================================================================================
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 8-K
CURRENT REPORT
PURSUANT TO SECTION 13 OR 15(D) OF THE
SECURITIES EXCHANGE ACT OF 1934
DATE OF REPORT (DATE OF EARLIEST EVENT REPORTED) APRIL 18, 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
- ------ -----------------------------------------
On April 18, 2001, Occidental Petroleum Corporation announced record
earnings before special items for the first quarter 2001 of $510 million ($1.38
per share), an increase of more than 90 percent, compared with $264 million
($0.72 per share) for the first quarter 2000.
Net income for the first quarter 2001 was $484 million ($1.31 per share),
compared with $271 million ($0.74 per share) for the first quarter 2000. The
first quarter 2001 results included special items that are discussed below.
Sales increased to $4.5 billion for the first quarter 2001, an increase of over
70 percent, compared with $2.6 billion for the first quarter 2000.
In announcing the results, Dr. Ray R. Irani, chairman and chief executive
officer, said, "This year's first quarter results represent the highest
quarterly earnings before special items in the history of the company. The
increase in oil and gas production of more than 35 percent, from 352,000 barrels
of oil equivalent in the first quarter of 2000 to 478,000 barrels in the first
quarter this year, was the key factor in our outstanding first quarter
performance. In addition, premium pricing for natural gas sales from our Elk
Hills operation in California was another important contributor to our results.
Premium pricing for California gas compared to gas production from the Gulf of
Mexico should not be viewed as a temporary phenomenon because California's
current supply -- demand imbalance that is driving in-state prices is expected
to continue for the next two to three years. Partially offsetting the positive
factors in the first quarter were the reduced chemical results due to a decline
in product demand and higher energy and feedstock costs."
Oil and Gas
-----------
The oil and gas segment earned $946 million for the first quarter 2001,
compared with $394 million for the same period of 2000. The improvement is
primarily the result of higher domestic natural gas prices and higher domestic
oil production volumes, partially offset by lower worldwide crude oil price
realizations and higher exploration expense. The California gas market price
premium, which began to increase in the fall of 2000 and continued through the
first quarter 2001, resulted in a significantly higher realized price for
domestic natural gas. Oil production was also higher in the first quarter this
year compared to last year due primarily to the Altura and THUMS acquisitions
which occurred in the second quarter 2000.
Chemicals
---------
The chemicals segment reported a net loss before special items of $53
million for the first quarter 2001, compared with income of $143 million for the
first quarter 2000. The decline in results before special items reflects higher
energy and feedstock costs; lower sales prices and volumes for PVC, VCM, EDC and
chlorine; and lower results from equity investments.
Chemical results after special items were a loss of $79 million for the
first quarter 2001. The 2001 first quarter included $26 million pre-tax expense
for employee severance, plant write-down costs and plant shut-down costs.
1
Other
-----
Special items reduced earnings by $26 million after tax, or 7 cents per
share. The special items included charges for severance and plant write-downs in
the chemicals segment totaling $26 million and an increase in environmental
reserves. These two items were largely offset by the settlement of a
long-standing tax issue and an insurance dividend. An additional after-tax
charge of $24 million for a change in accounting standards for derivatives also
was recorded.
Forward-looking statements and estimates regarding exploration and production
activities, oil, gas and commodity chemical prices and their related earnings
effects, and cost reductions 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 SEGMENT NET SALES AND EARNINGS
(Millions, except per-share amounts)
First Quarter
----------------
Periods ended March 31 2001 2000
============================================ ======= =======
SEGMENT NET SALES
Oil and gas $ 3,612 $ 1,534
Chemical 863 1,040
------- -------
Net sales $ 4,475 $ 2,574
============================================ ======= =======
SEGMENT EARNINGS (LOSS)
Oil and gas $ 946 $ 394
Chemical (79) 143
------- -------
867 537
UNALLOCATED CORPORATE ITEMS
Interest expense, net (a) (76) (99)
Income taxes (b) (175) (150)
Trust preferred distributions
& other (16) (17)
Other (c) (89) --
------- -------
INCOME BEFORE EXTRAORDINARY ITEMS AND EFFECT
OF CHANGES IN ACCOUNTING PRINCIPLES 511 271
Extraordinary loss, net (d) (3) --
Cumulative effect of changes in accounting
principles, net (e) (24) --
------- -------
NET INCOME 484 271
Effect of repurchase of Trust
Preferred Securities -- 1
------- -------
EARNINGS APPLICABLE TO COMMON
STOCK $ 484 $ 272
======= =======
BASIC EARNINGS PER COMMON SHARE
Income before extraordinary items and
effect of changes in accounting principles $ 1.38 $ .74
Extraordinary loss, net (d) (.01) --
Cumulative effect of changes
in accounting principles, net (e) (.06) --
------- -------
$ 1.31 $ .74
======= =======
DILUTED EARNINGS PER COMMON SHARE
Income before extraordinary items and
effect of changes in accounting principles $ 1.37 $ .74
Extraordinary loss, net (d) (.01) --
Cumulative effect of changes
in accounting principles, net (e) (.06) --
------- -------
$ 1.30 $ .74
======= =======
AVERAGE BASIC COMMON SHARES
OUTSTANDING 370.2 368.1
============================================ ======= =======
See footnotes on following page.
3
(a) The first quarter 2001 includes $33 million interest income on notes
receivable from Occidental Permian partners.
(b) Includes an offset for credits in lieu of U.S. federal income taxes
allocated to the divisions. Divisional earnings have benefited from credits
allocated by $1 million and $4 million at oil and gas and chemical,
respectively, in the first quarters of 2001 and 2000.
(c) The first quarter 2001 includes $34 million for preferred distributions to
the Occidental Permian partners. This is essentially offset by the interest
income discussed in (a) above.
(d) During the first quarter 2001, Occidental placed into an escrow account,
with a third party, sufficient funds to retire the outstanding $20.5
million Calcasieu pollution control revenue bonds due 2005. As a result of
the defeasance, Occidental recognized an after-tax loss of $3 million.
(e) Effective January 1, 2001, Occidental implemented SFAS No. 133 -
"Accounting for Derivative Instruments and Hedging," as amended by SFAS No.
137 - "Accounting for Derivative Instruments and Hedging
Activities-Deferral of the Effective Date of FASB Statement No. 133," and
SFAS No. 138 - "Accounting for Certain Derivative Instruments and Certain
Hedging Activities." Adoption of these new accounting standards resulted in
a cumulative after-tax reduction in net income of $24 million and other
comprehensive income of approximately $27 million.
4
SUMMARY OF OPERATING STATISTICS
First Quarter
----------------
Periods ended March 31 2001 2000
============================================ ======= =======
NET OIL, GAS AND LIQUIDS
PRODUCTION PER DAY
United States
Liquids (MBBL)
California 73 50
Permian 134 13
US Other -- 7
------- -------
Total 207 70
Natural Gas (MMCF)
California 317 305
Hugoton 167 164
Permian 148 51
US Other -- 110
------- -------
Total 632 630
Latin America
Crude oil & condensate (MBBL)
Colombia 21 36
Ecuador 13 16
------- -------
Total 34 52
Eastern Hemisphere
Crude oil and condensate (MBBL)
Oman 11 9
Pakistan 6 4
Qatar 42 42
Russia 28 26
Yemen 36 36
------- -------
Total 123 117
Natural Gas (MMCF)
Pakistan 50 50
Barrels of Oil Equivalent (MBOE) 478 352
CAPITAL EXPENDITURES (millions) $ 238 $ 122
======= =======
DEPRECIATION, DEPLETION AND
AMORTIZATION OF ASSETS (millions) $ 245 $ 185
============================================ ======= =======
5
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 -
First Quarter 2001 Earnings Announcement
April 18, 2001
Los Angeles, California
Good morning, and thanks for joining us.
Most, if not all, of you have already received a copy of the press release
announcing our first 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 on the SEC's EDGAR site.
Reported income for our first quarter this year was $484 million, or $1.31
per share, compared to last year's first quarter of $271 million, or $0.74 per
share.
Income before special items was $510 million, or $1.38 per share. That
represents a 93-percent increase above the $264 million, or $0.72 per share, we
earned in the first quarter of 2000. The change was due to the following
factors:
o Production increased from 352,000 barrels of oil equivalent per day to
478,000 barrels - for an increase of 36-percent.
o Our average domestic natural gas price realizations were more than four
times higher at $10.01 per thousand cubic feet compared to $2.42 in the
same quarter last year. Oil price realizations increased slightly from
$23.90 per barrel to $24.32 per barrel.
o Exploration expense was $21 million compared to $6 million in last year's
first quarter and $30 million in the fourth quarter. Our spending rate is
below trend, but in the current quarter we expect to complete the drilling
of a number of wells, including two major wells, for a total estimated
investment of $70 million.
o Chemical earnings before special items were a negative $53 million compared
to a positive $143 million in last year's first quarter. This year's first
quarter results were essentially flat compared with the fourth quarter last
year.
o Special items reduced earnings by $26 million after-tax, or 7 cents per
share. The special items included charges for severance and plant
write-downs in the chemicals segment totaling $26 million and an increase
in environmental reserves. These two items were
6
largely offset by the settlement of a long-standing tax issue and an
insurance dividend. An additional after-tax charge of $24 million for a
change in accounting standards for derivatives also was recorded.
Oil and gas divisional earnings before special items were $946 million for
the quarter. This is an increase of $552 million over the same quarter last year
and $183 million over the fourth quarter.
Oil and gas earnings were positively impacted by about $200 million in
premiums we received for our California gas production above NYMEX prices. Most
of our California gas sales are based on the Southern California border price at
the end of the prior month, with smaller amounts being sold into Northern
California markets and spot markets.
Currently, the price of gas sold into Northern California is materially
less than the price of gas being sold into Southern California. From Elk Hills,
we can ship into either market, but due to pipeline constraints in Southern
California we do sell some gas into the Northern California market. The sales
price in all of these markets requires some reduction to pay for transportation.
The border price is very volatile and daily pricing swings of $2-3 per million
BTUs are not uncommon.
The first quarter included the months of December, January and February
that are the heart of the natural gas season. The second quarter includes March,
April and May - which historically are the worst months for gas prices. For the
seven months since last October, when gas shortages began in California, we've
received an average of about $5 above NYMEX prices for our California gas
production. Alternatively, compared to the Southern California daily border spot
gas price, we've received about $3 per million BTUs less than the average. We
expect our California gas production to continue to average about 300 million
cubic feet per day in the second quarter. Because of the tightness of the
California gas market we can and do sell our production only to credit worthy
buyers.
A $1.00 per million BTUs swing in gas prices has a $60 million impact on
our quarterly oil and gas earnings. Likewise, a $1.00 per barrel change in oil
prices will impact those quarterly earnings by $28 million.
With the slowdown in the economy, the chemical sector experienced a
sequential worsening of market conditions beginning last July and continuing
through January, which was the worst month in the history of this business. This
was followed by sequential improvements in February and March, due mainly to
lower natural gas prices. Meaningful improvement in the profitability of our
chemical business will depend largely on an improved economy.
In the meantime, we're continuing to work on lowering our overhead and
other costs. As I noted earlier, we have taken a severance charge at chemicals
in the quarter as part of our ongoing effort to cut costs.
During the first quarter we increased shareholder equity by $368 million
and we reduced total debt by $233 million to $6.1 billion compared to just under
$6.4 billion at the end of the year. We expect to pay down a similar amount of
debt this quarter. Total debt includes preferred securities, the Altura
non-recourse debt, Oxy's corporate debt and other obligations. At
7
the end of the quarter our debt to total capitalization ratio was down to
54-percent, compared to 57-percent at year-end.
Capital spending of $238 million for the quarter was below the estimated
run rate of the $1.1 billion we've budgeted for the year.
Overall, we expect lower debt levels and lower interest rates to result in
a further reduction in interest expense in the second quarter.
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 Officer
- Conference Call -
First Quarter 2001 Earnings Announcement
April 18, 2001
Los Angeles, California
Thank you, Steve.
The results Steve just reviewed with you include the highest quarterly
earnings in the history of the company. As Steve noted, natural gas sales from
our California operations were one of the key factors that helped drive our
performance. The price strength for our California gas should not be viewed as a
temporary phenomenon that is limited to the first quarter - or even to this
year.
Our Elk Hills operation currently accounts for about a third of
California's domestic gas production. Because of the structural imbalance in the
supply - demand equation for natural gas in the California market, California
gas production is receiving premium prices. The size of the premium will
fluctuate, but we expect California gas production will continue to sell at a
premium until supply and demand come back into balance. Most experts do not see
that happening for at least two to three years.
From the beginning, one of the attractions of Elk Hills for us was the
earnings potential of Elk Hills' existing gas reserves and the prospects for
major deep gas discoveries in the area surrounding Elk Hills. At the same time
we've been producing the Elk Hills gas cap, we've assembled the largest holdings
of mineral interests in California - approximately 850,000 acres. These
properties are concentrated around Elk Hills and extend northward in the San
Joaquin Valley to the Lost Hills area where we've been carefully evaluating the
technical merits of a number of deep gas plays. We expect to drill a series of
test wells over the next several years, with the first deep well scheduled to
begin drilling in mid-summer.
8
In the meantime, we've made several key process and operating changes to
maintain Elk Hills gas production at historic highs through the first quarter.
We expect to maintain production at or near the current level for most of 2001.
With success in our exploration program in California we hope to offset the
eventual decline.
As a result of the sharp run-up in California natural gas prices, the
average returns for Elk Hills have gone from good to superior.
In the 38 months that we've owned our 78-percent interest in Elk Hills,
this oil and gas property has generated $1.75 billion in free cash flow. That
equates to a 16-percent return on capital. Clearly, Elk Hills has been an
excellent acquisition for us.
Now let's shift the spotlight briefly to the Permian Basin where we're
implementing several programs aimed at adding additional reserves to our
production stream. Production averaged about 159,000 barrels per day, which is
right on target.
We are moving forward with plans for carbon dioxide (CO2) injection in the
Cogdell field located in the eastern portion of the Permian Basin. The project
will extend the life of the field significantly and produce approximately 10
million barrels of oil that would otherwise be unrecoverable. This project is
the first of several planned phases of CO2 flood development for the Cogdell
field. When fully implemented, Cogdell production will increase by approximately
seven thousand barrels per day. Construction activities for Phase 1 began in
March and CO2 injection startup is planned for the third quarter this year.
We also have begun drilling our first gas exploration wells in the Permian
Basin. When we purchased Altura last year, we identified a number of gas
exploration opportunities that we believed the previous owners had overlooked
because their focus was on oil. Now we're in the process of testing some of
these exploration concepts.
In Latin America, our Colombian operations have been in the news,
particularly during the last couple of days because of a kidnapping incident
involving contractors working at our Cano Limon facility. We're concerned about
the fate of the kidnap victims, and we look forward to their safe and speedy
return to their families.
For the purpose of this report, let me put our Colombian operations into
the financial perspective. Colombia represents less than one-percent of our
total corporate assets - so our financial risk is not material. Recent events
have had no impact on the drilling of the Gibraltar exploration well in Colombia
that is proceeding according to plan. We're currently below the 10,000 foot mark
on our way to a total depth of approximately 14,000 feet. We expect to complete
this well around mid-year.
In Ecuador, plans for the OCP pipeline are proceeding on schedule. The
completion of this pipeline will unlock the development of 112 million barrels
of oil reserves we discovered in the Eden-Yuturi field in our Block 15.
In the Middle East, we've submitted proposals for two large gas projects in
Saudi Arabia - and we hope to be included in one of them. We hope to hear from
the Saudis in a matter of weeks.
9
Apart from Saudi Arabia, we're continuing to pursue new projects in Kuwait
and the United Arab Emirates that we expect will be made available to foreign
investors in the future. We're also moving ahead with plans to return to Libya
once sanctions are lifted.
Thank you - and we're now ready to answer questions.
- --------------------------------------------------------------------------------
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 for oil, natural
gas and chemicals; 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. The United States Securities and
Exchange Commission (SEC) permits oil and natural gas companies, in
their filings with the SEC, to disclose only proved reserves
demonstrated by actual production or conclusive formation tests to be
economically producible under existing economic and operating
conditions. We use certain terms in this presentation, such as
probable, possible and recoverable reserves, that the SEC's guidelines
strictly prohibit us from using in filings with the SEC. U.S.
investors are urged to consider carefully the disclosure in our form
10-K, available through the following toll-free telephone number,
1-888-OXYPETE (1-888-699-7383) or on the Internet at
http://www.oxy.com. You also can obtain a copy from the SEC by calling
1-800-SEC-0330.
- --------------------------------------------------------------------------------
10
Supplemental Investor Information
---------------------------------
Investor Relations Supplemental Schedules
[OXY LOGO]
OCCIDENTAL PETROLEUM
2001 FIRST QUARTER
NET INCOME (LOSS) ($ MILLIONS)
EARNINGS
REPORTED BEFORE
INCOME ADJUSTMENTS SPECIAL ITEMS
-------- ----------- -------------
Oil & Gas $ 946 $ 946
Chemical (79) 26 Severance and plant shut down costs (53)
Corporate
Interest-Permian Non-recourse debt (33) (33)
Interest - all others (76) (76)
Taxes (175) (70) State tax reserve reversal (245)
Trust Pfd Distributions & Other (16) (16)
Other (56) 49 Environmental remediation (13)
(6) OIL insurance dividend
-------- -------- --------
Income before extraordinary loss 511 (1) 510
and cumulative effect of changes in
accounting principles
Extraordinary loss, net (3) 3 Early debt defeasance --
Cumulative effect of changes in (24) 24 Derivative & hedge accounting --
accounting principles
-------- -------- --------
Net Income $ 484 $ 26 $ 510
======== ======== ========
BASIC EARNINGS PER SHARE
Income before extraordinary loss $ 1.38 $ 1.38
and cumulative effect of changes in
accounting principles
Extraordinary loss, net (0.01) --
Cumulative effect of changes in (0.06) --
accounting principles
-------- --------
NET INCOME $ 1.31 $ 1.38
======== ========
11
Investor Relations Supplemental Schedules
[OXY LOGO]
OCCIDENTAL PETROLEUM
2000 FIRST QUARTER
NET INCOME (LOSS) ($ MILLIONS)
EARNINGS
REPORTED BEFORE
INCOME ADJUSTMENTS SPECIAL ITEMS
-------- ----------- -------------
Oil & Gas $ 394 $ 394
Chemical 143 143
Corporate
Interest (99) (99)
Taxes (150) 4 Tax effect of adjustments (146)
Trust Pfd Distributions & Other (17) (17)
Other -- (11) OIL insurance dividend (11)
-------- -------- --------
NET INCOME $ 271 $ (7) $ 264
======== ======== ========
BASIC EARNINGS PER SHARE $ 0.74 $ 0.72
======== ========
12
Investor Relations Supplemental Schedules
[OXY LOGO]
OCCIDENTAL PETROLEUM
2001 FIRST QUARTER NET INCOME (LOSS)
REPORTED INCOME COMPARISON
FIRST FIRST
QUARTER QUARTER
2001 2000 B/(W)
-------- -------- --------
OIL & GAS $ 946 $ 394 $ 552
CHEMICAL (79) 143 (222)
CORPORATE
INTEREST-PERMIAN NON-RECOURSE DEBT (33) -- (33)
INTEREST - ALL OTHERS (76) (99) 23
TAXES (175) (150) (25)
TRUST PFD DISTRIBUTIONS & OTHER (16) (17) 1
OTHER (56) -- (56)
-------- -------- --------
INCOME BEFORE EXTRAORDINARY ITEMS 511 271 240
AND CUMULATIVE EFFECT OF CHANGES
IN ACCOUNTING PRINCIPLES
EXTRAORDINARY ITEMS (3) -- (3)
CUMULATIVE EFFECT OF CHANGES IN
ACCOUNTING PRINCIPLES (24) -- (24)
-------- -------- --------
NET INCOME $ 484 $ 271 $ 213
======== ======== ========
BASIC EARNINGS PER SHARE $ 1.31 $ 0.74 $ 0.57
======== ======== ========
EFFECTIVE TAX RATE 25% 35% -10%
======== ======== ========
================================================================================
OCCIDENTAL PETROLEUM
2001 FIRST QUARTER NET INCOME (LOSS)
INCOME BEFORE SPECIAL ITEMS COMPARISON
FIRST FIRST
QUARTER QUARTER
2000 2000 B/(W)
-------- -------- --------
OIL & GAS $ 946 $ 394 $ 552
CHEMICAL (53) 143 (196)
CORPORATE
INTEREST-PERMIAN NON-RECOURSE DEBT (33) -- (33)
INTEREST - ALL OTHERS (76) (99) 23
TAXES (245) (146) (99)
TRUST PFD DISTRIBUTIONS & OTHER (16) (17) 1
OTHER (13) (11) (2)
-------- -------- --------
NET INCOME $ 510 $ 264 $ 246
======== ======== ========
BASIC EARNINGS PER SHARE $ 1.38 $ 0.72 $ 0.66
======== ======== ========
EFFECTIVE TAX RATE 32% 35% -3%
-------- -------- --------
13
Investor Relations Supplemental Schedules
[OXY LOGO]
OCCIDENTAL PETROLEUM
OIL & GAS
SEGMENT EARNINGS BEFORE SPECIAL ITEMS VARIANCE ANALYSIS
($ MILLIONS)
2001 1st Quarter $ 946
2000 1st Quarter 394
--------
$ 552
========
Price Variance* $ 406
Volume Variance* (44)
Altura & THUMS 212
Exploration Expense Variance (15)
Others (7)
--------
TOTAL VARIANCE $ 552
========
* Excludes Altura & THUMS
- --------------------------------------------------------------------------------
OCCIDENTAL PETROLEUM
CHEMICAL
SEGMENT EARNINGS BEFORE SPECIAL ITEMS VARIANCE ANALYSIS
($ MILLIONS)
2001 1st Quarter ($ 53)
2000 1st Quarter 143
--------
($ 196)
========
Sales Price ($ 55)
Sales Volume/Mix (24)
Operations/Manufacturing (85) *
All Other ** (32)
--------
TOTAL VARIANCE ($ 196)
========
* Higher energy and feedstock costs.
** Includes petrochemical joint venture.
14
Investor Relations Supplemental Schedules
[OXY LOGO]
OCCIDENTAL PETROLEUM
2001 FIRST QUARTER NET INCOME (LOSS)
REPORTED INCOME COMPARISON
FIRST FOURTH
QUARTER QUARTER
2001 2000 B/(W)
-------- -------- --------
OIL & GAS $ 946 $ 770 $ 176
CHEMICAL (79) (55) (24)
CORPORATE
INTEREST-PERMIAN NON-RECOURSE DEBT (33) (39) 6
INTEREST - ALL OTHERS (76) (79) 3
TAXES (175) (193) 18
TRUST PFD DISTRIBUTIONS & OTHER (16) (17) 1
OTHER (56) (54) (2)
-------- -------- --------
INCOME BEFORE EXTRAORDINARY ITEMS 511 333 178
AND CUMULATIVE EFFECT OF CHANGES
IN ACCOUNTING PRINCIPLES
EXTRAORDINARY ITEMS (3) -- (3)
CUMULATIVE EFFECT OF CHANGES IN
ACCOUNTING PRINCIPLES (24) -- (24)
-------- -------- --------
NET INCOME $ 484 $ 333 $ 151
======== ======== ========
BASIC EARNINGS PER SHARE $ 1.31 $ 0.90 $ 0.41
======== ======== ========
EFFECTIVE TAX RATE 25% 36% -11%
======== ======== ========
================================================================================
OCCIDENTAL PETROLEUM
2001 FIRST QUARTER NET INCOME (LOSS)
INCOME BEFORE SPECIAL ITEMS COMPARISON
FIRST FOURTH
QUARTER QUARTER
2001 2000 B/(W)
-------- -------- --------
OIL & GAS $ 946 $ 763 $ 183
CHEMICAL (53) (51) (2)
CORPORATE
INTEREST-PERMIAN NON-RECOURSE DEBT (33) (39) 6
INTEREST - ALL OTHERS (76) (79) 3
TAXES (245) (191) (54)
TRUST PFD DISTRIBUTIONS & OTHER (16) (17) 1
OTHER (13) (37) 24
-------- -------- --------
NET INCOME $ 510 $ 349 $ 161
======== ======== ========
BASIC EARNINGS PER SHARE $ 1.38 $ 0.94 $ 0.44
======== ======== ========
EFFECTIVE TAX RATE 32% 35% -3%
======== ======== ========
15
Investor Relations Supplemental Schedules
[OXY LOGO]
OCCIDENTAL PETROLEUM
OIL & GAS
SEGMENT EARNINGS BEFORE SPECIAL ITEMS VARIANCE ANALYSIS
($ MILLIONS)
2001 1st Quarter $ 946
2000 4th Quarter 763
--------
$ 183
========
Price Variance $ 217
Volume Variance (38)
Exploration Expense Variance 9
Others (5)
--------
TOTAL VARIANCE $ 183
========
- --------------------------------------------------------------------------------
OCCIDENTAL PETROLEUM
CHEMICAL
SEGMENT EARNINGS BEFORE SPECIAL ITEMS VARIANCE ANALYSIS
($ MILLIONS)
2001 1st Quarter ($ 53)
2000 4th Quarter (51)
--------
($ 2)
========
Sales Price ($ 4)
Sales Volume/Mix 13
Operations/Manufacturing (22) *
All Other ** 11
--------
TOTAL VARIANCE ($ 2)
========
* Higher energy and feedstock costs.
** Includes petrochemical joint venture.
16
Investor Relations Supplemental Schedules
[OXY LOGO]
SUMMARY OF OPERATING STATISTICS
-------------------------------
FIRST QUARTER
2001 2000
---- ----
NET PRODUCTION PER DAY:
UNITED STATES
LIQUIDS (MBL)
California 73 50
Permian 134 13
US Other 0 7
---- ----
TOTAL 207 70
NATURAL GAS (MMCF)
California 317 305
Hugoton 167 164
Permian 148 51
US Other 0 110
---- ----
TOTAL 632 630
LATIN AMERICA
CRUDE OIL (MBL)
Colombia 21 36
Ecuador 13 16
---- ----
TOTAL 34 52
EASTERN HEMISPHERE
CRUDE OIL (MBL)
Oman 11 9
Pakistan 6 4
Qatar 42 42
Russia 28 26
Yemen 36 36
---- ----
TOTAL 123 117
NATURAL GAS (MMCF)
Pakistan 50 50
---- ----
BARRELS OF OIL EQUIVALENT (MBOE) 478 352
- --------------------------------------------------------------------------------
United States: Liquids production increases in the first quarter 2001 reflect
the Altura and THUMS acquisitions which occurred in the second quarter 2000.
Natural gas increases in California and in Permian reflect the Altura and THUMS
acquisition. The decrease in 2001 natural gas U.S. other reflects the sale of
the Gulf of Mexico properties in the third quarter of last year.
Latin America: The decrease in Colombia's oil production is a result of pipeline
disruption. The decline in Ecuador's production is a result of a farm out of 40
percent of Occidental's interest to Alberta Energy Company in the fourth quarter
of last year.
17
Investor Relations Supplemental Schedules
[OXY LOGO]
SUMMARY OF OPERATING STATISTICS
FIRST QUARTER
2001 2000
---- ----
OIL & GAS:
- ----------
PRICES
UNITED STATES
Crude Oil ($/BBL) 24.32 23.96
Natural gas ($/MCF) 10.01 2.42
LATIN AMERICA
Crude oil ($/BBL) 22.69 26.40
EASTERN HEMISPHERE
Crude oil ($/BBL) 22.04 24.24
Natural Gas ($/MCF) 2.20 1.73
United States: The price of natural gas in the first quarter of 2001 reflects
the premium received for gas sales from Elk Hills.
FIRST QUARTER
2001 2000
---- ----
EXPLORATION EXPENSE
Domestic $ 13 $ 5
Latin America 2 1
Eastern Hemisphere 6 --
--------------
TOTAL $ 21 $ 6
==============
18
Investor Relations Supplemental Schedules
[OXY LOGO]
OCCIDENTAL PETROLEUM
CHEMICALS
VOLUME (M TONS)
FIRST QUARTER
2001 2000
---- ----
MAJOR PRODUCTS
Chlorine 705 853
Caustic 669 803
Ethylene Dichloride 222 304
PVC Resins 501 450
CHEMICALS
PRICES (INDEX)
FIRST QUARTER
2001 2000
---- ----
MAJOR PRODUCTS
Chlorine 0.92 1.40
Caustic 1.31 0.72
Ethylene Dichloride 0.81 1.64
PVC Resins 0.72 0.94
CHLORINE OXYCHEM INDUSTRY (Chlorine Institute)
- -------- ------- --------
Operating Rate (U.S.): 1Q-01 85% 88%
OxyChem Commentary
- ------------------
o The chlorine price weakness continued during the 1st quarter due to overall
economic weakness and softness in the vinyls and TiO2 segments and the
seasonal slowdown in the bleach and repackaging markets. Operating rates
have remained low. However, demand is expected to improve with economic
recovery.
o Demand in the export vinyls (EDC) segment is expected to remain weak.
o Additional increases over the 4th quarter in power and natural gas costs
continue to squeeze margins.
Influencing Factors:
- --------------------
Demand into the vinyls sector will continue to 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.
19
Investor Relations Supplemental Schedules
[OXY LOGO]
CAUSTIC
- -------
OxyChem Commentary
- ------------------
o OxyChem's 1st quarter average net domestic prices have improved due to the
low operating rates. A shift to "List Prices", effective January 2001, has
enabled the implementation of price increases where the opportunity exists.
o Supply remains low as a result of reduced chlorine operating rates. OxyChem
has implemented a 75% allocation program due to low inventories. This
allocation is expected to remain in place for the balance of the year as
the low operating rates are expected to continue.
Influencing Factors:
- --------------------
Lower operating rates will continue to limit supply and allow prices to remain
stable.
EDC
- ---
OxyChem Commentary
- ------------------
o Demand is expected to continue to decline due to the continued softness in
the Far East vinyls segment.
Influencing Factors:
- --------------------
Lower demand into the export vinyls market continues to soften pricing from
all-time highs in 2000.
PVC/VCM OXYCHEM INDUSTRY (CHEM DATA)
- -------- ------- --------
Operating Rates (U.S.): 1Q-01 95% 86%
OxyChem Commentary
- ------------------
o Domestic PVC prices increased $.03/lb through the 1st quarter as energy
costs remain well above historical levels.
o Domestic demand improved but was well below 1st quarter 2000 levels as
converters remain cautious and are careful not to build inventories for the
Spring construction period as overall economic weakness may persist.
o Export prices to Asia after reaching a high of $620/MT for March shipments
have since dropped to levels near $580/MT as supply/demand balance has
weakened.
o Domestic demand for VCM was moderate.
Influencing Factors:
- --------------------
Product prices will remain under a great deal of pressure until the construction
markets strengthen.
20
Investor Relations Supplemental Schedules
[OXY LOGO]
SUMMARY OF OPERATING STATISTICS
-------------------------------
FIRST QUARTER
2001 2000
---- ----
CAPITAL EXPENDITURES ($MM)
Oil & Gas
California $ 59 $ 33
Permian 50 4
Other - U.S. 23 14
Latin America 21 9
Eastern Hemisphere 66 47
Chemicals 18 15
Corporate 1 --
-------------
TOTAL $238 $122
=============
DEPRECIATION, DEPLETION &
AMORTIZATION OF ASSETS ($MM)
Oil & Gas
Domestic $132 $ 67
Latin America 6 9
Eastern Hemisphere 48 48
Chemicals 49 50
Corporate 10 11
-------------
TOTAL $245 $185
=============
Capital spending for the first quarter of 2001 was below the estimated run rate
of the $1.1 billion budgeted for 2001.
21
Investor Relations Supplemental Schedules
[OXY LOGO]
OCCIDENTAL PETROLEUM
CORPORATE
($ MILLIONS)
CAPITALIZATION
31-Mar-01 31-Dec-00
--------- ---------
Oxy Long-Term Debt (including current maturities) 3,545 3,541
Permian Non-Recourse Debt 1,700 1,900
Gas Sales Obligation (current and non-current) 380 411
Trust Preferred Securities 471 473
Others 27 31
--------- ---------
TOTAL DEBT 6,123 6,356
========= =========
EQUITY 5,142 4,774
========= =========
TOTAL DEBT TO TOTAL CAPITALIZATION 54% 57%
22
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.
23
SIGNATURE
Pursuant to the requirements of the Securities Exchange Act of 1934, the
Registrant has duly caused this report to be signed on its behalf by the
undersigned hereunto duly authorized.
OCCIDENTAL PETROLEUM CORPORATION
(Registrant)
DATE: April 17, 2001 S. P. Dominick, Jr.
---------------------------------------------------
S. P. Dominick, Jr., Vice President and Controller
(Chief Accounting and Duly Authorized Officer)