================================================================================
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 8-K
CURRENT REPORT
PURSUANT TO SECTION 13 OR 15(D) OF THE
SECURITIES EXCHANGE ACT OF 1934
DATE OF REPORT (DATE OF EARLIEST EVENT REPORTED) OCTOBER 18, 2000
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 net income of $402 million
($1.09 per share) for the third quarter of 2000, compared with $126 million
($0.35 per share) for the corresponding period of 1999.
Earnings before special items for the quarter were $370 million ($1.00 per
share) compared with earnings before special items of $125 million ($0.35 per
share) for the third quarter of 1999. Sales for the third quarter of 2000
increased to $3.8 billion from $2.1 billion in 1999.
In announcing the results, Dr. Ray R. Irani, chairman and chief executive
officer, emphasized Occidental's commitment to debt reduction. "When we
announced our intention to purchase Altura Energy, we made a commitment to
reduce our total debt by $2 billion by the end of this year from the $9 billion
pro-forma level reached in April of this year as a result of purchasing Altura.
The reduction is being made through a combination of asset sales and cash flow",
he said. "Thanks to strong oil and gas prices and production from the Altura
properties, we have reached that goal three months ahead of schedule. The total
debt at the end of the third quarter of $7.06 billion includes $2.08 billion of
the Altura non-recourse debt. The ratio of debt to total capitalization, which
rose with the Altura financing, has declined dramatically and is now essentially
unchanged from the beginning of the year. Debt reduction remains our highest
priority and we will continue to use our strong cash flow and the proceeds from
asset sales to achieve additional reductions in the fourth quarter."
Results for the quarter included after-tax gains of $39 million from the
partial-interest sale of the subsidiary that owned Occidental's Gulf of Mexico
shelf assets; after-tax income of $41 million from the receipt of contingency
payments related to a prior year sale of an oil and gas subsidiary in the Dutch
North Sea; and a $1 million extraordinary gain resulting from the early
extinguishment of debt. The results also included $49 million of after-tax
charges related to the write-down of various oil and gas assets, real estate and
investments.
Oil and Gas
-----------
The oil and gas division earned $690 million before special items, compared
with $279 million for the third 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. 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. The
overall earnings improvement was partially offset by higher exploration expense.
Oil and gas earnings after special items were $696 million for the third
quarter of 2000, compared with $280 million for the third quarter of 1999. The
2000 results included $80 million of net gains from the previously described
asset sale and the receipt of contingency payments, partially offset by charges
of $74 million, on a pre-tax basis, to write down various oil and gas assets,
real estate and investments.
Chemicals
---------
The chemical division earned $47 million for the third quarter of 2000,
compared with $44 million for the third quarter of 1999. Since the second
quarter of 2000, chemical earnings have declined primarily due to reduced sales
prices and volumes in EDC and PVC and higher energy and feedstock costs.
For the first nine months of 2000, Occidental's net income was $1.2 billion
($3.36 per share), compared with $65 million ($0.17 per share) for the first
nine months of 1999. Net income for the nine months before special items was
$977 million ($2.65 per share), compared with net income of $61 million ($0.15
per share) for 1999. Sales increased from $5.1 billion in the nine months of
1999 to $9.4 billion for the same period of 2000.
-0-
Contacts: Howard Collins (media)
310-443-6523
Kenneth J. Huffman (investors)
212-603-8183
On the Web: www.oxy.com
A conference call regarding these financial results will be held today at 11:30
a.m. EDT and may be accessed by calling 1-800-275-3210.
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)
Third Quarter Nine Months
---------------- ----------------
Periods Ended September 30 2000 1999 2000 1999
================================= ======= ======= ======= =======
DIVISIONAL NET SALES
Oil and gas $ 2,965 $ 1,265 $ 6,614 $ 2,955
Chemical 840 848 2,827 2,149
------- ------- ------- -------
Net sales $ 3,805 $ 2,113 $ 9,441 $ 5,104
================================= ======= ======= ======= =======
DIVISIONAL EARNINGS (LOSS)
Oil and gas $ 696 $ 280 $ 1,647 $ 511
Chemical 47 44 224 89
------- ------- ------- -------
743 324 1,871 600
UNALLOCATED CORPORATE ITEMS
Interest expense, net (a) (97) (118) (300) (357)
Income taxes (b) (169) (41) (668) (65)
Trust preferred distributions
& other (17) (16) (50) (45)
Other (c) (59) (23) 383 (52)
------- ------- ------- -------
INCOME BEFORE EXTRAORDINARY
ITEMS AND EFFECT OF CHANGES
IN ACCOUNTING PRINCIPLES 401 126 1,236 81
Extraordinary gain/(loss), net 1 - 1 (3)
Cumulative effect of changes
in accounting principles,
net - - - (13)
------- ------- ------- -------
NET INCOME 402 126 1,237 65
Effect of repurchase of Trust
Preferred Securities - - 1 -
Preferred dividends - - - (7)
------- ------- ------- -------
EARNINGS APPLICABLE TO COMMON
STOCK $ 402 $ 126 $ 1,238 $ 58
======= ======= ======= =======
BASIC AND DILUTED EARNINGS
PER COMMON SHARE
Income before extraordinary
items and effect of changes
in accounting principles $ 1.09 $ .35 $ 3.36 $ .22
Extraordinary gain/(loss), net - - - (.01)
Cumulative effect of changes
in accounting principles,
net - - - (.04)
------- ------- ------- -------
$ 1.09 $ .35 $ 3.36 $ .17
======= ======= ======= =======
AVERAGE BASIC COMMON SHARES
OUTSTANDING 369.2 357.6 368.7 351.3
================================= ======= ======= ======= =======
See footnotes on following page.
3
(a) The third quarter and nine months year-to-date 2000 includes $38 million
and $68 million, respectively, interest income on notes receivable from
Altura partners.
(b) 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 charges of $42 million and $1 million in the third quarters of
2000 and 1999, respectively. The Oil and Gas third quarter of 2000 amount
includes the tax effects from the partial-interest sale of the subsidiary
which owned the Gulf of Mexico shelf assets and receipt of contingency
payments related to a prior year sale of a Dutch North Sea subsidiary.
Chemical divisional earnings have been impacted by credits of $4 million in
the third quarters of 2000 and 1999, respectively.
(c) The third quarter and nine months year-to-date 2000 includes preferred
distributions to the Occidental Permian partners of $38 million and $68
million, respectively. This is offset by the interest income discussed in
(a) above.
4
SUMMARY OF OPERATING STATISTICS
Third Quarter Nine Months
---------------- ----------------
Periods Ended September 30 2000 1999 2000 1999
================================= ======= ======= ======= =======
NET OIL, GAS AND LIQUIDS
PRODUCTION PER DAY
United States
Liquids (MBBL)
California 74 50 68 52
Permian 136 14 89 14
US Other - 7 2 7
------- ------- ------- -------
Total 210 71 159 73
Natural Gas (MMCF)
California 305 287 302 282
Hugoton 178 174 168 175
Permian 161 55 118 56
US Other 43 157 89 151
------- ------- ------- -------
Total 687 673 677 664
Other Western Hemisphere
Crude oil (MBBL)
Colombia 21 40 33 45
Ecuador 21 15 19 16
Peru - 40 - 41
------- ------- ------- -------
Total 42 95 52 102
Eastern Hemisphere
Crude oil (MBBL)
Oman 8 15 9 15
Pakistan 8 5 6 6
Qatar 48 54 50 61
Russia 28 28 27 27
Yemen 32 26 32 32
------- ------- ------- -------
Total 124 128 124 141
Natural Gas (MMCF)
Bangladesh - 4 - 11
Pakistan 47 47 49 42
------- ------- ------- -------
Total 47 51 49 53
Barrels of Oil Equivalent (MBOE) 499 414 456 436
CAPITAL EXPENDITURES (millions) $ 275 $ 120 $ 608 $ 383
======= ======= ======= =======
DEPRECIATION, DEPLETION AND
AMORTIZATION OF ASSETS (millions) $ 268 $ 198 $ 687 $ 598
================================= ======= ======= ======= =======
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 -
Third Quarter 2000 Earnings Announcement
October 18
Los Angeles, California
Good morning everyone, and thank you for joining us.
EARNINGS
--------
The continuing strength of oil and natural gas prices, together with a full
quarter of production from our Permian properties in Texas and the THUMS
properties in Long Beach, have resulted in another very strong quarter.
Third quarter net income is $402 million, or $1.09 per share. This
represents more than a three-fold increase above the $126 million, or $0.35 per
share, we reported in the third quarter of 1999.
Income before special items was $370 million, or $1.00 per share, compared
to income before special items of $125 million, or $0.35 per share, in the third
quarter of 1999. Our third quarter 2000 results include after-tax gains totaling
$80 million. These gains include $41 million in payments related to the 1998
sale of oil and gas assets in the Dutch North Sea and an after-tax gain of $39
million from sale of oil and gas interests on the continental shelf in the Gulf
of Mexico. The quarterly results also included $49 million of after-tax charges
to write-down various oil and gas assets and investments and a $1 million gain
from early retirement of debt.
Oil and gas divisional earnings after special items were $696 million for
the quarter. This is an increase of $416 million over the same quarter last year
and $139 million over the second quarter of this year. Before special items oil
and gas earnings were $690 million for this quarter. Chemical divisional
earnings before special items were $47 million for the quarter. This is a
decrease of $107 million over the second quarter of this year.
Through the first nine months of this year, our net income rose to over
$1.2 billion, or $3.36 per share. Our net income before special items for the
first nine months of 2000 was $997 million, or $2.65 per share.
6
DEBT
----
Turning to the balance sheet, when we acquired Altura in April of this
year, on a pro-forma basis we increased Oxy's debt from $5.4 billion at year-end
1999 to $9.0 billion. At that time we committed to reduce total debt to $7
billion by the end of this year. The $2 billion debt reduction target was to
consist of $1.2 billion from asset sales and $800 million from cash flow. At the
end of the third quarter, Oxy's total debt is about $60 million over the $7
billion targeted debt level. This is three months ahead of our scheduled
commitment. Of the $2 billion debt reduction, approximately $1 billion is from
asset sales and approximately $1 billion is from cash flow. In addition, Oxy's
third quarter balance sheet will reflect invested cash of $200 million - so net
debt is actually about $6.85 billion. To reflect our fourth quarter intentions
for this cash we have characterized $200 million of debt as current maturities
to be paid off in the quarter.
Included in the $7 billion of total debt at the end of the third quarter is
the Altura non-recourse debt. We committed to reduce this non-recourse debt from
$2.4 billion to $2.1 billion by the end of this year. At the end of the third
quarter the Altura non-recourse debt was $2.08 billion for a reduction of $320
million. We expect the Altura non-recourse debt to be below $2.0 billion by the
end of this year.
The total debt of $7 billion at the end of the third quarter of this year
represents a ratio of 60 percent total debt to total capitalization. This is the
essentially same ratio that we had at the start of the year when debt was $5.4
billion and before the $3.6 billion Altura acquisition.
While we have reached our targeted debt level three months ahead of
schedule we will continue to make debt reduction the highest priority. We will
use our cash flow and any proceeds from asset sales to achieve additional
reductions in the fourth quarter.
With this lower debt level we expect to see interest expense decline in the
fourth quarter of this year compared to the third quarter.
Now I would like to turn the conference call over to Dale Laurance,
president of Occidental.
Text of Speech by Dr. Dale R. Laurance, President
-------------------------------------------------
Occidental Petroleum Corporation
Dr. Dale R. Laurance
President
- Conference Call -
Third Quarter 2000 Earnings Announcement
October 18, 2000
Los Angeles, California
Thank you, Steve. I will focus my remarks on the key operating results that
are driving this strong financial performance.
7
OIL AND GAS
-----------
Domestic liquids production for the third quarter of this year was 210 MB/D
compared to 71 MB/D in the third quarter of last year. International production
in the third quarter of this year was 166 MB/D compared to 223 MB/D last year.
The decline is primarily attributable to the sale of our producing properties in
Peru last December.
Domestic gas production was 687 MMCF/D in this year's third quarter
compared to 673 MMCF/D last year. Permian gas production increased over 100
MMCF/D this year compared to last year due to the Altura acquisition. The
decline in US Other gas production this year is due to the sale of the Gulf of
Mexico properties in the third quarter of this year.
BOE production from Altura this year has averaged 143,000 per day, about
8,000 BOE/D greater that we originally projected.
Overall, Occidental's BOE production in the third quarter increased 20
percent over last year's third quarter.
As expected, oil realizations are considerably greater than last year. What
is important is that Oxy's net oil price realizations as a percent of WTI have
significantly improved. Our asset restructuring has included selling properties
with lower net price realizations and adding properties with higher net price
realizations. Now our domestic oil realization is about 90 percent of WTI price
compared to 80 percent of WTI in last year's third quarter. In Other Western
Hemisphere the realization improvement is more dramatic. As a result of the sale
of our producing asset in Peru last year our realizations in Other Western
Hemisphere increased from 72 percent of WTI to 83 percent of WTI. The higher
realizations together with the operating cost reductions mean that Oxy's
profitability per BOE has improved significantly.
Natural gas prices also improved in the third quarter of this year -
compared not only to the third quarter of last year, but also to the second
quarter of this year. United States natural gas price realizations as a
percentage of the average NYMEX price increased significantly. The third quarter
natural gas price realization was 99 percent of NYMEX compared to 90 percent for
the same period last year.
At Elk Hills, gas prices were substantially higher in September than the
MERC price because of shortages in California caused by the explosion of the El
Paso gas pipeline. Hence, due to the unique California gas market, we would
expect our domestic natural gas realizations in the fourth quarter to be higher
than the third quarter.
Exploration expense for the third quarter of this year was $44 million
compared to $11 million for last year's third quarter.
CHEMICALS
---------
As Steve noted, chemical earnings before special items declined this
quarter compared to the second quarter. The primary reasons are lower sales
prices and volumes in chlorine and PVC, together with higher energy and
feedstock costs and lower ethylene dichloride earnings.
8
The reduction in demand for chlorine from the vinyls segment affected
plant-operating rates. The current chlor-alkali operating rates are 86 percent
compared to 99 percent in the first half of this year. While this is a negative
factor for chlorine, it is a positive factor for caustic soda. Stable product
demand has resulted in product shortages and supported two price increase
totaling $110/ ton. Due to price protection provisions in our caustic soda
contracts, we will not see the benefit of these price increases until the fourth
quarter of this year and the first quarter of 2001. However, we expect the net
benefit of the caustic soda price increases will be largely offset by lower
chlorine prices.
The reduced PVC prices and operating rates are the result of the slow-down
in the economy due to the increase in interest rates by the Fed and to inventory
de-stocking. During the first half of the year PVC demand was driven by a
favorable economy, fears of product shortages and rising prices that encouraged
an inventory build-up. Beginning in June, rising interest rates finally slowed
down the demand. In August, industry-operating rates fell below 80 percent as
inventories were worked down. Customer orders are now for demand only. The
current fourth quarter outlook for PVC demand shows little improvement over the
third quarter.
I will close our formal remarks by reiterating that debt reduction remains
our top priority, and we expect to achieve substantial reductions in our debt
levels in the fourth quarter and throughout next year.
9
Supplemental Investor Information
---------------------------------
Investor Relations Supplemental Schedules
[OXY LOGO]
OCCIDENTAL PETROLEUM
2000 THIRD QUARTER
NET INCOME (LOSS) ($ MILLIONS)
EARNINGS
REPORTED BEFORE
INCOME ADJUSTMENTS SPECIAL ITEMS
-------- ----------- -------------
Oil & Gas $ 696 (39) Gulf of Mexico-VPP $ 690
(41) TransCanada buyout
74 Asset writedowns
Chemical 47 47
Corporate
Interest-Permian Non-recourse debt (44) (44)
Interest - all others (91) (91)
Taxes (169) (25) Tax effect of adjustments (194)
Trust Pfd Distribution & Other (17) (17)
Other (21) (21)
-------- -------- --------
INCOME BEFORE EXTRAORDINARY ITEMS $ 401 $ (31) $ 370
EXTRAORDINARY ITEMS 1 (1) Early debt retirement --
-------- -------- --------
NET INCOME $ 402 $ (32) $ 370
======== ======== ========
BASIC EARNINGS PER SHARE $ 1.09 $ 1.00
======== ========
10
Investor Relations Supplemental Schedules
[OXY LOGO]
OCCIDENTAL PETROLEUM
1999 THIRD QUARTER
NET INCOME (LOSS) ($ MILLIONS)
EARNINGS
REPORTED BEFORE
INCOME ADJUSTMENTS SPECIAL ITEMS
-------- ----------- -------------
Oil & Gas $ 280 10 Relocation $ 279
(11) Contingency Pymt.
Chemical 44 44
Corporate
Interest (118) (118)
Taxes (41) (41)
Trust Pfd Distribution & Other (16) (16)
Other (23) (23)
-------- -------- --------
NET INCOME $ 126 $ (1) $ 125
======== ======== ========
BASIC EARNINGS PER SHARE $ 0.35 $ 0.35
======== ========
11
Investor Relations Supplemental Schedules
[OXY LOGO]
OCCIDENTAL PETROLEUM
2000 FIRST NINE MONTHS
NET INCOME (LOSS) ($ MILLIONS)
EARNINGS
REPORTED BEFORE
INCOME ADJUSTMENTS SPECIAL ITEMS
-------- ----------- -------------
Oil & Gas $ 1,647 (39) Gulf of Mexico-VPP $ 1,641
(41) TransCanada buyout
74 Asset writedowns
Chemical 224 120 Specialty write-down 344
Corporate
Interest-Permian Non-recourse debt (80) (80)
Interest - all others (288) (288)
Taxes (668) 131 Tax effect of adjustments (537)
Trust Pfd Distribution & Other (50) (50)
Other 451 (493) CanOxy gain (53)
(11) OIL dividend
-------- -------- --------
INCOME BEFORE EXTRAORDINARY ITEMS 1,236 (259) 977
Extraordinary Items 1 (1) Early debt retirement --
-------- -------- --------
NET INCOME $ 1,237 $ (260) $ 977
======== ======== ========
Income Before Extraordinary Items $ 3.36 $ 2.65
Extraordinary Items -- --
-------- --------
BASIC EARNINGS PER SHARE $ 3.36 $ 2.65
======== ========
12
Investor Relations Supplemental Schedules
[OXY LOGO]
OCCIDENTAL PETROLEUM
1999 FIRST NINE MONTHS
NET INCOME (LOSS) ($ MILLIONS)
EARNINGS
REPORTED BEFORE
INCOME ADJUSTMENTS SPECIAL ITEMS
-------- ----------- -------------
Oil & Gas $ 511 10 Relocation $ 510
(11) Contingency payment
Chemical 89 (12) Equistar compounds gain 77
Corporate
Interest - all others (357) (357)
Taxes (65) 11 Tax effect of adjustments (54)
Trust Pfd Distribution & Other (45) (45)
Other (52) (18) OIL Insurance Dividend (70)
-------- -------- --------
Income Before Extraordinary Items and $ 81 $ (20) $ 61
Changes in Accounting Principles
Extraordinary Items, net (3) 3 Early debt retirement --
Change in Acct. Principle (13) 13 Change in Acct. Principle --
-------- -------- --------
NET INCOME $ 65 $ (4) $ 61
======== ======== ========
INCOME BEFORE EXTRAORDINARY ITEMS $ 0.22 $ 0.15
AND CHANGES IN ACCOUNTING PRINCIPLES
EXTRAORDINARY ITEMS, NET (0.01) --
CHANGE IN ACCT. PRINCIPLES, NET (0.04) --
-------- --------
BASIC EARNINGS PER SHARE $ 0.17 $ 0.15
======== ========
13
Investor Relations Supplemental Schedules
[OXY LOGO]
OCCIDENTAL PETROLEUM
2000 THIRD QUARTER NET INCOME (LOSS)
REPORTED INCOME COMPARISON
THIRD SECOND
QUARTER QUARTER
2000 2000 H/(L)
-------- -------- --------
OIL & GAS $ 696 $ 557 $ 139
CHEMICAL 47 34 13
CORPORATE
INTEREST-PERMIAN NON-RECOURSE DEBT (44) (36) (8)
INTEREST - ALL OTHERS (91) (98) 7
TAXES (169) (349) 180
TRUST PFD DISTRIBUTIONS & OTHER (17) (16) (1)
OTHER (21) 472 (493)
-------- -------- --------
INCOME BEFORE EXTRAORDINARY ITEMS 401 564 (163)
EXTRAORDINARY ITEMS 1 -- 1
-------- -------- --------
NET INCOME $ 402 $ 564 ($ 162)
======== ======== ========
BASIC EARNINGS PER SHARE $ 1.09 $ 1.53 ($ 0.44)
======== ======== ========
EFFECTIVE TAX RATE 34% 38% ( 4%)
======== ======== ========
================================================================================
OCCIDENTAL PETROLEUM
2000 THIRD QUARTER NET INCOME (LOSS)
INCOME BEFORE SPECIAL ITEMS COMPARISON
THIRD SECOND
QUARTER QUARTER
2000 2000 H/(L)
-------- -------- --------
OIL & GAS $ 690 $ 557 $ 133
CHEMICAL 47 154 (107)
CORPORATE
INTEREST-PERMIAN NON-RECOURSE DEBT (44) (36) (8)
INTEREST - ALL OTHERS (91) (98) 7
TAXES (194) (197) 3
TRUST PFD DISTRIBUTIONS & OTHER (17) (16) (1)
OTHER (21) (21) 0
-------- -------- --------
NET INCOME $ 370 $ 343 $ 27
======== ======== ========
BASIC EARNINGS PER SHARE $ 1.00 $ 0.93 $ 0.07
======== ======== ========
EFFECTIVE TAX RATE 39% 36% 3%
======== ======== ========
14
Investor Relations Supplemental Schedules
[OXY LOGO]
OCCIDENTAL PETROLEUM
OIL & GAS
SEGMENT EARNINGS BEFORE SPECIAL ITEMS VARIANCE ANALYSIS
($ MILLIONS)
2000 3rd Quarter $ 690
2000 2nd Quarter 557
--------
$ 133
========
Price Variance $ 180
Volume Variance (18)
Exploration Expense Variance (29)
--------
TOTAL VARIANCE $ 133
========
- --------------------------------------------------------------------------------
OCCIDENTAL PETROLEUM
CHEMICAL
SEGMENT EARNINGS BEFORE SPECIAL ITEMS VARIANCE ANALYSIS
($ MILLIONS)
2000 3rd Quarter $ 47
2000 2nd Quarter 154
--------
($ 107)
========
Sales Price ($ 35)
Sales Volume/Mix (13)
Operations/Manufacturing (25) *
All Other (34)
--------
TOTAL VARIANCE ($ 107)
========
* Higher energy and feedstock costs.
15
Investor Relations Supplemental Schedules
[OXY LOGO]
OCCIDENTAL PETROLEUM
2000 THIRD QUARTER NET INCOME (LOSS)
INCOME BEFORE SPECIAL ITEMS COMPARISON
THIRD THIRD
QUARTER QUARTER
2000 1999 H/(L)
-------- -------- --------
OIL & GAS $ 690 $ 279 $ 411
CHEMICAL 47 44 3
CORPORATE
INTEREST-PERMIAN NON-RECOURSE DEBT (44) (44)
INTEREST - ALL OTHERS (91) (118) 27
TAXES (194) (41) (153)
TRUST PFD DISTRIBUTIONS & OTHER (17) (16) (1)
OTHER (21) (23) 2
-------- -------- --------
NET INCOME $ 370 $ 125 $ 245
======== ======== ========
BASIC EARNINGS PER SHARE $ 1.00 $ 0.35 $ 0.65
======== ======== ========
EFFECTIVE TAX RATE 39% 23% 16%
======== ======== ========
OCCIDENTAL PETROLEUM
OIL & GAS
SEGMENT EARNINGS BEFORE SPECIAL ITEMS VARIANCE ANALYSIS
($ MILLIONS)
2000 3rd Quarter $ 690
1999 3rd Quarter 279
--------
$ 411
========
Price Variance* $ 263
Volume Variance* (61)
Altura & THUMS 237
Exploration Expense Variance (32)
All other variances 4
--------
TOTAL VARIANCE $ 411
========
* Excludes Altura & THUMS
16
Investor Relations Supplemental Schedules
[OXY LOGO]
OCCIDENTAL PETROLEUM
SUMMARY OF OPERATING STATISTICS
-------------------------------
THIRD QUARTER NINE MONTHS
2000 1999 2000 1999
---- ---- ---- ----
NET PRODUCTION PER DAY:
UNITED STATES
LIQUIDS (MBL)
California 74 50 68 52
Permian 136 14 89 14
US Other -- 7 2 7
---- ---- ---- ----
TOTAL 210 71 159 73
NATURAL GAS (MMCF)
California 305 287 302 282
Hugoton 178 174 168 175
Permian 161 55 118 56
US Other 43 157 89 151
---- ---- ---- ----
TOTAL 687 673 677 664
OTHER WESTERN HEMISPHERE
CRUDE OIL (MBL)
Colombia 21 40 33 45
Ecuador 21 15 19 16
Peru -- 40 -- 41
---- ---- ---- ----
TOTAL 42 95 52 102
EASTERN HEMISPHERE
CRUDE OIL (MBL)
Oman 8 15 9 15
Pakistan 8 5 6 6
Qatar 48 54 50 61
Russia 28 28 27 27
Yemen 32 26 32 32
---- ---- ---- ----
TOTAL 124 128 124 141
NATURAL GAS (MMCF)
Bangladesh -- 4 -- 11
Pakistan 47 47 49 42
---- ---- ---- ----
TOTAL 47 51 49 53
BARRELS OF OIL EQUIVALENT (MBOE) 499 414 456 436
- --------------------------------------------------------------------------------
The increase in United States oil production is due to the THUMS (California)
and Altura (Permian) acquisitions. The increase in Permian natural gas
production is due to the Altura acquisition while the decrease in U.S. Other
natural gas production is a result of the sale of a partial interest in the Gulf
of Mexico properties to Apache Corporation effective July 1, 2000.
The decrease in Other Western Hemisphere oil production is a result of reduced
Colombia production and the sale of Peru producing assets in the fourth quarter
of 1999.
17
Investor Relations Supplemental Schedules
[OXY LOGO]
SUMMARY OF OPERATING STATISTICS
THIRD QUARTER NINE MONTHS
2000 1999 2000 1999
---- ---- ---- ----
WTI 31.58 21.73 29.65 17.48
NYMEX 4.24 2.36 3.28 2.08
OIL & GAS:
- ----------
PRICES
UNITED STATES
Crude Oil ($/BBL) 28.10 17.67 26.19 14.17
Natural gas ($/MCF) 4.18 2.12 3.23 1.94
OTHER WESTERN HEMISPHERE
Crude oil ($/BBL) 26.18 15.73 26.13 11.62
EASTERN HEMISPHERE
Crude oil ($/BBL) 26.39 18.42 24.76 13.92
Natural Gas ($/MCF) 1.98 1.11 1.80 1.14
As a result of asset restructuring, Oxy oil price realization, as a
percentage of WTI, has increased substantially. For the third quarter of 2000
United States oil realization was 89 percent of the average WTI price compared
to 81 percent for the same period last year.
United States natural gas price realization as a percentage of the average
NYMEX price also increased significantly. The third quarter 2000 natural gas
price realization was 99 percent of NYMEX compared to 90 percent for the same
period of last year.
The realizations for Other Western Hemisphere oil increased for both the
third quarter of 2000 and for the nine months due to the sale of the producing
assets in Peru. For the third quarter of 2000 price realization was 83 percent
of WTI compared to 72 percent of WTI for the same period last year.
THIRD QUARTER NINE MONTHS
2000 1999 2000 1999
---- ---- ---- ----
EXPLORATION EXPENSE
Domestic $ 27 $ 9 $ 46 $ 44
Other Western Hemisphere 13 1 15 2
Eastern Hemisphere 4 1 4 17
------------- -------------
TOTAL $ 44 $ 11 $ 65 $ 63
============= =============
18
Investor Relations Supplemental Schedules
[OXY LOGO]
ALTURA
AS OF SEPTEMBER 30, 2000
9 MONTHS*
--------
2000
----
NET PRODUCTION PER DAY:
Oil (MBO) 106
Gas (MMCF) 106
NGL's (MB) 19
BOE 143
*For the period April 19 to September 30
NON RECOURSE DEBT ($ MILLIONS)
As of April 19, 2000 $ 2,400
As of September 30, 2000 2,080
--------
DEBT REDUCTION $ 320
========
Oxy committed to reduce the Altura non-recourse debt from $2.4 billion to $2.1
billion by the end of this year. At the end of the third quarter the Altura
non-recourse debt was $2.08 billion for a reduction of $320 million. We expect
the Altura non-recourse debt to be below $2.0 billion by the end of this year.
19
Investor Relations Supplemental Schedules
[OXY LOGO]
OCCIDENTAL PETROLEUM
CHEMICALS
VOLUME (M TONS)
THIRD QUARTER NINE MONTHS
2000 1999 2000 1999
---- ---- ---- ----
MAJOR PRODUCTS
Chlorine 690 819 2,294 2,437
Caustic 825 847 2,470 2,390
Ethylene Dichloride 128 254 674 768
PVC Resins 413 505 1,350 1,444
CHEMICALS
PRICES (INDEX)
THIRD QUARTER NINE MONTHS
2000 1999 2000 1999
---- ---- ---- ----
MAJOR PRODUCTS
Chlorine 1.72 0.85 1.60 0.73
Caustic 0.59 0.54 0.66 0.68
Ethylene Dichloride 1.22 1.07 1.57 0.79
PVC Resins 0.99 0.73 0.99 0.64
CHLORINE OXYCHEM INDUSTRY (Chlorine Institute)
- -------- ------- --------
Operating Rate (U.S.) 86.0% 89.5%
2000 year-to-date (January-August) 95.0% 93.7%
OxyChem Commentary
- ------------------
o Chlorine price weakness to the vinyls segment began in the 3rd quarter
relative to 2nd quarter pricing and is likely to show continued relative
softness through the 4th quarter as well. Year-to-date prices have improved
$77/ton over 1999.
o For the quarter, OxyChem average external net prices improved $11/ton over
2nd quarter 2000.
Industry Commentary (CMAI)
- -------------------
o Reduced demand into the vinyls industry introduced additional product into
the spot market. Spot prices dropped during the quarter while contract
prices to the vinyls industry remained largely unchanged. Downward pressure
is expected to continue in the 4th quarter.
o Although some price reductions are forecast for the 4th quarter and 1st
quarter 2001, very little new chlorine capacity will be brought online
during the next 12 months. Therefore, chlorine prices should remain at
fairly high levels on average.
20
Investor Relations Supplemental Schedules
[OXY LOGO]
o U.S. chlorine demand is expected to reflect 2.4% growth for 2000.
Consumption into the vinyls sector is forecast to pick up starting in the
2nd quarter, 2001.
Influencing Factors
- -------------------
Demand into the vinyls sector is temporarily weakened. With limited available
production capacity, returning demand will drive long-term volume and upward
price pressures.
CAUSTIC
- -------
OxyChem Commentary
- -------------------
o OxyChem's 3rd quarter net average domestic prices declined $6/ton as
contract buyers received the remaining benefit of price weakness earlier in
the year. Announced price increases of $50/ton for July and $60/ton for
August will significantly improve 4th quarter and future realized net
values.
o Inventories declined through the 3rd quarter and are down significantly for
the year. Short supplies will continue through the remainder of the year.
o Demand continues to demonstrate strength and stability.
Industry Commentary (CMAI)
- -------------------
o Spot prices reached a level of $200/DST with some buyers paying "well
above" that amount for urgently needed product. While contract pricing is
forecast to increase during the 4th quarter, there appears to be additional
room for future price increases.
o U.S. demand rose 8.5%, in the 1st half 2000 compared to 1st half 1999. With
operating rates reduced during the 2nd half, 3% production growth is
forecast for the year.
Influencing Factors
- -------------------
Lower operating rates will continue to limit supply and allow price
improvements. Demand remains strong.
EDC
- ---
OxyChem Commentary
- ------------------
o Continued weakness into the PVC/VCM markets and expectations of ethylene
price declines are providing downward price pressure. Price weakness is
expected to continue through the 4th quarter.
Industry Commentary (CMAI)
- -------------------
o Export prices declined further to 11.0-11.5(cent)/lb (FOB) for September
shipments.
21
Investor Relations Supplemental Schedules
[OXY LOGO]
o Demand remains weak with indications that inventories in Asia remain high.
Influencing Factors
- -------------------
Declining demand in vinyls has softened pricing from all-time 2nd quarter highs.
PVC/VCM OXYCHEM INDUSTRY (CHEM DATA)
- -------- ------- --------
Operating Rates (U.S.) 87% 85%
OxyChem Commentary
- ------------------
o Domestic PVC prices decreased 3.5(cent)/lb since May, remaining up
1.5(cent)/lb in 2000.
o Domestic demand weakness continued through the quarter with continued
inventory adjustments and an overall slow-down in the construction
industry.
o Export volume began increasing in June with Shintech moving product from
the U.S. to sell out their new plant. Export volume increased again in
August as U.S. producers moved additional inventory into the market.
o Asian export prices held during the third quarter at $670-680/MT CFR, but
face downward pressure as material from the U.S., Middle East, and Europe
tries to find a home in China. Latin America prices have steadily declined
since June and continue to face downward pressure with capacity additions
at Shintech and Petco. Current prices are $585-650 CFR.
o Domestic VCM prices were 27(cent)/lb for July, 26(cent)/lb in August, and
are expected to settle at 25.5(cent)/lb for September. These decreases are
attributable to lower PVC and ethylene prices.
o For October shipments, the export VCM price decreased to $430-440/MT F.O.B.
U.S. Gulf Coast.
Industry Commentary (CMAI)
- -------------------
o PVC price remains under downward pressure due to weak demand in all
regions.
o VCM demand has weakened for both domestic and export shipments.
Influencing Factors
- -------------------
Product prices remain under downward pressure from weak demand in all regions.
Long term, capacity limitations and demand strength will continue benefit
product prices and volumes.
22
Investor Relations Supplemental Schedules
[OXY LOGO]
SUMMARY OF OPERATING STATISTICS
-------------------------------
THIRD QUARTER NINE MONTHS
2000 1999 2000 1999
---- ---- ---- ----
CAPITAL EXPENDITURES ($MM)
Oil & Gas
California $ 48 $ 25 $132 $ 65
Permian 51 1 88 3
Other - U.S. 37 27 69 75
Other Western Hemisphere 27 4 59 12
Eastern Hemisphere 68 44 170 151
Chemicals 40 19 84 74
Corporate 4 -- 6 3
------------- -------------
TOTAL $275 $120 $608 $383
============= =============
DEPRECIATION, DEPLETION &
AMORTIZATION OF ASSETS ($MM)
Oil & Gas
Domestic $154 $ 76 $340 $229
Other Western Hemisphere 10 16 30 47
Eastern Hemisphere 47 49 141 160
Chemicals 47 49 145 137
Corporate 10 8 31 25
------------- -------------
TOTAL $268 $198 $687 $598
============= =============
23
Investor Relations Supplemental Schedules
[OXY LOGO]
OCCIDENTAL PETROLEUM
CORPORATE
($ MILLIONS)
CAPITALIZATION
30-Sep-00 31-Dec-99
--------- ---------
Oxy Long-Term Debt (including current maturities) 4,017 4,372
Permian Non-Recourse Debt 2,080 --
Gas Sales Obligation (current and non-current) 442 533
Trust Preferred Securities 473 486
Others 47 57
--------- ---------
TOTAL DEBT 7,059 5,448
========= =========
EQUITY 4,522 3,523
========= =========
With the Altura acquisition in April of this year, on a pro-forma basis
Oxy's debt increased from $5.4 billion at year-end 1999 to $9.0 billion. At that
time we committed to reduce total debt to $7 billion by the end of this year.
The $2 billion debt reduction target was to consist of $1.2 billion from asset
sales and $800 million from cash flow. At the end of the third quarter, Oxy's
total debt is about $60 million over the $7 billion targeted debt level. This is
three months ahead of our scheduled commitment. Of the $2 billion debt reduction
since April, approximately $1 billion is from asset sales and approximately $1
billion is from cash flow. In addition, Oxy's third quarter balance sheet will
reflect invested cash of $200 million--so net debt is actually about $6.85
billion. To reflect our fourth quarter intentions for this cash we have
characterized $200 million of debt as current maturities to be paid off in the
quarter.
The total debt of $7 billion at the end of the third quarter of this year
represents a ratio of 60 percent total debt to total capitalization. This is the
essentially the same ratio that we had at the start of the year when debt was
$5.4 billion and before the $3.6 billion Altura acquisition.
While we have reached our targeted debt level three months ahead of
schedule we will continue to make debt reduction the highest priority. We will
use our cash flow and any proceeds from asset sales to achieve additional
reductions in the fourth quarter.
With this lower debt level we expect to see interest expense decline in the
fourth quarter of this year compared to the third quarter.
24
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.
25
SIGNATURE
Pursuant to the requirements of the Securities Exchange Act of 1934, the
Registrant has duly caused this report to be signed on its behalf by the
undersigned hereunto duly authorized.
OCCIDENTAL PETROLEUM CORPORATION
(Registrant)
DATE: October 17, 2000 S. P. Dominick, Jr.
---------------------------------------------------
S. P. Dominick, Jr., Vice President and Controller