 4 23 12
Middle East 1 2 16 14
Other Eastern Hemisphere 15 7 44 11
---------- ---------- ---------- ----------
TOTAL $ 88 $ 45 $ 219 $ 139
========== ========== ========== ==========
12
Investor Relations Supplemental Schedules
[OXY LOGO]
OCCIDENTAL PETROLEUM
CHEMICALS
Volume (M Tons, except PVC Resins)
FOURTH QUARTER TWELVE MONTHS
------------------------- -------------------------
MAJOR PRODUCTS 2004 2003 2004 2003
---------- ---------- ---------- ----------
Chlorine 716 702 2,892 2,733
Caustic 763 711 3,109 2,764
Ethylene Dichloride 134 172 458 546
PVC Resins (millions of pounds) 1,003 1,010 4,208 3,954
CHEMICALS
Prices (Index)
FOURTH QUARTER TWELVE MONTHS
------------------------- -------------------------
MAJOR PRODUCTS 2004 2003 2004 2003
---------- ---------- ---------- ----------
Chlorine 2.36 1.65 2.05 1.72
Caustic 1.18 0.80 0.84 0.84
Ethylene Dichloride 1.75 1.10 1.56 1.16
PVC Resins 1.20 0.86 1.08 0.89
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 in the 3rd quarter.
o OxyChem announced an additional $20 per ton increase to be effective
December 1 to most accounts. Other U.S. chlor-alkali producers announced
similar increases. Market conditions are expected to remain favorable for
the successful implementation of the announced price increase.
o 1st quarter operating rates are expected to remain at capacity as the
seasonal demand for downstream products improves.
o Order control programs for chlorine are still in effect and are expected to
remain so through the 1st quarter for OxyChem and other U.S. producers.
INFLUENCING FACTORS:
- --------------------
The normal seasonal decline in demand has made it easier to avoid customer
shutdowns. The availability of spot chlorine indicates a further balancing of
supply and
13
Investor Relations Supplemental Schedules
[OXY LOGO]
demand. However, spot chlorine remains limited and pricing is at or above
current contract levels. Increased chlorine consumption into downstream
derivatives in the 1st quarter is expected to tighten the supply/demand balance.
CAUSTIC
- -------
OXYCHEM COMMENTARY
- ------------------
o Caustic soda sales remained strong in the 4th quarter and consistent with
3rd quarter volumes fueled by demand in the alumina, organic and refining
markets. Sales into the bleach market did experience the customary seasonal
decline.
o OxyChem successfully implemented in the 4th quarter the $110 DST price
increase announced in the 3rd quarter. An additional increase of $50 DST
was announced November 1st. Market conditions are expected to remain
favorable for the successful implementation of the announced price increase
in the 1st quarter of 2005.
o U.S. Gulf Coast producers settled the alumina pricing for the first half of
2005 at $325 DMT FOB U.S. Gulf Coast. This represents a $211 DMT premium
over the second half of 2004 and a $50 DMT premium over that of Asian
producers' pricing for the first half of 2005.
o Order control programs for liquid caustic soda remained in effect through
the 4th quarter and are expected to continue into 2005.
INFLUENCING FACTORS:
- --------------------
The supply/demand balance projected for the 1st quarter is expected to lend
support for future price increases. Continuing improvement in the U.S.
manufacturing sector will keep liquid caustic soda demand in line with supply.
EDC
- ---
OXYCHEM COMMENTARY
- ------------------
o EDC pricing continued in an upward trend through mid-November when PVC
pricing moderated in China.
o Despite a balanced to tight supply/demand balance, EDC pricing moderated to
mid-3rd quarter levels, maintaining the gap between EDC and PVC prices.
o Scheduled VCM outages in December coupled with seasonally lower PVC demand
in Asia reduced the need for EDC late in the 4th quarter.
14
Investor Relations Supplemental Schedules
[OXY LOGO]
INFLUENCING FACTORS:
- --------------------
The supply/demand balance for EDC in Asia is expected to tighten late in the 1st
quarter after the Chinese New Year period in February. Improved demand for EDC
and its downstream vinyl derivatives is also expected to result in increased EDC
pricing. Chlorine availability within the U.S. for EDC production will tighten
as seasonal demand for chlorine increases.
PVC/VCM
- -------
OXYCHEM COMMENTARY
- ------------------
o OxyChem's 4th quarter operating rate fell to 90% from a 3rd quarter average
of 95% due to scheduled 4th quarter outages at three PVC plants.
o A strong domestic and export market in the 4th quarter resulted in
increased operating rates for PVC and minimal inventory build by producers
as they tried to prepare for the seasonal spring surge in demand.
o Strong PVC demand and low operating rates at Pemex kept the VCM
supply/demand balance tight. PVC production was interrupted at one Latin
American producer due to VCM availability.
o Westlake has restarted the Geismar VCM and PVC plants at reduced rates. It
is expected that the plants will be brought up to a 50% operating rate in
2005. The Shintech Addis facility remains idle and is not expected to
restart in 2005.
o Domestic PVC resin prices were flat in October, increased $0.01 per pound
in November and another $0.02 per pound in December.
o PVC resin export prices weakened in December but closed the quarter at $870
- $920 per metric ton CFR Southeast Asia. Normal seasonal decline in PVC
demand was experienced in December.
o Spot VCM export prices to Latin America closed the 4th quarter at $810 -
$820 per metric ton FOB U.S. Gulf Coast. VCM shipments to Asia did not
occur due to high freight rates in the range of $200 per metric ton.
o Additional price increase for January has been announced for domestic PVC
resin of $0.02 per pound.
INFLUENCING FACTORS:
- --------------------
Favorable domestic demand along with a seasonal rebound in the export market and
moderation of energy costs will result in improved margins for the first half of
2005.
15
Investor Relations Supplemental Schedules
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OCCIDENTAL PETROLEUM
SUMMARY OF OPERATING STATISTICS
FOURTH QUARTER TWELVE MONTHS
------------------------- -------------------------
CAPITAL EXPENDITURES ($MM) 2004 2003 2004 2003
---------- ---------- ---------- ----------
Oil & Gas
California $ 84 $ 73 $ 315 $ 228
Permian 83 78 289 265
Other - U.S. 25 10 55 47
Latin America 57 51 180 118
Middle East 218 180 768 556
Other Eastern Hemisphere 14 9 42 23
Chemicals 60 44 155 344 (a)
Corporate 32 4 39 19
---------- ---------- ---------- ----------
TOTAL $ 573 $ 449 $ 1,843 $ 1,600
========== ========== ========== ==========
(a) Includes $180 million for the buyout of a VCM plant lease and $44 million
for buyout of railcar leases
FOURTH QUARTER TWELVE MONTHS
DEPRECIATION, DEPLETION & ------------------------- -------------------------
AMORTIZATION OF ASSETS ($MM) 2004 2003 2004 2003
---------- ---------- ---------- ----------
Oil & Gas
Domestic $ 156 $ 158 $ 622 $ 639
Latin America 24 19 96 61
Middle East 75 59 276 209
Other Eastern Hemisphere 12 15 47 48
Chemicals 61 56 243 203
Corporate 5 4 19 15
---------- ---------- ---------- ----------
TOTAL $ 333 $ 311 $ 1,303 $ 1,175
========== ========== ========== ==========
16
Investor Relations Supplemental Schedules
[OXY LOGO]
REVISED FEBRUARY 8, 2005
OCCIDENTAL PETROLEUM
CORPORATE
($ millions)
31-DEC-04 31-DEC-03
--------------- ---------------
CAPITALIZATION
Oxy Long-Term Debt (including current maturities) $ 3,804 $ 4,016
Trust Preferred Securities -- 453
Subsidiary Preferred Stock 75 75
Others 26 26
--------------- ---------------
TOTAL DEBT $ 3,905 $ 4,570
=============== ===============
EQUITY $ 10,568 $ 7,929
=============== ===============
Total Debt To Total Capitalization 27% 37%
=============== ===============
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Investor Relations Supplemental Schedules
[OXY LOGO]
Statements in this filing 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.
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