================================================================================
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) JULY 22, 2002
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
- ------ -----------------------------------------
On July 22, 2002, Occidental Petroleum Corporation announced net income for
the second quarter 2002 of $240 million ($0.64 per share), compared with $473
million ($1.27 per share) for the second quarter 2001. Earnings before special
items were $466 million ($1.25 per share) for the second quarter 2001. There
were no special items in the second quarter 2002.
Occidental's net income for the second quarter 2002 of $240 million ($0.64
per share), improved significantly compared with $25 million ($0.07 per share)
for the first quarter 2002, which included a goodwill write off and severance
charges of $104 million after tax. Earnings before special items for the first
quarter 2002 were $129 million ($0.34 per share).
In announcing the results, Dr. Ray R. Irani, chairman and chief executive
officer, said, "Our second quarter oil and gas production increased by 14
percent compared to last year, with volumes rising from an average of 450,000 to
512,000 barrels of oil equivalent per day. Despite the sharp increase in
production, our profits were down significantly due primarily to much lower gas
prices. We're encouraged by the improvement in our profits compared to the first
quarter. The improvement was driven by higher oil and gas prices and by
strengthening chemical markets for our products. We're on target to increase oil
and gas production by more than 5 percent this year, and we expect production
growth to continue at an average annual rate of 5 percent through 2006 - based
solely on current development projects.
Our chemical business was aided significantly by improved prices. We expect
additional improvement in the chemical business in the third quarter."
OIL AND GAS
-----------
Oil and gas segment earnings were $421 million for the second quarter 2002,
compared with $806 million for the second quarter 2001. The decline in the
second quarter 2002 earnings reflected the effect of lower prices of
approximately $400 million, primarily for domestic natural gas, and higher
exploration expense, partially offset by higher production volumes.
For the first quarter 2002, oil and gas segment earnings were $306 million.
The increase in earnings, in the second quarter 2002 compared with the first
quarter, primarily reflected higher crude oil and natural gas prices, partially
offset by higher exploration expense.
For the first six months of 2002, production volumes increased
approximately 12 percent to 518,000 barrels of oil equivalent per day (BOE)
compared with 463,000 for the same period of 2001. The increase reflects higher
worldwide crude oil and liquids production, particularly in California, Colombia
and the Middle East.
CHEMICALS
---------
Chemical segment earnings were $33 million for the second quarter 2002,
compared with $58 million for the second quarter 2001. The decline in the second
quarter 2002 earnings reflected lower sales prices for caustic soda and PVC,
partially offset by higher EDC prices and lower energy and raw material costs.
2
The first quarter 2002 segment results after special items were a loss of
$35 million. The improvement in earnings in the second quarter 2002 compared
with the first quarter reflected higher sales prices for chlorine, EDC and PVC
and better performance of our Equistar petrochemical investment, partially
offset by lower caustic soda prices and higher energy and raw material costs.
Core chemical operations, which excludes Equistar, earned $37 million in the
second quarter 2002 compared with $15 million before special items in the first
quarter. Equistar results in the second quarter 2002 improved to a loss of $4
million, compared with a $36 million loss in the first quarter. The sale of
Occidental's Equistar interest to Lyondell is expected to close at the end of
August 2002.
SIX MONTHS RESULTS
------------------
For the first six months of 2002, net income was $265 million ($0.71 per
share), compared with $957 million ($2.58 per share) for the first six months of
2001. Earnings before special items were $369 million ($0.98 per share),
compared with $976 million ($2.63 per share) for the same period of 2001.
Subsequent to the appointment of KPMG to replace Arthur Andersen as the
Company's independent auditor, KPMG conducted a complete re-audit of
Occidental's consolidated financial statements for the previous three years.
Occidental has filed a 10-K/A with the SEC that contains KPMG's unqualified
report containing no changes in our balance sheet, net income, cash flow or
earnings per share.
Statements in this presentation that contain words such as "will" or
"expect", 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; 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.
3
SUMMARY OF SEGMENT NET SALES AND EARNINGS
(Millions, except per-share amounts)
Second Quarter Six Months
------------------- -------------------
Periods Ended June 30 2002 2001 2002 2001
================================= ======= ======= ======= =======
SEGMENT NET SALES
Oil and gas $ 2,410 $ 2,964 $ 4,347 $ 6,576
Chemical 731 881 1,319 1,744
------- ------- ------- -------
Net sales $ 3,141 $ 3,845 $ 5,666 $ 8,320
================================= ======= ======= ======= =======
SEGMENT EARNINGS (LOSSES)
Oil and gas $ 421 $ 806 $ 727 $ 1,752
Chemical 33 58 (2) (21)
------- ------- ------- -------
454 864 725 1,731
UNALLOCATED CORPORATE ITEMS
Interest expense, net (a) (66) (71) (122) (147)
Income taxes (b) (101) (249) (144) (424)
Trust preferred distributions
& other (12) (14) (23) (30)
Other (c) (35) (57) (76) (146)
------- ------- ------- -------
INCOME BEFORE EXTRAORDINARY ITEMS
AND EFFECT OF CHANGES IN
ACCOUNTING PRINCIPLES 240 473 360 984
Extraordinary loss, net -- -- -- (3)
Cumulative effect of changes
in accounting principles, net -- -- (95) (24)
------- ------- ------- -------
NET INCOME $ 240 $ 473 $ 265 $ 957
======= ======= ======= =======
BASIC EARNINGS PER COMMON SHARE
Income before extraordinary
items and effect of changes
in accounting principles $ 0.64 $ 1.27 $ 0.96 $ 2.65
Extraordinary loss, net -- -- -- (0.01)
Cumulative effect of changes
in accounting principles, net -- -- (.25) (0.06)
------- ------- ------- -------
$ 0.64 $ 1.27 $ 0.71 $ 2.58
======= ======= ======= =======
DILUTED EARNINGS PER COMMON SHARE
Income before extraordinary
items and effect of changes
in accounting principles $ 0.63 $ 1.26 $ 0.95 $ 2.64
Extraordinary loss, net -- -- -- (0.01)
Cumulative effect of changes
in accounting principles, net -- -- (.25) (0.06)
------- ------- ------- -------
$ 0.63 $ 1.26 $ 0.70 $ 2.57
======= ======= ======= =======
AVERAGE BASIC COMMON SHARES
OUTSTANDING 375.8 372.0 375.1 371.1
================================= ======= ======= ======= =======
See footnotes on following page.
4
(a) Includes interest income on notes receivable from Occidental Permian
partners. The second quarter and six months year-to-date 2002 include $8
million and $22 million, respectively. The second quarter and six months
year-to-date 2001 include $28 million and $61 million, respectively.
(b) Includes an offset for (charges)/credits in lieu of U.S. federal income
taxes allocated to the divisions. Chemical divisional earnings had credits
allocated to them of $4 million in the second quarter of 2002. The second
quarter of 2001 was impacted by a ($3) million charge at Oil and Gas and an
$18 million credit at Chemicals. The 2001 results include a ($4) million
charge at Oil and Gas related to an asset sale and a $14 million credit at
Chemicals related to asset sales.
(c) Includes preferred distributions to the Occidental Permian partners. The
second quarter and six months year-to-date 2002 include $5 million and $20
million, respectively. The second quarter and six months year-to-date 2001
include $28 million and $62 million, respectively. These amounts are
essentially offset by the interest income discussed in (a) above.
5
SUMMARY OF OPERATING STATISTICS
Second Quarter Six Months
------------------- -------------------
Periods Ended June 30 2002 2001 2002 2001
================================= ======= ======= ======= =======
NET OIL, GAS AND LIQUIDS
PRODUCTION PER DAY
United States
Crude oil and liquids (MBBL)
California 86 72 88 72
Permian 143 137 141 136
Other 3 -- 3 --
------- ------- ------- -------
Total 232 209 232 208
Natural Gas (MMCF)
California 290 298 298 307
Hugoton 150 163 154 165
Permian 125 146 127 147
------- ------- ------- -------
Total 565 607 579 619
Latin America
Crude oil and condensate (MBBL)
Colombia 37 -- 34 10
Ecuador 12 14 13 13
------- ------- ------- -------
Total 49 14 47 23
Eastern Hemisphere
Crude oil and condensate (MBBL)
Oman 15 10 16 10
Pakistan 9 8 8 7
Qatar 43 41 43 42
Russia 28 27 27 28
Yemen 33 32 40 34
------- ------- ------- -------
Total 128 118 134 121
Natural Gas (MMCF)
Pakistan 50 47 50 48
Barrels of Oil Equivalent (MBOE) 512 450 518 463
CAPITAL EXPENDITURES (millions) $ 326 $ 309 $ 600 $ 547
======= ======= ======= =======
DEPRECIATION, DEPLETION AND
AMORTIZATION OF ASSETS (millions) $ 254 $ 237 $ 515 $ 482
================================= ======= ======= ======= =======
6
Item 9. Regulation FD Disclosure
- ------ ------------------------
Text of Speech by Stephen I. Chazen, Chief Financial Officer and
----------------------------------------------------------------
Executive Vice President - Corporate Development
------------------------------------------------
Occidental Petroleum Corporation
STEPHEN CHAZEN
Chief Financial Officer and
Executive Vice President - Corporate Development
- Conference Call -
Second Quarter 2002 Earnings Announcement
July 22, 2002
Los Angeles, California
Good morning, and thank you for joining us.
Those of you who haven't received a copy of the press release announcing
our second quarter earnings, along with the Investor Relations Supplemental
Schedules, can find them on our website oxy.com or through the SEC's EDGAR
system.
Net income was $240 million, or $0.64 per share. There were no special
items last quarter. In last year's second quarter, net income was $473 million,
or $1.27 per share, and earnings before special items were $466 million, or
$1.25 per share.
For the first half of this year, net income was $265 million, or $0.71 per
share compared to $957 million, or $2.58 per share, during the first half of
2001. Earnings before special items and the effect of changes in accounting
principles during the first half of this year were $369 million, or $0.98 per
share, compared to $976 million, or $2.63 per share last year.
On a segment basis, oil and gas second quarter earnings were $421 million,
compared to $806 million during the same period a year ago. The decline was due
primarily to lower US natural gas prices.
The decline was partially offset by a 14 percent increase in oil and gas
production - from 450,000 BOE per day in the second quarter of 2001 to 512,000
barrels this year. For the first half of this year, production was up by 12
percent compared to last year - from 463,000 to 518,000 BOE per day.
The increases in production in the first half compared to the same period
last year were due to several factors. Domestic liquids production increased by
24,000 barrels per day - with 16,000 barrels of the increase coming from
California. Significantly less downtime on the Cano Limon pipeline resulted in a
24,000 barrels per day increase in Colombia. Finally, a first quarter seasonal
adjustment in the cost recovery volumes related to our production-sharing
contracts in Oman and Yemen added a combined 12,000 barrels per day.
7
Chemical segment earnings were $33 million compared to a first quarter 2002
loss of $35. There were no special items in the second quarter. Prices for
chlorine, EDC and PVC have improved and our losses from Equistar declined from a
negative $36 million in the first quarter to a negative $4 million. Earnings
before special items - excluding Equistar - show earnings improving from $15
million in the first quarter to $37 million in the second quarter. The $52
million total for the first half is $23 million more than our core chemical
business earned in the first half of 2001.
When the deal with Lyondell is closed at the end of August, our third
quarter operations will wind up with two months of Equistar results and one
month of corporate equity earnings based on Lyondell's results. To assist
investors in analyzing our core chemical business, we have included a table that
shows that this business has always made money over the last 10 1/2 years on an
EBIT basis and has always produced positive free cash flow.
Cash flow from operations for the first half of the year was approximately
$945 million. During the second quarter, we increased shareholder equity by $253
million - which accounts for the reduction in the debt-to-capitalization ratio
from 46 to 45 percent.
Capital spending for the quarter was $326 million and $600 for the first
half. We expect total spending for the year to be $1.2 billion - with oil and
gas accounting for approximately $1.1 billion.
Looking ahead in the current quarter, we expect oil and gas production to
remain at roughly the same level as the second quarter. We also expect
additional improvement in chemicals as chlorine, caustic and PVC prices continue
to strengthen.
Our sensitivity to changes in oil and gas prices will be similar to prior
quarters. The average WTI price in the second quarter was $26.25 per barrel and
our average price realization for natural gas was $2.92 per thousand cubic feet.
A swing of 25-cents per million BTUs in NYMEX gas prices impacts our quarterly
oil and gas segment earnings by $13.5 million while a $1.00 per barrel change in
oil prices has a quarterly impact of $28 million.
I'd now like to call attention to several balance sheet items.
When we acquired Altura from the BP-Shell partnership in April 2000, we
recorded $2 billion in long-term receivables and an equivalent amount of
minority interest on our balance sheet. As we said in announcing first quarter
earnings in April, the BP-Shell partnership exercised an option to redeem their
partnership interests in exchange for their minority interest. There was no
impact on the income statement. Both sides of the balance sheet have been
reduced by $2 billion by eliminating the receivable and minority interest.
In the second quarter, we accrued $310 million to be paid in the third
quarter to the United Arab Emirate's Offset Group as the result of our
successful bid to acquire a 24.5 percent interest in the Dolphin Project.
Also in the second quarter, Oxy recognized an increase of $82 million in
the value of our 7.7 million shares of Premcor stock. Now that Premcor is
publicly traded, we are required to mark to market the value of our shares each
quarter. This change in value is reflected in the
8
equity account, but no income statement gain would be recognized as long as we
hold the shares as an investment.
As I said earlier, we expect the sale of our 29.5 percent equity interest
in Equistar and the purchase of 30 to 34 million shares of Lyondell common stock
to close at the end of August. Oxy will recognize an after-tax gain of at least
$100 million that can be viewed as a partial offset to the loss we recorded in
announcing the transaction last December.
Last March we engaged KPMG to replace Arthur Andersen as the company's
independent auditor. Subsequent to this change, we asked KPMG to conduct a
complete re-audit of our consolidated financial statements for the last three
years. We took this action for two reasons. First, we wanted to assure investors
that our financial statements were accurate. Second, we were concerned that no
one would be available from Arthur Andersen to sign consents or stand behind the
statements.
Upon the completion of KPMG's audit, we filed a 10-K/A with the SEC last
Friday which contains KPMG's unqualified report on our financial statements. The
new filing contains no changes in our balance sheet, net income, cash flow or
earnings per share. The only modifications made in connection with the re-audits
are to update the Management and Discussion Analysis and the Notes to the
Financial Statements to incorporate accounting pronouncements and events that
have transpired since the original filing date. Furthermore, KPMG made no
recommendations to management or the Audit Committee for any changes. Our
financial statements remain the same.
Now we're ready to take your questions. Joining me this morning are Oxy's
chairman and CEO, Dr. Ray Irani, and president, Dr. Dale Laurance.
9
Supplemental Investor Information
---------------------------------
Investor Relations Supplemental Schedules
[OXY LOGO]
OCCIDENTAL PETROLEUM
2002 Second Quarter
Net Income (Loss)
($ millions)
EARNINGS
REPORTED BEFORE
INCOME ADJUSTMENTS SPECIAL ITEMS
---------- ------------- ---------------
Oil & Gas $ 421 $ -- $ 421
Chemical 33 33
Corporate
Interest (74) (74)
Trust Pfd Distributions & Other (9) (9)
Other (30) (30)
Taxes (101) (101)
---------- ------------- ---------------
NET INCOME $ 240 $ -- $ 240
========== ============= ===============
BASIC EARNINGS PER SHARE $ 0.64 $ 0.64
========== ===============
10
Investor Relations Supplemental Schedules
[OXY LOGO]
OCCIDENTAL PETROLEUM
2001 Second Quarter
Net Income (Loss)
($ millions)
EARNINGS
REPORTED BEFORE
INCOME ADJUSTMENTS SPECIAL ITEMS
---------- ------------- ---------------
Oil & Gas $ 806 $ (7) Asset sale $ 799
Chemical 58 58
Corporate
Interest - Permian Non-recourse debt (23) (23)
Interest - all others (76) (76)
Trust Pfd Distributions & Other (14) (14)
Other (29) (29)
Taxes (249) (249)
---------- ------------- ---------------
NET INCOME $ 473 $ (7) $ 466
========== ============= ===============
BASIC EARNINGS PER SHARE $ 1.27 $ 1.25
========== ===============
11
Investor Relations Supplemental Schedules
[OXY LOGO]
OCCIDENTAL PETROLEUM
2002 First Six Months
Net Income (Loss)
($ millions)
EARNINGS
REPORTED BEFORE
INCOME ADJUSTMENTS SPECIAL ITEMS
---------- ------------- ---------------
Oil & Gas $ 727 $ -- $ 727
Chemical (2) 14 Severance 12
Corporate
Interest (144) (144)
Trust Pfd Distributions & Other (21) (21)
Other (56) (56)
Taxes (144) (5) Tax effect of adjustments (149)
---------- ------------- ----------------
Income before cumulative effect of changes 360 9 369
in accounting principles
Cumulative effect of changes in accounting (95) 95 Goodwill impairment --
principles, net
---------- ------------- ----------------
NET INCOME $ 265 $ 104 $ 369
========== ============= ================
BASIC EARNINGS PER SHARE
Income before cumulative effect of changes $ 0.96 $ 0.98
in accounting principles
Cumulative effect of changes in accounting (0.25) --
principles
---------- ----------------
NET INCOME $ 0.71 $ 0.98
========== ================
12
Investor Relations Supplemental Schedules
[OXY LOGO]
OCCIDENTAL PETROLEUM
2001 First Six Months
Net Income (Loss)
($ millions)
EARNINGS
REPORTED BEFORE
INCOME ADJUSTMENTS SPECIAL ITEMS
---------- ------------- ---------------
Oil & Gas $ 1,752 $ (7) Asset sale $ 1,745
Chemical (21) 26 Severance & plant shut down costs 5
Corporate
Interest - Permian Non-recourse debt (56) (56)
Interest - all others (152) (152)
Trust Pfd Distributions & Other (31) (31)
Other (84) 49 Environmental remediation (41)
(6) OIL insurance dividend
Taxes (424) (70) State tax reserve reversal (494)
---------- ------------- --------------
Income before extraordinary loss and 984 (8) 976
cumulative effect of changes in accounting
principles
Extraordinary loss, net (3) 3 Early debt extinguishment --
Cumulative effect of changes in accounting (24) 24 Derivative & hedge accounting --
principles, net
---------- ------------- --------------
NET INCOME $ 957 $ 19 $ 976
========== ============= ==============
BASIC EARNINGS PER SHARE
Income before extraordinary loss and $ 2.65 $ 2.63
cumulative effect of changes in accounting
principles
Extraordinary loss, net (0.01) --
Cumulative effect of changes in accounting (0.06) --
principles, net
---------- --------------
NET INCOME $ 2.58 $ 2.63
========== ==============
13
Investor Relations Supplemental Schedules
[OXY LOGO]
OCCIDENTAL PETROLEUM
2002 Second Quarter Net Income (Loss)
Reported Income Comparison
SECOND FIRST
QUARTER QUARTER
2002 2002 B / (W)
--------- --------- ---------
Oil & Gas $ 421 $ 306 $ 115
Chemical 33 (35) 68
Corporate
Interest - all others (74) (70) (4)
Trust Pfd Distributions & Other (9) (12) 3
Other (30) (26) (4)
Taxes (101) (43) (58)
--------- --------- ---------
Income Before Cumulative Effect of 240 120 120
Changes in Accounting Principles, net
Cumulative Effect of Changes in Accounting -- (95) 95
Principles, net
--------- --------- ---------
Net Income $ 240 $ 25 $ 215
========= ========= =========
Basic Earnings Per Share $ 0.64 $ 0.07 $ 0.57
========= ========= =========
Effective Tax Rate 29% 24% -5%
========= ========= =========
================================================================================
OCCIDENTAL PETROLEUM
2002 Second Quarter Net Income (Loss)
Income Before Special Items Comparison
SECOND FIRST
QUARTER QUARTER
2002 2002 B / (W)
--------- --------- ---------
Oil & Gas $ 421 $ 306 $ 115
Chemical 33 (21) 54
Corporate
Interest - all others (74) (70) (4)
Trust Pfd Distributions & Other (9) (12) 3
Other (30) (26) (4)
Taxes (101) (48) (53)
--------- --------- ---------
Net Income $ 240 $ 129 $ 111
========= ========= =========
Basic Earnings Per Share $ 0.64 $ 0.34 $ 0.30
========= ========= =========
Effective Tax Rate 29% 25% -4%
========= ========= =========
14
Investor Relations Supplemental Schedules
[OXY LOGO]
OCCIDENTAL PETROLEUM
Oil & Gas
Segment Earnings Before Special Items Variance Analysis
($ millions)
2002 2nd Quarter $ 421
2002 1st Quarter 306
-----------
$ 115
===========
Price Variance $ 156
Volume Variance (7)
Exploration Expense Variance (32)
All Other (2)
-----------
TOTAL VARIANCE $ 115
===========
================================================================================
OCCIDENTAL PETROLEUM
Chemical
Segment Earnings Before Special Items Variance Analysis
($ millions)
2002 2nd Quarter $ 33
2002 1st Quarter (21)
-----------
$ 54
===========
Sales Price $ 45
Sales Volume/Mix 6
Operations/Manufacturing (36)*
All Other 39 **
-----------
TOTAL VARIANCE $ 54
===========
* Higher energy and feedstock costs.
** Includes higher equity earnings
15
Investor Relations Supplemental Schedules
[OXY LOGO]
OCCIDENTAL PETROLEUM
2002 Second Quarter Net Income (Loss)
Reported Income Comparison
SECOND SECOND
QUARTER QUARTER
2002 2001 B / (W)
--------- --------- ---------
Oil & Gas $ 421 $ 806 $ (385)
Chemical 33 58 (25)
Corporate
Interest - Permian Non-recourse debt -- (23) 23
Interest - all others (74) (76) 2
Trust Pfd Distributions & Other (9) (14) 5
Other (30) (29) (1)
Taxes (101) (249) 148
--------- --------- ---------
Net Income $ 240 $ 473 $ (233)
========= ========= =========
Basic Earnings Per Share $ 0.64 $ 1.27 $ (0.63)
========= ========= =========
Effective Tax Rate 29% 33% 4%
========= ========= =========
================================================================================
OCCIDENTAL PETROLEUM
2002 Second Quarter Net Income (Loss)
Income Before Special Items Comparison
SECOND SECOND
QUARTER QUARTER
2002 2001 B / (W)
--------- --------- ---------
Oil & Gas $ 421 $ 799 $ (378)
Chemical 33 58 (25)
Corporate
Interest - Permian Non-recourse debt -- (23) 23
Interest - all others (74) (76) 2
Trust Pfd Distributions & Other (9) (14) 5
Other (30) (29) (1)
Taxes (101) (249) 148
--------- --------- ---------
Net Income $ 240 $ 466 $ (226)
========= ========= =========
Basic Earnings Per Share $ 0.64 $ 1.25 $ (0.61)
========= ========= =========
Effective Tax Rate 29% 34% 5%
========= ========= =========
16
Investor Relations Supplemental Schedules
[OXY LOGO]
OCCIDENTAL PETROLEUM
Oil & Gas
Segment Earnings Before Special Items Variance Analysis
($ millions)
2002 2nd Quarter $ 421
2001 2nd Quarter 799
-----------
$ (378)
===========
Price Variance $ (396)
Volume Variance 57
Exploration Expense Variance (41)
All Other 2
-----------
TOTAL VARIANCE $ (378)
===========
================================================================================
OCCIDENTAL PETROLEUM
Chemical
Segment Earnings Before Special Items Variance Analysis
($ millions)
2002 2nd Quarter $ 33
2001 2nd Quarter 58
-----------
$ (25)
===========
Sales Price $ (105)
Sales Volume/Mix (2)
Operations/Manufacturing 74 *
All Other 8
-----------
TOTAL VARIANCE $ (25)
===========
* Lower energy and feedstock costs.
17
Investor Relations Supplemental Schedules
[OXY LOGO]
OCCIDENTAL PETROLEUM
SUMMARY OF OPERATING STATISTICS
-------------------------------
SECOND QUARTER SIX MONTHS
-------------------- --------------------
2002 2001 2002 2001
-------- -------- -------- --------
NET PRODUCTION PER DAY:
United States
Crude oil and liquids (MBL)
California 86 72 88 72
Permian 143 137 141 136
US Other 3 -- 3 --
-------- -------- -------- --------
TOTAL 232 209 232 208
Natural Gas (MMCF)
California 290 298 298 307
Hugoton 150 163 154 165
Permian 125 146 127 147
-------- -------- -------- --------
TOTAL 565 607 579 619
Latin America
Crude oil (MBL)
Colombia 37 -- 34 10
Ecuador 12 14 13 13
-------- -------- -------- --------
TOTAL 49 14 47 23
Eastern Hemisphere
Crude oil (MBL)
Oman 15 10 16 10
Pakistan 9 8 8 7
Qatar 43 41 43 42
Russia 28 27 27 28
Yemen 33 32 40 34
-------- -------- -------- --------
TOTAL 128 118 134 121
Natural Gas (MMCF)
Pakistan 50 47 50 48
Barrels of Oil Equivalent (MBOE) 512 450 518 463
- -------------------------------- -------- -------- -------- --------
18
Investor Relations Supplemental Schedules
[OXY LOGO]
SUMMARY OF OPERATING STATISTICS
SECOND QUARTER SIX MONTHS
-------------------- --------------------
2002 2001 2002 2001
-------- -------- -------- --------
OIL & GAS:
- ----------
PRICES
UNITED STATES
Crude Oil ($/BBL) 23.88 23.11 21.35 23.71
Natural gas ($/MCF) 2.92 8.55 2.64 9.30
LATIN AMERICA
Crude oil ($/BBL) 22.77 18.90 20.65 21.69
EASTERN HEMISPHERE
Crude oil ($/BBL) 22.16 23.36 20.24 22.69
Natural Gas ($/MCF) 2.04 2.41 2.28 2.30
SECOND QUARTER SIX MONTHS
-------------------- --------------------
2002 2001 2002 2001
-------- -------- -------- --------
Exploration Expense
Domestic $ 44 $ 9 $ 54 $ 22
Latin America 7 2 14 4
Eastern Hemisphere 8 7 18 13
-------- -------- -------- --------
TOTAL $ 59 $ 18 $ 86 $ 39
======== ======== ======== ========
19
Investor Relations Supplemental Schedules
[OXY LOGO]
OCCIDENTAL PETROLEUM
CHEMICALS
Volume (M Tons)
SECOND QUARTER SIX MONTHS
-------------------- --------------------
MAJOR PRODUCTS 2002 2001 2002 2001
-------- -------- -------- --------
Chlorine 735 786 1,436 1,491
Caustic 743 750 1,317 1,419
Ethylene Dichloride 140 154 292 376
PVC Resins 1,151 1,050 2,193 2,113
CHEMICALS
Prices (Index)
SECOND QUARTER SIX MONTHS
-------------------- --------------------
MAJOR PRODUCTS 2002 2001 2002 2001
-------- -------- -------- --------
Chlorine 0.77 0.76 0.64 0.82
Caustic 0.66 1.42 0.79 1.37
Ethylene Dichloride 1.29 0.74 0.94 0.78
PVC Resins 0.70 0.77 0.62 0.75
CHLORINE
- --------
OXYCHEM COMMENTARY
- ------------------
o Demand for chlorine continued to improve through the 2nd quarter of 2002.
Industry operating rates climbed further, driven by the improved demand and
capacity curtailments. Rates have improved from a low of 77% in December
2001, to 87% in the 1st quarter 2002 and 92% in the 2nd quarter.
Expectations are that demand will continue to improve in the 3rd quarter.
o The supply of chlorine continues to be very tight. Many producers are
having trouble meeting contract obligations leaving very little product
available for the spot market.
o The improved supply/demand situation has led to improved prices. The 1st
quarter announced $50/ton increase was implemented in April. An additional
increase of $125/ton was announced in late May with implementation expected
in July.
INFLUENCING FACTORS:
- --------------------
Continued demand improvement requires sustained economic recovery. With no new
capacity additions being announced, operating rates will improve as economic
conditions
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Investor Relations Supplemental Schedules
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improve. Stronger demand and higher operating rates will support additional
price increases in the long-term.
CAUSTIC
- -------
OXYCHEM COMMENTARY
- ------------------
o Caustic soda demand in domestic and export markets, while still
fundamentally flat, is beginning to show some signs of recovery. Caustic
soda consumption in the Pulp and Paper business, a key market for liquid
caustic soda, is beginning to recover. Demand into the distribution market
as well as the inorganic and organic chemicals marketplace is also showing
some signs of recovery. Demand is expected to strengthen further in the 2nd
half.
o Domestic pricing continued to weaken in the 2nd quarter with prices
bottoming out in May. A $50/ton price increase was announced in mid-May and
has been supported by the industry.
INFLUENCING FACTORS:
- --------------------
Caustic soda demand is closely tied to overall economic activity and the health
of the US manufacturing sector. Traditionally caustic soda demand lags the
recovery of its co-product chlorine by several months. Chlorine demand has
already recovered and the supply/demand balance for caustic soda is shifting,
which is expected to lead to price recovery for caustic soda.
EDC
- ---
OXYCHEM COMMENTARY
- ------------------
o Demand continued to improve through the 2nd quarter while supply has been
extremely tight worldwide. Exports to Asia have declined due to a recent
drop in PVC prices in China and higher EDC inventories in China. Overall
demand may decline slightly in July but is expected to rebound by the
August/September timeframe.
o Pricing increased rapidly through the second quarter as buyers scrambled to
secure available product. Market prices in May were almost 7 cents/lb
higher than in March and 13 cents/lb higher than in January.
INFLUENCING FACTORS:
- --------------------
EDC remains in short supply, which continues to drive prices upward. Although
recent declines in PVC prices in China have created some short-term downward
pressure, demand is expected to rebound again.
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PVC/VCM
- -------
OXYCHEM COMMENTARY
- ------------------
o PVC resin demand outweighed production capability through the second
quarter and resin inventories continued to decline. The tightness of the
market is due to seasonal increases in demand, low beginning inventories
and a moderate export market.
o OxyVinyls' PVC operating rates for the 2nd quarter improved to 98%. Rates
in the 3rd quarter are expected to remain at this level. The estimated
industry average operating rate for the 2nd quarter was 94% as some
producers were constrained by a lack of chlorine. Capacities have been
modified to exclude both the Borden Geismar and the former Borden Addis
facilities, which are currently idle.
o Domestic PVC resin prices increased $.02/lb in April, $.02/lb in May, and
$.04/lb in June. Further increases of $0.02/lb have been announced for July
and August.
o U.S. export PVC resin prices into Asia peaked at the end of May at $700/MT,
up from $580/MT in March but declined to $580/MT in June as purchases from
China decreased. Prices to Latin America held at $720 - $750/MT.
o Strong demand for VCM continued through the 2nd quarter and it is expected
to remain strong through the balance of the year. VCM inventory levels
remain very low due to strong domestic PVC demand and numerous planned and
unplanned plant outages. More outages are scheduled for the 3rd quarter,
which should keep inventory levels low.
o Demand for VCM overseas remains strong in Mexico and Latin America. Asian
demand has fallen due to reduced PVC demand in China but is expected to
improve. Export demand is expected to remain strong into the 3rd quarter as
several maintenance shutdowns in Europe and Asia have kept inventories at
low-to-moderate levels.
o Export VCM pricing started the year in the $250-$260/MT range but increased
to $440 -$460/MT at the end of the 1st quarter and has increased further to
the $500-$520/MT range for June shipments. Pricing for July shipments is
expected to be in the $500-$540/MT range.
INFLUENCING FACTORS:
- --------------------
Normal seasonal downturns in the 2nd half PVC market will be strongly moderated
by a tight VCM market, idled PVC plants, and very low VCM and PVC inventories.
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OCCIENTAL PETROLEUM
Chemical Segment
Historical Financials Excluding Petrochemicals
Average
1993 - 6 Months
1993 1994 1995 1996 1997 1998 1999 2000 2001 2001 2002
------ ------ ------ ------ ------ ------ ------ ------ ------ -------- --------
EBIT $ 194 $ 251 $ 650 $ 445 $ 353 $ 261 $ 136 $ 245 $ 115 $ 294 $ 52
DD&A 194 189 184 151 167 160 190 190 190 179 96
------ ------ ------ ------ ------ ------ ------ ------ ------ -------- --------
EBITDA 388 440 834 596 520 421 326 435 305 473 148
Capital Spending (1) (134) (159) (200) (221) (356) (311) (115) (155) (121) (197) (38)
------ ------ ------ ------ ------ ------ ------ ------ ------ -------- --------
Free Cash Flow (2) $ 254 $ 281 $ 634 $ 375 $ 164 $ 110 $ 211 $ 280 $ 184 $ 276 $ 110
====== ====== ====== ====== ====== ====== ====== ====== ====== ======== ========
(1) Excludes divestiture proceeds and acquisitions
(2) Excludes working capital changes
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SUMMARY OF OPERATING STATISTICS
SECOND QUARTER SIX MONTHS
-------------------- --------------------
2002 2001 2002 2001
-------- -------- -------- --------
Capital Expenditures ($MM)
Oil & Gas
California $ 64 $ 64 $ 128 $ 123
Permian 44 76 103 126
Other - U.S. 36 44 58 67
Latin America 48 17 61 38
Eastern Hemisphere 98 78 187 144
Chemicals 23 27 38 45
Corporate 13 3 25 4
-------- --------- -------- --------
TOTAL $ 326 $ 309 $ 600 $ 547
======== ========= ======== ========
DEPRECIATION, DEPLETION &
AMORTIZATION OF ASSETS ($MM)
Oil & Gas
Domestic $ 147 $ 130 $ 296 $ 262
Latin America 9 4 18 10
Eastern Hemisphere 48 45 101 93
Chemicals 48 48 96 97
Corporate 2 10 4 20
-------- --------- -------- --------
TOTAL $ 254 $ 237 $ 515 $ 482
======== ========= ======== ========
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OCCIDENTAL PETROLEUM
CORPORATE
($ millions)
30-JUN-02 31-DEC-01
------------- -------------
CAPITALIZATION
Oxy Long-Term Debt (including current maturities) $ 4,090 $ 4,065
Gas Sales Obligation (current and non-current) 215 282
Trust Preferred Securities 459 463
Others 26 80
------------- -------------
TOTAL DEBT $ 4,790 $ 4,890
============= =============
EQUITY $ 5,832 $ 5,634
============= =============
Total Debt To Total Capitalization 45% 46%
============= =============
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Portions of this presentation are "forward-looking statements" as defined by the
Private Securities Litigation Reform Act of 1995, and involve risks and
uncertainties that could significantly affect expected results. No assurance can
be given that the results or statement of expectations or beliefs will be
attained. Factors that may cause actual results to differ materially are
contained in the March 13, 2002 form 10-K on file with the SEC.
26
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: July 19, 2002 S. P. Dominick, Jr.
--------------------------------------------------
S. P. Dominick, Jr., Vice President and Controller
(Chief Accounting and Duly Authorized Officer)