================================================================================
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) JANUARY 24, 2001
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
================================================================================
Item 5. Other Events and Regulation FD Disclosure
- ------ -----------------------------------------
Occidental Petroleum Corporation announced earnings before special items
for the fourth quarter 2000 of $349 million ($0.94 per share), an increase of
greater than 80 percent, compared with $192 million ($0.52 per share) for the
fourth quarter of 1999.
Net income for the fourth quarter of 2000 was $333 million ($0.90 per
share) compared with $383 million ($1.04 per share) for the corresponding period
of 1999. The fourth quarter 2000 results included several special items which
are discussed below in the respective operating sector's results. Sales for the
fourth quarter of 2000 were $3.9 billion, a 50 percent increase from sales of
$2.6 billion for the same period in 1999.
Occidental's total net income for 2000 was $1.6 billion ($4.26 per share),
compared with $448 million ($1.24 per share) for 1999. Earnings before special
items were $1.3 billion ($3.60 per share) for 2000, compared with $253 million
($0.69 per share) for 1999. Sales increased to $13.6 billion for 2000 from $7.8
billion for 1999.
Total Debt Reduced by $2.8 Billion
----------------------------------
In announcing the results, Dr. Ray R. Irani, chairman and chief executive
officer, said, "Earnings before special items for the entire year were $1.3
billion, the highest annual earnings in the company's history. The resulting
free cash flow generated, along with proceeds from asset sales, enabled
Occidental to significantly reduce total debt. Total debt at year-end was $6.4
billion, a reduction of $700 million from the end of the third quarter and $2.8
billion from the $9.2 billion pro forma level following the Altura acquisition."
Dr. Irani also said, "Our year-end debt to capitalization ratio of 57
percent is the lowest in nearly a decade and we expect to drive that number
lower in 2001."
Oil and Gas
-----------
The oil and gas sector earned $763 million before special items, compared
with $331 million for the fourth quarter of 1999. The improvement is primarily
the result of higher worldwide crude oil and natural gas prices combined with
increased domestic oil production volumes. Worldwide oil and gas production on a
barrel of oil equivalent (BOE) basis was up more than 22 percent for the fourth
quarter and over 8 percent for the year, compared with the same periods in 1999.
The net increase in domestic production volumes, resulting from the acquisitions
of Altura and THUMS in the second quarter of 2000, more than offsets lower
international production mainly due to asset sales.
Oil and gas earnings after special items were $770 million for the fourth
quarter of 2000, compared with $756 million for the fourth quarter of 1999. The
2000 results included a $7 million tax benefit related to the sale of an office
building. The 1999 results included: a $488 million benefit, net of tax, from
the Chevron settlement; a $29 million loss, net of tax, related to the sale of
producing assets in Peru; $25 million pre-tax charges for claims and
settlements; and a $9 million charge for the write-down of a real estate
investment to market value. Oil and gas earnings for the total year were $2.4
billion, the highest in Occidental's history.
Chemicals
---------
The chemical sector results before special items were a loss of $51 million
for the fourth quarter of 2000, compared with earnings before special items of
$70 million for the fourth quarter of 1999. The decline in earnings reflects
higher energy and feedstock costs, lower sales volumes, and lower earnings from
equity investments.
Chemical results after special items for the fourth quarter of 2000 were a
loss of $55 million, compared with a loss of $126 million for the fourth quarter
of 1999. The 2000 results include the following special items: a $13 million
after-tax gain, related to the sale of the Durez business; and other net charges
of $17 million mainly related to the write-down or disposition of various
assets. The 1999 results included pre-tax charges of $196 million to write-down
impaired assets and provide for claims and settlements. Chemical earnings before
special items for 2000 were $293 million compared with $147 million for 1999.
Other
-----
Corporate unallocated other expenses were $92 million for the fourth
quarter of 2000 compared with $12 million for the same period of 1999. The 2000
period included a $39 million preferred distribution to the Occidental Permian
partners which is essentially offset by $38 million of interest income included
in interest expense, net, and a $17 million litigation settlement.
The fourth quarter of 1999 net income of $383 million was after an
extraordinary loss of $104 million from retirement of debt.
-0-
Contacts: Howard Collins (media)
310-443-6523
Kenneth J. Huffman (investors)
212-603-8183
On the Web: www.oxy.com
Forward-looking statements and estimates regarding exploration and
production activities, oil, gas and commodity chemical prices, operating costs
and their related earnings effects in this release are based on assumptions
concerning market, competitive, regulatory, environmental, operational and other
conditions. Actual results could differ materially as a result of factors
discussed in Occidental's Annual Report on Form 10-K.
2
SUMMARY OF DIVISIONAL NET SALES AND EARNINGS
(Millions, except per-share amounts)
Fourth Quarter Twelve Months
---------------- ----------------
Periods ended December 31 2000 1999 2000 1999
================================= ======= ======= ======= =======
DIVISIONAL NET SALES (a)
Oil and gas $ 3,145 $ 1,626 $ 9,779 $ 4,599
Chemical 797 942 3,795 3,221
------- ------- ------- -------
Net sales $ 3,942 $ 2,568 $13,574 $ 7,820
================================= ======= ======= ======= =======
DIVISIONAL EARNINGS (LOSS)
Oil and gas $ 770 $ 756 $ 2,417 $ 1,267
Chemical (55) (126) 169 (37)
------- ------- ------- -------
715 630 2,586 1,230
UNALLOCATED CORPORATE ITEMS
Interest expense, net (b) (80) (111) (380) (468)
Income taxes (c) (193) (3) (861) (68)
Trust preferred distributions
& other (17) (17) (67) (62)
Other (d) (92) (12) 291 (64)
------- ------- ------- -------
INCOME BEFORE EXTRAORDINARY
ITEMS AND EFFECT OF CHANGES
IN ACCOUNTING PRINCIPLES 333 487 1,569 568
Extraordinary gain/(loss), net -- (104) 1 (107)
Cumulative effect of changes
in accounting principles,
net -- -- -- (13)
------- ------- ------- -------
NET INCOME 333 383 1,570 448
Effect of repurchase of Trust
Preferred Securities -- 1 1 1
Preferred dividends -- -- -- (7)
------- ------- ------- -------
EARNINGS APPLICABLE TO COMMON
STOCK $ 333 $ 384 $ 1,571 $ 442
======= ======= ======= =======
BASIC AND DILUTED EARNINGS
PER COMMON SHARE
Income before extraordinary
items and effect of changes
in accounting principles $ 0.90 $ 1.33 $ 4.26 $ 1.58
Extraordinary gain/(loss), net -- (.29) -- (.30)
Cumulative effect of changes
in accounting principles,
net -- -- -- (.04)
------- ------- ------- -------
$ 0.90 $ 1.04 $ 4.26 $ 1.24
======= ======= ======= =======
AVERAGE BASIC COMMON SHARES
OUTSTANDING 369.8 367.7 369.0 355.4
================================= ======= ======= ======= =======
See footnotes on following page.
3
(a) Occidental has implemented EITF Issue No. 00-10, "Shipping and Handling
Fees and Costs" effective with the fourth quarter of 2000. As a result of
this adoption, Occidental has added to both revenues and costs of sales
amounts related to transportation costs that previously had been accounted
for as deductions from revenues. There is no effect on income. Revenues
have been increased as follows:
Fourth Quarter Twelve Months
-------------- -------------
2000 1999 2000 1999
==== ==== ==== ====
Oil and gas 9 9 29 27
Chemical 45 53 216 183
---- ---- ---- ----
Total 54 62 245 210
==== ==== ==== ====
(b) The fourth quarter and twelve months year-to-date 2000 include $38 million
and $106 million, respectively, interest income on notes receivable from
Altura partners.
(c) Includes an offset for charges and credits in lieu of U.S. federal income
taxes allocated to the divisions. Oil and gas divisional earnings have been
impacted by a credit of $7 million in the fourth quarter of 2000 and a
charge of $260 million in the fourth quarter of 1999. The oil and gas
fourth quarter of 2000 amount included a $7 million credit for the sale of
an office building. The oil and gas fourth quarter of 1999 amount included
a charge related to the Chevron litigation settlement and a credit for the
loss on Peru producing properties. Chemical divisional earnings have been
impacted by a charge of $5 million in the fourth quarter of 2000 and a
credit of $4 million in the fourth quarter of 1999, respectively. The
Chemical fourth quarter of 2000 amount included a $21 million charge
related to the sale of the Durez business and a $12 million credit for the
shutdown and liquidation of a chemical operation in Thailand.
(d) The fourth quarter and twelve months year-to-date 2000 include preferred
distributions to the Occidental Permian partners of $39 million and $107
million, respectively. This is essentially offset by the interest income
discussed in (b) above.
4
SUMMARY OF OPERATING STATISTICS
Fourth Quarter Twelve Months
---------------- ----------------
Periods ended December 31 2000 1999 2000 1999
================================= ======= ======= ======= =======
NET OIL, GAS AND LIQUIDS
PRODUCTION PER DAY
United States
Liquids (MBBL)
California 75 52 70 52
Permian 136 13 101 13
US Other -- 8 1 8
------- ------- ------- -------
Total 211 73 172 73
Natural Gas (MMCF)
California 316 303 306 287
Hugoton 166 161 168 172
Permian 162 53 119 55
US Other -- 138 66 148
------- ------- ------- -------
Total 644 655 659 662
Latin America
Crude oil (MBBL)
Colombia 27 38 32 43
Ecuador 12 14 17 15
Peru -- 26 -- 38
------- ------- ------- -------
Total 39 78 49 96
Eastern Hemisphere
Crude oil (MBBL)
Oman 9 13 9 15
Pakistan 5 5 6 5
Qatar 48 49 49 58
Russia 27 26 26 27
Yemen 31 33 32 32
------- ------- ------- -------
Total 120 126 122 137
Natural Gas (MMCF)
Bangladesh -- -- -- 8
Pakistan 49 52 49 44
------- ------- ------- -------
Total 49 52 49 52
Barrels of Oil Equivalent (MBOE) 485 395 461 425
CAPITAL EXPENDITURES (millions) $ 344 $ 218 $ 952 $ 601
======= ======= ======= =======
DEPRECIATION, DEPLETION AND
AMORTIZATION OF ASSETS (millions) $ 214 $ 207 $ 901 $ 805
================================= ======= ======= ======= =======
5
Item 9. Regulation FD Disclosure
- ---------------------------------
Text of Speech by Stephen I. Chazen, Executive Vice President - Corporate
-------------------------------------------------------------------------
Development and Chief Financial Officer
---------------------------------------
Occidental Petroleum Corporation
STEPHEN CHAZEN
Chief Financial Officer and
Executive Vice President - Corporate Development
- Conference Call -
Fourth Quarter 2000 Earnings Announcement
January 24, 2001
Los Angeles, California
Good morning, and thank you for joining us.
Most, if not all, of you have already received a copy of the press release
announcing our fourth quarter earnings along with the Investor Relations
Supplemental Schedules. If you haven't received them, you can find them on our
website oxy.com or through the SEC's EDGAR system.
Income before special items for our fourth quarter last year was $349
million, or $0.94 per share. That represents an 80-percent increase above the
$192 million, or $0.52 per share, we earned in the fourth quarter of 1999. The
change was due to the following factors:
o Production increased from 395,000 barrels of oil equivalent per day to
485,000 barrels -- for an increase of 23-percent.
o The average price for West Texas Intermediate increased from $24.54 per
barrel to $31.86.
o Natural gas prices more than doubled from $2.52 per thousand cubic feet to
$5.31.
o Chemical earnings before special items declined from a positive $70 million
to a negative $51 million.
o Interest expense increased from $111 million to $118 million.
The changes in interest expense and production were due primarily to the
April acquisition of the Altura assets.
Special items reduced earnings by $16 million, or $0.04 per share. The most
significant special item involved the settlement of a lawsuit.
For the year, we earned $1.57 billion, or $4.26 per share. Before special
items the earnings were $1.3 billion, or $3.60 per share.
6
The most significant special item in 2000 was the sale of our interest in
Canadian Occidental that accounted for a pre-tax gain of approximately $493
million.
The results for the year were driven by the following items compared to
1999:
o Oil and gas production increased by 8-percent -- from 425,000 to
461,000 BOE.
o Oil prices increased by 57-percent -- from an average WTI price of
$19.25 per barrel to $30.20.
o Natural gas price realizations increased by 73-percent -- from $2.19
to $3.79 per MCF.
o And, finally, chemical earnings before special items for the year were
nearly double the 1999 earnings.
Oil and gas sector earnings increased for the ninth consecutive quarter and
each of the last six quarters set new records. Exploration expense declined in
the fourth quarter compared to the third quarter by $14 million -- from $44
million to $30 million.
The most significant change in the oil and gas results for the quarter was
the increase in natural gas prices which accounted for $49 million in
improvements over the third quarter results. In the late fall, the differential
between the Henry Hub and the California border gas prices began to grow so that
California prices were much higher than the NYMEX index. The California border
and Henry Hub prices are usually close to the same value, but the differential
widened sharply in December and remains very volatile on a day-to-day basis.
Currently, the differential is in excess of $3.00 per MCF. Because we book our
December production in January, this effect will not show up until the first
quarter of 2001. We produce and market about 300 million cubic feet of gas per
day in California.
The chemical sector reported a loss of $51 million for the fourth quarter,
compared with a profit of $47 million in the third quarter. The biggest change
from quarter-to-quarter came from our equity investment in petrochemicals that
went from a profit of $20 million in the third quarter to a loss of $34 million
in the fourth quarter.
As we discussed in our third quarter conference call, the widely reported
slowdown in the economy reduced operating rates in petrochemicals and our
chlor-alkai/vinyls business to the low 80-percent level. These low operating
rates are continuing in the first quarter. Normally, the chemical industry is
profitable when operating rates range from the high 80s to low 90s. Under
current conditions, we're unable to pass through to our customers the full cost
of higher electricity and natural gas prices.
During the fourth quarter we reduced total debt -- which includes preferred
stock, advanced gas sales, the Altura non-recourse debt and Oxy's corporate debt
- -- by $700 million to $6.356 billion. This is $650 million below our announced
year-end target of $7.0 billion and $2.8 billion below our pro-forma debt at the
time of the Altura acquisition in April of last year. About 45-percent of the
cash used to pay down debt came from asset sales, with the rest coming from
operations.
The Altura non-recourse debt declined from $2.4 billion in April to $1.9
billion at year-end. The $500 million decrease represents Altura's cash flow
after interest and capital.
7
Interest expense declined $17 million from the third to the fourth quarter.
Lower debt levels and somewhat lower interest rates will result in a further
decline in interest expense in the first quarter.
Capital spending of $952 million for the year 2000 was $351 million higher
than 1999 expenditures.
Now I'd like to turn the conference call over to Dr. Ray Irani, Chairman
and CEO.
Text of Speech by Dr. Ray R. Irani, Chairman and Chief Executive Officer
------------------------------------------------------------------------
Occidental Petroleum Corporation
DR. RAY R. IRANI
Chairman and Chief Executive Office
- Conference Call -
Fourth Quarter 2000 Earnings Announcement
January 24, 2001
Los Angeles, California
Thank you, Steve. As Steve reported, we had another strong quarter that
caps off the best year in Occidental's history. The continued strength in oil
prices throughout 2000 and the sharp increase in natural gas prices late in the
second half of the year were key elements in our strong financial performance.
The extensive restructuring of our oil and gas business that has resulted
in an improved mix of long-lived oil and gas assets allowed us to maximize the
benefits of lower costs and higher energy prices throughout 2000. We also are
off to a strong start this year due to the further strengthening of gas prices
in the first quarter.
Our strategy of growing our business by focusing on larger, competitive
core assets with economies of scale to drive down costs has produced four
consecutive quarters of record oil and gas recurring earnings in 2000. The oil
and gas division could set yet another quarterly earnings record in the first
quarter this year if current market conditions persist.
The completion of the Altura and THUMS acquisitions early in the second
quarter of 2000 has proved to be very timely in allowing us to catch the peak of
the recent wave of high energy prices. In addition, our decision to maximize gas
sales from Elk Hills has positioned the company to take full advantage of the
unique opportunities in California's exceptionally strong energy price
environment.
The integration of the Altura assets with our existing Permian operations
has been a tremendous success. Production in our Permian Basin properties
averaged about 163,000 barrels of oil equivalent per day in the fourth quarter,
well ahead of our original forecast for these assets. We are proceeding with the
implementation of the CO2 flood program in the Cogdell field in the
8
Permian Basin. When fully implemented, this program will increase Cogdell
production by 7,000 BOE per day. We also are continuing to reduce our costs in
the Permian Basin.
The financial results from our Elk Hills, Permian Basin and THUMS
operations were excellent in 2000, and all three are off to an exceptionally
strong start in the first quarter of 2001. In 2000, these properties accounted
for approximately $1.5 billion in operating cash flow after capital, and I would
remind everyone that we owned Altura and THUMS for just over 8 months in 2000.
While high energy prices have been a boon to our oil and gas business, they
have adversely impacted our energy-intensive chemicals operations through
substantial increases in electric power and feedstock costs. During the first
half of the year we succeeded in passing along those costs to our customers in
the form of product price increases while demand in our key product markets
remained strong. During the second half of the year, a significant slowing in
the rate of economic growth has undermined demand -- especially in the fourth
quarter -- and accentuated the problem of continuing high energy and feedstock
costs.
After an exceptionally robust first half, PVC demand growth fell off
sharply in the second half of the year due to slower growth in construction
markets and inventory de-stocking. The moderation in PVC demand tempered demand
growth for chlorine that, in turn, caused a tightening in the caustic soda
markets, resulting in higher prices for caustic soda. If the economy improves in
the second half of the year, as many expect, we should see a strengthening of
the PVC markets.
In petrochemicals, the current operating rates, as Steve indicated, are
currently in the low 80-percent range. The start-up of new petrochemicals
capacity and continued high feedstock costs this year will make a meaningful
recovery in the near-term very difficult.
In the meantime, we are continuing to focus on reducing costs and improving
the efficiency of our operations.
Steve has reviewed our achievements in the area of debt reduction. Last
April, when we set our target to reduce debt by $2 billion by year-end 2000,
some people thought we were being too aggressive. But we beat that target by
$800 million and reduced our total debt by about $2.8 billion from the pro-forma
high point following the acquisition of Altura and THUMS last April. We ended
the year with a debt-to-capitalization ratio of 57%, our lowest level in nearly
a decade.
Last year I said that one of our goals is to maintain the momentum of our
debt reduction initiatives into 2001, and we expect to achieve additional debt
reduction from free cash flow this year.
Our capital budget this year will be approximately $1.1 billion, including
$1 billion for oil and gas and $100 million for chemicals.
As I indicated earlier, we're already off to a strong start in the first
quarter due in part to exceptionally high gas prices that are driven by a
combination of cold weather in much of the country and increased electric power
demand in the west -- particularly in California.
9
Last year, we also devoted a considerable amount of attention to developing
new business opportunities in the Middle East that included opening a business
development office in Dubai. These efforts are already beginning to show
promise.
We and our partners at Enron were selected by the Saudi government to bid
on two of the three new natural gas core ventures the Kingdom has approved for
implementation. Both projects include upstream gas exploration, development and
production. They also include midstream gathering, processing and transmission
- -- as well as power generation, water desalination and petrochemical projects.
We've signed a letter of intent, and we're in the process of finalizing our
proposals. We expect both of these projects to get under way before the end of
this year, and we hope to have a substantial role in each of them.
In addition, we recently received a package of materials from the Kuwaiti
government to facilitate our preparation of proposals for the enhanced
development of major producing fields in the northern part of the country.
We're also evaluating a series of opportunities in other parts of the
Middle East -- including Libya. Oxy has a long track record of success in Libya,
but the timing of our return is contingent upon a shift in U.S. policy
permitting U.S. companies to resume operation of their existing Libyan assets.
In Yemen, we're continuing to add new, high potential exploration blocks
that complement our producing operations in Masila and East Shabwa. In addition
to the four Northern Border Blocks adjacent to Saudi Arabia and Block 20 in the
west-central part of the country, we recently signed a production sharing
agreement for Block 44 located just to the north of Masila in the Sayun-Masila
Basin. Yesterday, our partner Nexen announced that we had signed a memorandum of
understanding to explore Block 59 that borders on Saudi Arabia. We will hold a
40-percent working interest in the block.
I'm going to conclude with some brief comments about reserve additions and
finding costs. Proved reserve additions, excluding acquisitions and asset sales,
replaced 119-percent of our 2000 production of 169 million BOE. This translates
to a finding and development cost of $3.72 per BOE. Proved reserve additions
from all sources, including the net effect of acquisitions and property sales,
replaced 588-percent of our 2000 production. Finding and development costs,
including acquisitions, were $3.80 per BOE.
Our year-end 2000 proved reserves were 2.17 billion BOE, or 61-percent
higher than the 1.35 billion BOE we reported at year-end 1999, and our yearend
reserves-to-production ratio of 12.9 years represents a 48-percent increase from
our year-end 1999 R/P ratio of 8.7 years.
Putting all of this together, we expect a very strong first quarter with
significant net debt reduction.
Thank you -- and we're now ready to answer questions.
10
Supplemental Investor Information
---------------------------------
Investor Relations Supplemental Schedules
[OXY LOGO]
OCCIDENTAL PETROLEUM
2000 FOURTH QUARTER
NET INCOME (LOSS) ($ MILLIONS)
EARNINGS
REPORTED BEFORE
INCOME ADJUSTMENTS SPECIAL ITEMS
-------- ----------- -------------
Oil & Gas $ 770 (7) Office building sale $ 763
Chemical (55) (13) Durez sale (51)
17 Net other charges
including write-downs
Corporate
Interest-Permian Non-recourse debt (39) (39)
Interest - all others (79) (79)
Taxes (193) 2 Tax effect of adjustments (191)
Trust Pfd Distributions & Other (17) (17)
Other (54) 17 Litigation settlement (37)
-------- -------- --------
NET INCOME $ 333 $ 16 $ 349
======== ======== ========
BASIC EARNINGS PER SHARE $ 0.90 $ 0.94
======== ========
11
Investor Relations Supplemental Schedules
[OXY LOGO]
OCCIDENTAL PETROLEUM
1999 FOURTH QUARTER
NET INCOME (LOSS) ($ MILLIONS)
EARNINGS
REPORTED BEFORE
INCOME ADJUSTMENTS SPECIAL ITEMS
-------- ----------- -------------
Oil & Gas $ 756 $ (488) Chevron settlement, net of tax $ 331
29 Peru asset write-down
25 Claims and settlements
9 Office building write-down
Chemical (126) 159 Domestic and foreign asset writedowns 70
28 Share of Equistar writedowns
9 Claims and settlements
Corporate
Interest (111) (111)
Taxes (3) (66) Tax effect of adjustments (69)
Trust Pfd Distributions & Other (17) (17)
Other (12) (12)
-------- -------- --------
INCOME FROM CONTINUING OPS $ 487 $ (295) $ 192
Extraordinary Items, net of tax (104) 104 Early debt retirement --
-------- -------- --------
NET INCOME $ 383 $ (191) $ 192
======== ======== ========
BASIC EARNINGS PER SHARE
CONTINUING OPERATIONS $ 1.33 $ 0.52
EXTRAORDINARY ITEMS, NET OF TAX $ (0.29) $ --
======== ========
$ 1.04 $ 0.52
======== ========
12
Investor Relations Supplemental Schedules
[OXY LOGO]
OCCIDENTAL PETROLEUM
TOTAL YEAR 2000
NET INCOME (LOSS) ($ MILLIONS)
EARNINGS
REPORTED BEFORE
INCOME ADJUSTMENTS SPECIAL ITEMS
-------- ----------- -------------
Oil & Gas 2,417 (39) Gulf of Mexico-VPP $ 2,404
(41) TransCanada buyout
14 Sale of office building
53 Asset writedowns
Chemical 169 120 Specialty write-down 293
(13) Durez sale
17 Net other charges
including write-downs
Corporate
Interest-Permian non-recourse debt (119) (119)
Interest - all others (367) (367)
Taxes (861) 133 Tax effect of adjustments (728)
Trust Pfd Distributions & Other (67) (67)
Other 397 (493) CanOxy gain (90)
17 Litigation settlement
(11) OIL dividend
-------- -------- --------
INCOME BEFORE EXTRAORDINARY ITEMS 1,569 (243) 1,326
Extraordinary Items 1 (1) Early debt retirement --
-------- -------- --------
NET INCOME $ 1,570 $ (244) $ 1,326
======== ======== ========
Income Before Extraordinary Items $ 4.26 $ 3.60
Extraordinary Items -- --
-------- --------
BASIC EARNINGS PER SHARE $ 4.26 $ 3.60
======== ========
13
Investor Relations Supplemental Schedules
[OXY LOGO]
OCCIDENTAL PETROLEUM
TOTAL YEAR 1999
NET INCOME (LOSS) ($ MILLIONS)
EARNINGS
REPORTED BEFORE
INCOME ADJUSTMENTS SPECIAL ITEMS
-------- ----------- -------------
Oil & Gas $ 1,267 (488) Chevron settlement, net of tax $ 841
(11) Netherland contingency payment
29 Peru asset write-down
25 Claims and settlements
10 Relocation
9 Office building writedown
Chemical (37) (12) Equistar compounds gain 147
159 Domestic & foreign asset writedowns
28 Share of Equistar write-downs
9 Claims and settlements
Corporate
Interest-all others (468) (468)
Taxes (68) (55) Tax effect of adjustments (123)
Trust Pfd Distributions & Other (62) (62)
Other (64) (18) OIL Insurance Dividend (82)
-------- -------- --------
Income Before Extraordinary Items and $ 568 $ (315) $ 253
Changes in Accounting Principles
Extraordinary Items, net (107) 107 Early debt retirement --
Change in Acct. Principle (13) 13 Change in Acct. Principle --
-------- -------- --------
NET INCOME $ 448 $ (195) $ 253
======== ======== ========
BASIC EARNINGS PER SHARE
CONTINUING OPERATIONS $ 1.58 $ 0.69
EXTRAORDINARY ITEMS, NET (0.30) --
CHANGE IN ACCT. PRINCIPLES, NET (0.04) --
-------- --------
BASIC EARNINGS PER SHARE $ 1.24 $ 0.69
======== ========
14
Investor Relations Supplemental Schedules
[OXY LOGO]
OCCIDENTAL PETROLEUM
2000 FOURTH QUARTER NET INCOME (LOSS)
REPORTED INCOME COMPARISON
FOURTH THIRD
QUARTER QUARTER
2000 2000 H/(L)
-------- -------- --------
OIL & GAS $ 770 $ 696 $ 74
CHEMICAL (55) 47 (102)
CORPORATE
INTEREST-PERMIAN NON-RECOURSE DEBT (39) (44) 5
INTEREST - ALL OTHERS (79) (91) 12
TAXES (193) (169) (24)
TRUST PFD DISTRIBUTIONS & OTHER (17) (17) 0
OTHER (54) (21) (33)
-------- -------- --------
INCOME BEFORE EXTRAORDINARY ITEMS 333 401 (68)
EXTRAORDINARY ITEMS 0 1 (1)
-------- -------- --------
NET INCOME $ 333 $ 402 ($ 69)
======== ======== ========
BASIC EARNINGS PER SHARE $ 0.90 $ 1.09 ($ 0.19)
======== ======== ========
EFFECTIVE TAX RATE 36% 34% 2%
======== ======== ========
================================================================================
OCCIDENTAL PETROLEUM
2000 FOURTH QUARTER NET INCOME (LOSS)
INCOME BEFORE SPECIAL ITEMS COMPARISON
FOURTH THIRD
QUARTER QUARTER
2000 2000 H/(L)
-------- -------- --------
OIL & GAS $ 763 $ 690 $ 73
CHEMICAL (51) 47 (98)
CORPORATE
INTEREST-PERMIAN NON-RECOURSE DEBT (39) (44) 5
INTEREST - ALL OTHERS (79) (91) 12
TAXES (191) (194) 3
TRUST PFD DISTRIBUTIONS & OTHER (17) (17) 0
OTHER (37) (21) (16)
-------- -------- --------
NET INCOME $ 349 $ 370 ($ 21)
======== ======== ========
BASIC EARNINGS PER SHARE $ 0.94 $ 1.00 ($ 0.06)
======== ======== ========
EFFECTIVE TAX RATE 35% 34% 1%
======== ======== ========
15
Investor Relations Supplemental Schedules
[OXY LOGO]
OCCIDENTAL PETROLEUM
OIL & GAS
SEGMENT EARNINGS BEFORE SPECIAL ITEMS VARIANCE ANALYSIS
($ MILLIONS)
2000 4th Quarter $ 763
2000 3rd Quarter 690
--------
$ 73
========
Price Variance $ 60
Volume Variance (5)
Exploration Expense Variance 13
Others 5
--------
TOTAL VARIANCE $ 73
========
- --------------------------------------------------------------------------------
OCCIDENTAL PETROLEUM
CHEMICAL
SEGMENT EARNINGS BEFORE SPECIAL ITEMS VARIANCE ANALYSIS
($ MILLIONS)
2000 4th Quarter ($ 51)
2000 3rd Quarter 47
--------
($ 98)
========
Sales Price ($ 42)
Sales Volume/Mix (18)
Operations/Manufacturing (5) *
All Other (33)
--------
TOTAL VARIANCE ($ 98)
========
* Higher energy and feedstock costs.
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Investor Relations Supplemental Schedules
[OXY LOGO]
OCCIDENTAL PETROLEUM
2000 FOURTH QUARTER NET INCOME (LOSS)
REPORTED INCOME COMPARISON
FOURTH FOURTH
QUARTER QUARTER
2000 1999 H/(L)
-------- -------- --------
OIL & GAS $ 770 $ 756 $ 14
CHEMICAL (55) (126) 71
CORPORATE
INTEREST-PERMIAN NON-RECOURSE DEBT (39) 0 (39)
INTEREST - ALL OTHERS (79) (111) 32
TAXES (193) (3) (190)
TRUST PFD DISTRIBUTIONS & OTHER (17) (17) 0
OTHER (54) (12) (42)
-------- -------- --------
INCOME BEFORE EXTRAORDINARY ITEMS 333 487 (154)
EXTRAORDINARY ITEMS 0 (104) 104
-------- -------- --------
NET INCOME $ 333 $ 383 ($ 50)
======== ======== ========
BASIC EARNINGS PER SHARE $ 0.90 $ 1.04 ($ 0.14)
======== ======== ========
EFFECTIVE TAX RATE 36% 35% 1%
======== ======== ========
================================================================================
OCCIDENTAL PETROLEUM
2000 FOURTH QUARTER NET INCOME (LOSS)
INCOME BEFORE SPECIAL ITEMS COMPARISON
FOURTH FOURTH
QUARTER QUARTER
2000 1999 H/(L)
-------- -------- --------
OIL & GAS $ 763 $ 331 $ 432
CHEMICAL (51) 70 (121)
CORPORATE
INTEREST-PERMIAN NON-RECOURSE DEBT (39) 0 (39)
INTEREST - ALL OTHERS (79) (111) 32
TAXES (191) (69) (122)
TRUST PFD DISTRIBUTIONS & OTHER (17) (17) 0
OTHER (37) (12) (25)
-------- -------- --------
NET INCOME $ 349 $ 192 $ 157
======== ======== ========
BASIC EARNINGS PER SHARE $ 0.94 $ 0.52 $ 0.42
======== ======== ========
EFFECTIVE TAX RATE 35% 25% 10%
======== ======== ========
17
Investor Relations Supplemental Schedules
[OXY LOGO]
OCCIDENTAL PETROLEUM
OIL & GAS
SEGMENT EARNINGS BEFORE SPECIAL ITEMS VARIANCE ANALYSIS
($ MILLIONS)
2000 4th Quarter $ 763
1999 4th Quarter 331
--------
$ 432
========
Price Variance* $ 236
Volume Variance* (33)
Altura & THUMS 249
Exploration Expense Variance (18)
Others (2)
--------
TOTAL VARIANCE $ 432
========
* Excludes Altura & THUMS
- --------------------------------------------------------------------------------
OCCIDENTAL PETROLEUM
CHEMICAL
SEGMENT EARNINGS BEFORE SPECIAL ITEMS VARIANCE ANALYSIS
($ MILLIONS)
2000 4th Quarter ($ 51)
1999 4th Quarter 70
--------
($ 121)
========
Sales Price $ 6
Sales Volume/Mix (35)
Operations/Manufacturing (40) *
All Other (52)
--------
TOTAL VARIANCE ($ 121)
========
* Higher energy and feedstock costs.
18
Investor Relations Supplemental Schedules
[OXY LOGO]
OCCIDENTAL PETROLEUM
SUMMARY OF OPERATING STATISTICS
-------------------------------
FOURTH QUARTER TWELVE MONTHS
2000 1999 2000 1999
---- ---- ---- ----
NET PRODUCTION PER DAY:
UNITED STATES
LIQUIDS (MBL)
California 75 52 70 52
Permian 136 13 101 13
US Other 0 8 1 8
---- ---- ---- ----
TOTAL 211 73 172 73
NATURAL GAS (MMCF)
California 316 303 306 287
Hugoton 166 161 168 172
Permian 162 53 119 55
US Other 0 138 66 148
---- ---- ---- ----
TOTAL 644 655 659 662
LATIN AMERICA
CRUDE OIL (MBL)
Colombia 27 38 32 43
Ecuador 12 14 17 15
Peru 0 26 0 38
---- ---- ---- ----
TOTAL 39 78 49 96
EASTERN HEMISPHERE
CRUDE OIL (MBL)
Oman 9 13 9 15
Pakistan 5 5 6 5
Qatar 48 49 49 58
Russia 27 26 26 27
Yemen 31 33 32 32
---- ---- ---- ----
TOTAL 120 126 122 137
NATURAL GAS (MMCF)
Bangladesh -- -- -- 8
Pakistan 49 52 49 44
---- ---- ---- ----
TOTAL 49 52 49 52
BARRELS OF OIL EQUIVALENT (MBOE) 485 395 461 425
- --------------------------------------------------------------------------------
The increase in the fourth quarter of 2000 was due primarily to the United
States oil production from the Altura and THUMS properties. United States oil
production in fourth quarter 2000 was 211,000 barrels per day versus 73,000
barrels per day for the same period of 1999. Partially offsetting this increase
is a reduction in fourth quarter 2000 oil production from Latin America compared
to the 1999 fourth quarter due to the sale of producing properties in Peru in
December of 1999 and lower production from Colombia.
19
Investor Relations Supplemental Schedules
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SUMMARY OF OPERATING STATISTICS
FOURTH QUARTER TWELVE MONTHS
2000 1999 2000 1999
---- ---- ---- ----
WTI $ 31.86 $ 24.54 $ 30.20 $ 19.25
NYMEX $ 5.31 $ 2.52 $ 3.79 $ 2.19
OIL & GAS:
- ----------
PRICES
UNITED STATES
Crude Oil ($/BBL) 27.72 20.76 26.66 15.81
Natural gas ($/MCF) 4.91 2.52 3.66 2.09
LATIN AMERICA
Crude oil ($/BBL) 25.53 19.31 26.01 13.20
EASTERN HEMISPHERE
Crude oil ($/BBL) 26.32 22.35 25.14 15.86
Natural Gas ($/MCF) 2.56 1.25 1.99 1.17
West Texas Intermediate (WTI) oil prices averaged $31.86 per barrel for the
fourth quarter of 2000, a 30 percent increase from the $24.54 per barrel WTI
price for the same period in 1999. United States natural gas prices in the
fourth quarter of 2000 averaged $4.91 per MCF. This price is a 95 percent
increase from the 1999 fourth quarter price of $2.52 per MCF and a 17 percent
increase from the third quarter 2000 price of $4.18 per MCF. California
currently accounts for about 45 percent of Oxy's U.S. gas production. The
differential between California and NYMEX began to increase starting in
September. Oxy's fourth quarter 2000 average gas price reflects production and
prices for the months of September, October, and November because we have a
one-month lag in reporting gas production. Accordingly, the impact of higher gas
prices in the California market for December 2000 will be reflected in the first
quarter 2001 results.
FOURTH QUARTER TWELVE MONTHS
2000 1999 2000 1999
---- ---- ---- ----
EXPLORATION EXPENSE
Domestic $ 17 $ 10 $ 63 $ 54
Latin America 8 0 22 2
Eastern Hemisphere 5 2 9 19
-------------- -------------
TOTAL $ 30 $ 12 $ 94 $ 75
============== =============
20
Investor Relations Supplemental Schedules
[OXY LOGO]
ALTURA
AS OF DECEMBER 31, 2000
2000
----
NET PRODUCTION PER DAY:
Oil (MBO) 106
Gas (MMCF) 104
NGL's (MB) 19
BOE 142
* For the period April 19 to December 31.
NON RECOURSE DEBT ($ MILLIONS)
As of April 19, 2000 $ 2,400
As of December 31, 2000 1,900
--------
DEBT REDUCTION $ 500
========
21
Investor Relations Supplemental Schedules
[OXY LOGO]
OCCIDENTAL PETROLEUM
CHEMICALS
VOLUME (M TONS)
FOURTH QUARTER TWELVE MONTHS
2000 1999 2000 1999
---- ---- ---- ----
MAJOR PRODUCTS
Chlorine 683 883 2,977 3,230
Caustic 698 833 3,165 3,223
Ethylene Dichloride 306 312 979 1,080
PVC Resins 408 481 1,758 1,925
CHEMICALS
PRICES (INDEX)
FOURTH QUARTER TWELVE MONTHS
2000 1999 2000 1999
---- ---- ---- ----
MAJOR PRODUCTS
Chlorine 1.50 0.97 1.58 0.79
Caustic 0.81 0.62 0.69 0.66
Ethylene Dichloride 0.91 1.41 1.37 0.97
PVC Resins 0.82 0.85 0.95 0.70
CHLORINE OXYCHEM INDUSTRY (Chlorine Institute)
- -------- ------- --------
Operating Rate (U.S.): 4Q-00 83.4% 87.8%
Full Year 2000 91.9% 92.0%
OxyChem Commentary
- ------------------
o Chlorine experienced price weakness during the 4th quarter due to softness
in the vinyls segment. Full Year 2000 chlorine prices improved $65/ton over
1999.
o For the 4th quarter, OxyChem's average net prices fell $26/ton over 3rd
quarter.
o Demand to the vinyls segment weakened through the second half of 2000 and
is not expected to significantly rebound until the 2nd quarter of 2001.
o The sharp rise in power and natural gas costs have significantly squeezed
margins. Natural Gas costs increased in the 4th quarter to $5.58/MMBTU
compared to $4.47/MMBTU during the 3rd quarter.
Industry Commentary (CMAI)
- -------------------
o Reduced demand into the vinyls industry introduced additional product into
the spot market. Spot prices dropped during the quarter to $80-$90/ton in
December and are expected to remain under pressure in the 1st quarter of
2001.
22
Investor Relations Supplemental Schedules
[OXY LOGO]
o Although the 2nd half of 2000 experienced a softening of prices, very
little new chlorine capacity will be brought online during the next 12
months.
o U.S. chlorine demand experienced growth of 2.1% (estimate) in 2000, with
most of the increase occurring in the first half of the year. Consumption
into the vinyls sector is forecast to pick-up starting in the late 1st
quarter or the 2nd quarter of 2001.
Influencing Factors
- -------------------
Demand in the vinyl's sector will be adversely affected by reduced
housing/construction demand and the general economic slowdown. With limited new
production capacity, returning demand will drive long-term volume and upward
price pressures.
CAUSTIC
- -------
OxyChem Commentary
- -------------------
o OxyChem's 4th quarter average net domestic prices rose $36/ton due to the
continued implementation of price increases. These price improvements will
improve 1st quarter and future realized net values.
o Inventories remained essentially flat for the 4th quarter but are down
significantly for the year.
Industry Commentary (CMAI)
- -------------------
o Spot prices reached a level of $345/DST in December due to the tight supply
position. An additional $50/DST price increase has been announced for
February implementation. However, domestic demand for additional material
is subdued as buyers are exhibiting caution due to the general economic
slowdown.
o U.S. demand rose 1.5% (estimated) in 2000 compared 1999 and total demand
(including exports) rose 3.6%. U.S. production grew an estimated 2.8%
versus 1999. However, virtually all of the growth was realized in the first
half of the year (7%) as demand was flat in the second half versus 1999.
Operation rates declined from 97.2% in January 2000 to a low of 87%
(estimated) in December.
Influencing Factors
- -------------------
Lower operating rates will continue to limit supply and allow price
improvements. Demand remains strong.
EDC
- ---
OxyChem Commentary
- ------------------
o Continued demand weakness into the PVC/VCM markets is providing downward
price pressure. Price weakness is expected to continue in 2001.
23
Investor Relations Supplemental Schedules
[OXY LOGO]
Industry Commentary (CMAI)
- -------------------
o Export prices fell to 7.50-8.50 cents/lb (FOB U.S. Gulf Coast) for December
shipments.
o Demand remains weak with indications that inventories in Asia remain high.
Influencing Factors
- -------------------
Declining demand into the vinyls segment continued to soften pricing from
all-time highs in the 2nd quarter.
PVC/VCM OXYCHEM INDUSTRY (CHEM DATA)
- -------- ------- --------
Operating Rates (U.S.): 4Q-00 78% 84%
Full Year 2000 90% 88%
OxyChem Commentary
- ------------------
o Domestic PVC prices continued to decrease since the peak in May, as an
overall slow down in the economy remained through the 4th quarter.
o Domestic demand weakness continued through the 4th quarter with continued
inventory adjustments at all levels in order to meet year-end inventory
targets.
o Export prices to Asia dropped substantially during the 4th quarter. Prices
began the quarter at $680/MT CFR but fell rapidly to $550/MT CFR for
December shipment. Prices to Latin America also declined from $585-$650/MT
CFR to a level of $515-$600/MT CFR.
o Domestic VCM prices settled at 23.75 cents/lb in October, 22.50 cents/lb in
November and declined to 22.25 cents/lb in December.
o The VCM Export price from the U.S. started the 4th quarter at $430-$440/MT
FOB U.S. Gulf Coast but ended the quarter at $330-$340/MT FOB U.S. Gulf
Coast due to downward pressure of spot export PVC.
Industry Commentary (CMAI)
- -------------------
o PVC prices remain under downward pressure due to weak demand in all
regions. PVC export prices remain under pressure due to increased
availability from the U.S., Europe and the Middle East targeting Asia.
o VCM demand has weakened for both domestic and export shipments.
Influencing Factors
- -------------------
Product prices remain under downward pressure from weak demand in all regions.
Long term, capacity limitations and demand strength will continue to drive
product prices and volumes.
24
Investor Relations Supplemental Schedules
[OXY LOGO]
SUMMARY OF OPERATING STATISTICS
-------------------------------
FOURTH QUARTER TWELVE MONTHS
2000 1999 2000 1999
---- ---- ---- ----
CAPITAL EXPENDITURES ($MM)
Oil & Gas
California $ 69 $ 47 $201 $112
Permian 74 5 162 7
Other - U.S. 24 52 94 127
Latin America 26 6 85 19
Eastern Hemisphere 79 58 249 209
Chemicals 71 42 155 116
Corporate 1 8 6 11
-------------- -------------
TOTAL $344 $218 $952 $601
============== =============
DEPRECIATION, DEPLETION &
AMORTIZATION OF ASSETS ($MM)
Oil & Gas
Domestic $112 $84 $452 $313
Latin America 5 10 35 57
Eastern Hemisphere 42 47 183 207
Chemicals 45 53 190 190
Corporate 10 13 41 38
-------------- -------------
TOTAL $214 $207 $901 $805
============== =============
For 2001, we expect that depreciation, depletion and amortization will equal our
capital expenditures of approximately $1.1 billion and that the remaining free
cash flow will be used to achieve additional debt reduction.
25
Investor Relations Supplemental Schedules
[OXY LOGO]
OCCIDENTAL PETROLEUM
CORPORATE
($ MILLIONS)
CAPITALIZATION
31-Dec-00 31-Dec-99
--------- ---------
Oxy Long-Term Debt (including current maturities) 3,541 4,372
Permian Non-Recourse Debt 1,900 --
Gas Sales Obligation (current and non-current) 411 533
Trust Preferred Securities 473 486
Others 31 57
--------- ---------
TOTAL DEBT 6,356 5,448
========= =========
EQUITY 4,774 3,523
========= =========
Debt at year-end 2000 was $6.356 billion and the debt to capitalization ratio
was 57 percent, the lowest in nearly a decade. Of the total debt, the Altura
non-recourse debt was $1.9 billion, a decrease of $500 million in the eight
months since the date of acquisition. Oxy's debt, excluding the non-recourse
debt, at year-end 2000 was $4.456 billion, which is almost a billion dollars
below the debt at year-end 1999.
26
Investor Relations Supplemental Schedules
[OXY LOGO]
Portions of this presentation 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; competitive pricing pressures; higher than
expected costs including feedstock; the supply/demand considerations for
Occidental's products; any general economic recession domestically or
internationally; and not successfully completing any expansion, capital
expenditure or acquisition.
27
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, 2001 S. P. Dominick, Jr.
---------------------------------------------------
S. P. Dominick, Jr., Vice President and Controller
(Chief Accounting and Duly Authorized Officer)
28
