================================================================================
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 17, 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 October 17, 2001, Occidental Petroleum Corporation announced earnings
before special items for the third quarter 2001 of $317 million ($0.85 per
share), compared with $370 million ($1.00 per share) for the same period a year
ago.
In announcing the results, Dr. Ray R. Irani, chairman and chief executive
officer, said, "The strong third quarter performance of our oil and gas segment
and the profitability of our chemical segment, despite the slowing economy, has
kept us on track for another record year. Our earnings before special items, of
$1.3 billion, or $3.48 per share, through the first three quarters nearly
equaled our record performance for the entire year 2000. The combination of
strong cash flow from operations and proceeds from non-strategic asset sales has
resulted in substantial debt reduction that, along with outstanding earnings,
has enabled us to slash our debt-to-capitalization ratio to 46-percent, the
lowest level in nearly two decades."
Net income for the third quarter of 2001 was $444 million ($1.19 per
share), compared with $402 million ($1.09 per share) for the same period of
2000. The third quarter 2001 included the sale of non-strategic assets,
including Occidental's interest in the Tangguh LNG project in Indonesia and the
sale of the entity that leased a pipeline in Texas to Occidental's former MidCon
subsidiary for after-tax cash proceeds of $750 million, resulting in a net
after-tax gain of $127 million. The third quarter 2000 included net after-tax
gains of $31 million.
Debt Reduction
--------------
During the third quarter, the $750 million in after-tax proceeds from the
Indonesia and pipeline asset sales, combined with free cash flow from
operations, lowered Occidental's total debt to $5.0 billion, compared to $6.4
billion at the end of 2000 and the pro-forma peak of $9.2 billion in April 2000.
The reduced debt level, along with the drop in interest rates, lowered interest
expense (including distribution on trust preferred securities) to $98 million
from $113 million for the second quarter 2001 and $152 million for the third
quarter of 2000.
Oil and Gas
-----------
Oil and gas segment earnings before special items were $528 million for the
third quarter 2001, compared with $690 million for the same period in 2000. The
decline in earnings is primarily due to lower worldwide crude oil prices and
higher exploration expense. The third quarter 2001 exploration expense included
the write-off of the Gibraltar well in Colombia.
Oil and gas segment earnings for the third quarter 2001 were $927 million
and included the $399 million gain, net of tax, from the sale of the Tangguh LNG
project. Third quarter 2000 oil and gas earnings were $696 million, including
net gains of $6 million from special items.
Chemicals
---------
Earnings from the chemicals segment were $40 million for the third quarter
2001, compared with $47 million for the third quarter 2000. The results reflect
improvements in those chemicals
1
businesses operated by the company that were more than offset by significantly
lower earnings from our petrochemical equity investment.
Nine Months Results
-------------------
For the first nine months of 2001, Occidental's earnings before special
items increased 31-percent to $1.3 billion ($3.48 per share), compared with $977
million ($2.65 per share) for the same period of 2000. Net income was $1.4
billion ($3.77 per share) for the first nine months of 2001, compared with $1.2
billion ($3.36 per share) for the first nine months of 2000. Sales rose by
approximately 20-percent to $11.6 billion for the first nine months of 2001,
from $9.6 billion for the same period a year ago.
Forward-looking statements and estimates regarding exploration and production
activities, oil, gas and commodity chemical prices and their related earnings
effects, and cost reductions, as well as pro-forma estimates 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)
Third Quarter Nine Months
------------------ ------------------
Periods Ended September 30 2001 2000 2001 2000
================================= ======= ======= ======= =======
SEGMENT NET SALES
Oil and gas $ 2,521 $ 2,972 $ 9,097 $ 6,634
Chemical 764 891 2,508 2,998
------- ------- ------- -------
Net sales $ 3,285 $ 3,863 $11,605 $ 9,632
================================= ======= ======= ======= =======
SEGMENT EARNINGS (LOSS)
Oil and gas $ 927 $ 696 $ 2,679 $ 1,647
Chemical 40 47 19 224
------- ------- ------- -------
967 743 2,698 1,871
UNALLOCATED CORPORATE ITEMS
Interest expense, net (a) (60) (97) (207) (300)
Income taxes (b) (129) (169) (553) (668)
Trust preferred distributions
& other (13) (17) (43) (50)
Other (c) (321) (59) (467) 383
------- ------- ------- -------
INCOME BEFORE EXTRAORDINARY ITEMS
AND EFFECT OF CHANGES IN
ACCOUNTING PRINCIPLES 444 401 1,428 1,236
Extraordinary items, net -- 1 (3) 1
Cumulative effect of changes
in accounting principles, net -- -- (24) --
------- ------- ------- -------
NET INCOME 444 402 1,401 1,237
Effect of repurchase of Trust
Preferred Securities -- -- -- 1
------- ------- ------- -------
EARNINGS APPLICABLE TO COMMON
STOCK $ 444 $ 402 $ 1,401 $ 1,238
======= ======= ======= =======
BASIC EARNINGS PER COMMON SHARE
Income before extraordinary
items and effect of changes
in accounting principles $ 1.19 $ 1.09 $ 3.84 $ 3.36
Extraordinary loss, net -- -- (.01) --
Cumulative effect of changes
in accounting principles, net -- -- (.06) --
------- ------- ------- -------
$ 1.19 $ 1.09 $ 3.77 $ 3.36
======= ======= ======= =======
DILUTED EARNINGS PER COMMON SHARE
Income before extraordinary
items and effect of changes
in accounting principles $ 1.19 $ 1.09 $ 3.82 $ 3.36
Extraordinary loss, net -- -- (.01) --
Cumulative effect of changes
in accounting principles, net -- -- (.06) --
------- ------- ------- -------
$ 1.19 $ 1.09 $ 3.75 $ 3.36
======= ======= ======= =======
AVERAGE BASIC COMMON SHARES
OUTSTANDING 373.5 369.2 371.9 368.7
================================= ======= ======= ======= =======
See footnotes on following page.
3
(a) The third quarter and nine months year-to-date 2001 include $24 million and
$85 million, respectively, interest income on notes receivable from Altura
partners. The third quarter and nine months year-to-date 2000 include $38
million and $68 million, respectively.
(b) Includes an offset for charges and credits in lieu of U.S. federal income
taxes allocated to the segments. Oil and gas segment earnings have been
impacted by charges of $35 million and $42 million in the third quarters of
2001 and 2000, respectively. The oil and gas segment third quarter of 2001
includes the tax effects from the sale of its interest in the Tangguh LNG
project in Indonesia. The oil and gas segment third quarter of 2000 amount
includes the tax effects from the partial-interest sale of the subsidiary
that 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 segment earnings have been impacted by credits of $16 million in
the third quarter of 2001, $12 million of which related to asset
dispositions, and $4 million in the third quarter of 2000.
(c) The third quarter and nine months year-to-date 2001 include preferred
distributions to the Occidental Permian partners of $25 million and $87
million, respectively. The third quarter and nine months year-to-date 2000
include $38 million and $68 million, respectively. These amounts are
essentially offset by the interest income discussed in (a) above. The third
quarter and nine months year-to-date 2001 also include a $272 million
net-of-tax loss related to the sale of Occidental's residual interest in
Occidental Texas Pipeline Company.
4
SUMMARY OF OPERATING STATISTICS
Third Quarter Nine Months
------------------ ------------------
Periods Ended September 30 2001 2000 2001 2000
================================= ======= ======= ======= =======
NET OIL, GAS AND LIQUIDS
PRODUCTION PER DAY
United States
Crude oil and liquids (MBBL)
California 78 74 75 68
Permian 137 136 136 89
US Other -- -- -- 2
------- ------- ------- -------
Total 215 210 211 159
Natural Gas (MMCF)
California 302 305 305 302
Hugoton 154 178 161 168
Permian 146 161 147 106
US Other -- 43 -- 89
------- ------- ------- -------
Total 602 687 613 665
Latin America
Crude oil and condensate (MBBL)
Colombia 35 21 19 33
Ecuador 13 21 13 19
------- ------- ------- -------
Total 48 42 32 52
Eastern Hemisphere
Crude oil and condensate (MBBL)
Oman 10 8 10 9
Pakistan 7 8 7 6
Qatar 45 48 43 50
Russia 27 28 27 27
Yemen 32 32 33 32
------- ------- ------- -------
Total 121 124 120 124
Natural Gas (MMCF)
Pakistan 52 47 50 49
Barrels of Oil Equivalent (MBOE) 493 499 473 454
CAPITAL EXPENDITURES (millions) $ 418 $ 275 $ 965 $ 608
======= ======= ======= =======
DEPRECIATION, DEPLETION AND
AMORTIZATION OF ASSETS (millions) $ 244 $ 268 $ 726 $ 687
================================= ======= ======= ======= =======
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 -
Third Quarter 2001 Earnings Announcement
October 17, 2001
New York, New York
Good morning, and thanks for joining us.
Most, if not all, of you have already received a copy of the press release
announcing our third 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.
Earnings before special items were $317 million, or $0.85 per share,
compared with the $370 million, or $1.00 per share, we earned in the third
quarter last year.
For the first nine months of this year, earnings before special items were
$1.3 billion, or $3.48 per share, a 31-percent increase compared to $977
million, or $2.65 per share last year.
On a segment basis, oil and gas third quarter earnings before special items
were $528 million, compared to $690 million during the same period a year ago.
This decline is due primarily to lower worldwide crude oil prices and higher
exploration expense.
Oil prices for the quarter averaged $22.61 per barrel compared to $27.26
during the same period last year. Natural gas prices in the US for the quarter
averaged $4.59 per MCF versus $4.18 during last year's third quarter. The
premium for our California gas was approximately $2.70 per MCF above NYMEX.
Looking forward to the fourth quarter, we expect this premium to disappear. The
loss of this premium is expected to reduce our fourth quarter segment earnings
by $70 million compared with the third quarter. In addition, a $1.00 per million
BTUs swing in NYMEX gas prices has a $62 million impact on our quarterly oil and
gas earnings, and a $1.00 per barrel change in oil prices will impact quarterly
earnings by $28 million. The fourth quarter usually is the weakest period for
gas prices since it represents production from the low gas storage injection
months of September, October and November that fall between the summer air
conditioning and winter heating seasons. Gas prices during the period are
generally set at the beginning of each of these months.
Although third quarter oil and gas earnings before special items were lower
than the second quarter mainly because of significantly lower natural gas
prices, the effect was partially offset by improved oil production, primarily
from Colombia. Worldwide oil production increased from 341,000 barrels per day
in the second quarter to 384,000 barrels in the third quarter. Approximately
6
65-percent of Oxy's BOE production is in the US with 10-percent in Latin America
and 25-percent in the Eastern Hemisphere.
Exploration expense was $91 million in the quarter compared to $43 million
in last year's third quarter. Included in this year's exploration expense is the
write-off of the Gibraltar well in Colombia that accounted for $66 million of
the total.
Chemical earnings before special items were $40 million compared to $47
million in last year's third quarter. The decline primarily reflects worsening
results from our petrochemical equity interest. The industry as a whole is
operating on approximately a cash break-even basis.
In Oxy's operations, lower prices for our products were more than offset by
lower energy, feedstock and overhead costs.
The fundamental weakness in chemical demand we discussed last quarter is
continuing with no signs of an early recovery.
Cash flow from operations for the first nine months of the year was
approximately $2.3 billion. For the first nine months we increased shareholder
equity by approximately $1.1 billion to $5.9 billion. At the same time, we
reduced total debt by over $1.3 billion to $5.0 billion, compared to just under
$6.4 billion at the end of last year. During the quarter, we received $750
million in after-tax proceeds from the sale of Oxy's interest in the Tangguh LNG
project in Indonesia and the sale of the entity that leased a pipeline in Texas
to Oxy's former MidCon subsidiary.
At the end of the third quarter our debt to total capitalization ratio was
down to 46-percent, compared to 57-percent at the end of last year. We expect
further improvement in this ratio in the fourth quarter. Interest expense,
including distributions on trust preferred securities, was $98 million during
the third quarter this year compared to $152 million in last year's third
quarter and $113 million in the second quarter this year. Through the first nine
months of this year, total interest expense of $337 million is $81 million below
the same period a year ago.
Capital spending for the quarter was $418 million and $965 million for the
first nine months. We expect total spending for the year of $1.4 billion,
including $100 million for chemicals.
Now I'd like to turn the conference call over to Dr. Ray Irani, Chairman
and CEO.
7
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 -
Third Quarter 2001 Earnings Announcement
October 17, 2001
New York, New York
Thank you, Steve.
As Steve reported, we completed the best nine-month period in the company's
history. When we reported our second quarter results in July, we said our
balance sheet would continue to grow stronger in the second half of the year as
we remained focused on rapidly reducing our debt. Our debt to capitalization
ratio was cut from 51-percent at the end of the second quarter to 46-percent, as
we reduced debt by $862 million during the third quarter.
The substantial progress we've made in materially improving our balance
sheet and the continued strengthening of our oil and gas asset base have led
both Standard and Poor's and Moody's to upgrade the company's debt ratings in
the third quarter.
The considerable de-leveraging we've achieved over the past 18-months
contrasts sharply to almost all our competitors. By focusing on maximizing the
benefits from high energy prices and the timely disposition of non-strategic
assets to bolster our balance sheet, we've increased our financial flexibility,
reduced our earnings volatility and significantly strengthened our capacity to
weather downward pressure on energy and chemical prices in a slumping economy.
A comparison of last year's total interest expense of $554 million with our
annualized third quarter 2001 interest expense of $392 million, shows a savings
of $162 million that equates to an improvement of 28-cents a share in our bottom
line.
Despite the tragic events of September 11th, our worldwide oil and gas
operations have been carrying on with business as usual. Production has not been
affected. Significantly, the US accounts for approximately 55-percent of our
worldwide oil production and 92-percent of our natural gas production. On a BOE
basis, nearly two-thirds of our worldwide production comes from US operations.
Our proven oil and gas reserves also are mainly in the US. The US holds
75-percent of our worldwide oil reserves and 95-percent of our gas reserves, or
approximately 78-percent of our proven reserves on a BOE basis.
The Middle East countries of Qatar, Oman, Pakistan and Yemen account for
about 20-percent of our worldwide production on a BOE basis, with Yemen making
up 6-percent of the total and Pakistan about 3-percent. Significantly, our
producing operations in Yemen were never interrupted during the civil war in the
mid-1990s. The same can be said for Pakistan where we've had producing
operations for more than two decades that have never been impacted by shifts in
the country's internal politics.
8
The investment climate in Oman and Qatar is excellent, and we maintain
exceptionally strong relations with the leaders of both countries. I had the
opportunity to meet personally once again with the Emir of Qatar, His Majesty,
Sheikh Hamad Bin Khalifah Al-Thani, during his recent trip to the US. The Emir
is very pleased with our performance in enhancing oil production from Qatar's
North and South Dome oil fields and he was also pleased to learn of our plans to
increase our level of investment to further boost oil production.
The Saudi Arabian natural gas project is moving ahead. We, along with our
partners, are working closely with the Saudi Negotiating Team and Aramco to
assure the success of this important project.
Finally, I recently returned from a trip to the United Arab Emirates where
I had a series of productive meetings with key leaders regarding new business
opportunities. Occidental was one of five western oil companies, including
British Petroleum, Exxon, Shell and Conoco, short-listed to compete for a
25-percent interest in the Dolphin Project.
The Dolphin Project involves delivery of 2 billion cubic feet per day of
natural gas from Qatar's North Field to markets in the UAE through a sub-sea
pipeline. We're very pleased to be in the running for this project which is
scheduled for start-up in late 2004 or early 2005.
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.
--------------------------------------------------------------------------------
9
Investor Relations Supplemental Schedules
[OXY LOGO]
OCCIDENTAL PETROLEUM
2001 THIRD QUARTER
NET INCOME (LOSS)
($ MILLIONS)
EARNINGS
REPORTED BEFORE
INCOME ADJUSTMENTS SPECIAL ITEMS
-------- ----------- -------------
Oil & Gas $ 927 $ (399) Indonesia - Tangguh LNG $ 528
Chemical 40 40
Corporate
Interest - Permian Non-recourse debt (13) (13)
Interest - all others (71) (71)
Trust Pfd Distributions & Other (14) (14)
Other (296) 272 Occidental Texas Pipeline (24)
Taxes (129) (129)
-------- -------- --------
NET INCOME $ 444 $ (127) $ 317
======== ======== ========
BASIC EARNINGS PER SHARE $ 1.19 $ 0.85
======== ========
10
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 (91) (91)
Trust Pfd Distributions & Other (17) (17)
Other (21) (21)
Taxes (169) (25) Tax effect of adjustments (194)
-------- -------- --------
Income before extraordinary gain 401 (31) 370
Extraordinary gain 1 (1) Early debt retirement --
-------- -------- --------
NET INCOME $ 402 $ (32) $ 370
======== ======== ========
BASIC EARNINGS PER SHARE $ 1.09 $ 1.00
======== ========
11
Investor Relations Supplemental Schedules
[OXY LOGO]
OCCIDENTAL PETROLEUM
2001 FIRST NINE MONTHS
NET INCOME (LOSS)
($ MILLIONS)
EARNINGS
REPORTED BEFORE
INCOME ADJUSTMENTS SPECIAL ITEMS
-------- ----------- -------------
Oil & Gas $ 2,679 $ (399) Indonesia - Tangguh LNG $ 2,273
(7) Asset sale
Chemical 19 26 Severance and plant shut down cost 45
Corporate
Interest - Permian Non-recourse debt (69) (69)
Interest - all others (223) (223)
Trust Pfd Distributions & Other (45) (45)
Other (380) 272 Occidental Texas Pipeline (65)
49 Environmental remediation
(6) OIL insurance dividend
Taxes (553) (70) State tax reserve reversal (623)
-------- -------- --------
Income before extraordinary loss 1,428 (135) 1,293
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 $ 1,401 $ (108) $ 1,293
======== ======== ========
BASIC EARNINGS PER SHARE
Income before extraordinary loss $ 3.84 $ 3.48
and cumulative effect of changes in
accounting principles
Extraordinary loss, net (0.01) --
Cumulative effect of changes in (0.06) --
accounting principles
-------- --------
NET INCOME $ 3.77 $ 3.48
======== ========
12
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 (288) (288)
Trust Pfd Distributions & Other (50) (50)
Other 451 (493) CanOxy gain (53)
(11) OIL insurance dividend
Taxes (668) 131 Tax effect of adjustments (537)
-------- -------- --------
Income before extraordinary gain 1,236 (259) 977
Extraordinary gain 1 (1) --
-------- -------- --------
NET INCOME $ 1,237 $ (260) $ 977
======== ======== ========
BASIC EARNINGS PER SHARE $ 3.36 $ 2.65
======== ========
13
Investor Relations Supplemental Schedules
[OXY LOGO]
OCCIDENTAL PETROLEUM
2001 THIRD QUARTER NET INCOME (LOSS)
REPORTED INCOME COMPARISON
THIRD SECOND
QUARTER QUARTER
2001 2001 B/(W)
-------- -------- --------
OIL & GAS $ 927 $ 806 $ 121
CHEMICAL 40 58 (18)
CORPORATE
INTEREST-PERMIAN NON-RECOURSE DEBT (13) (23) 10
INTEREST - ALL OTHERS (71) (76) 5
TRUST PFD DISTRIBUTIONS & OTHER (14) (14) --
OTHER (296) (29) (267)
TAXES (129) (249) 120
-------- -------- --------
NET INCOME $ 444 $ 473 $ (29)
======== ======== ========
BASIC EARNINGS PER SHARE $ 1.19 $ 1.27 $ (0.08)
======== ======== ========
EFFECTIVE TAX RATE -5% 33% 38%
======== ======== ========
================================================================================
OCCIDENTAL PETROLEUM
2001 THIRD QUARTER NET INCOME (LOSS)
INCOME BEFORE SPECIAL ITEMS COMPARISON
THIRD SECOND
QUARTER QUARTER
2001 2001 B/(W)
-------- -------- --------
OIL & GAS $ 528 $ 799 $ (271)
CHEMICAL 40 58 (18)
CORPORATE
INTEREST-PERMIAN NON-RECOURSE DEBT (13) (23) 10
INTEREST - ALL OTHERS (71) (76) 5
TRUST PFD DISTRIBUTIONS & OTHER (14) (14) --
OTHER (24) (29) 5
TAXES (129) (249) 120
-------- -------- --------
NET INCOME $ 317 $ 466 $ (149)
======== ======== ========
BASIC EARNINGS PER SHARE $ 0.85 $ 1.25 $ (0.40)
======== ======== ========
EFFECTIVE TAX RATE 28% 34% 6%
======== ======== ========
14
Investor Relations Supplemental Schedules
[OXY LOGO]
OCCIDENTAL PETROLEUM
OIL & GAS
SEGMENT EARNINGS BEFORE SPECIAL ITEMS VARIANCE ANALYSIS
($ MILLIONS)
2001 3rd Quarter $ 528
2001 2nd Quarter 799
--------
$ (271)
========
Price Variance $ (307)
Volume Variance 63
Exploration Expense Variance (73)
All other 46
--------
TOTAL VARIANCE $ (271)
========
================================================================================
OCCIDENTAL PETROLEUM
CHEMICAL
SEGMENT EARNINGS BEFORE SPECIAL ITEMS VARIANCE ANALYSIS
($ MILLIONS)
2001 3rd Quarter $ 40
2001 2nd Quarter 58
--------
$ (18)
========
Sales Price $ (64)
Sales Volume/Mix (8)
Operations/Manufacturing 62 *
All Other (8)
--------
TOTAL VARIANCE $ (18)
========
* Lower energy and feedstock costs.
15
Investor Relations Supplemental Schedules
[OXY LOGO]
OCCIDENTAL PETROLEUM
2001 THIRD QUARTER NET INCOME (LOSS)
REPORTED INCOME COMPARISON
THIRD THIRD
QUARTER QUARTER
2001 2000 B/(W)
-------- -------- --------
OIL & GAS $ 927 $ 696 $ 231
CHEMICAL 40 47 (7)
CORPORATE
INTEREST-PERMIAN NON-RECOURSE DEBT (13) (44) 31
INTEREST - ALL OTHERS (71) (91) 20
TRUST PFD DISTRIBUTIONS & OTHER (14) (17) 3
OTHER (296) (21) (275)
TAXES (129) (169) 40
-------- -------- --------
INCOME BEFORE EXTRAORDINARY GAIN 444 401 43
EXTRAORDINARY GAIN -- 1 (1)
-------- -------- --------
NET INCOME $ 444 $ 402 $ 42
======== ======== ========
BASIC EARNINGS PER SHARE $ 1.19 $ 1.09 $ 0.10
======== ======== ========
EFFECTIVE TAX RATE -5% 34% 39%
======== ======== ========
================================================================================
OCCIDENTAL PETROLEUM
2001 THIRD QUARTER NET INCOME (LOSS)
INCOME BEFORE SPECIAL ITEMS COMPARISON
THIRD THIRD
QUARTER QUARTER
2001 2000 B/(W)
-------- -------- --------
OIL & GAS $ 528 $ 690 $ (162)
CHEMICAL 40 47 (7)
CORPORATE
INTEREST-PERMIAN NON-RECOURSE DEBT (13) (44) 31
INTEREST - ALL OTHERS (71) (91) 20
TRUST PFD DISTRIBUTIONS & OTHER (14) (17) 3
OTHER (24) (21) (3)
TAXES (129) (194) 65
-------- -------- --------
NET INCOME $ 317 $ 370 $ (53)
======== ======== ========
BASIC EARNINGS PER SHARE $ 0.85 $ 1.00 $ (0.15)
======== ======== ========
EFFECTIVE TAX RATE 28% 34% 6%
======== ======== ========
16
Investor Relations Supplemental Schedules
[OXY LOGO]
OCCIDENTAL PETROLEUM
OIL & GAS
SEGMENT EARNINGS BEFORE SPECIAL ITEMS VARIANCE ANALYSIS
($ MILLIONS)
2001 3rd Quarter $ 528
2000 3rd Quarter 690
--------
$ (162)
========
Price Variance $ (131)
Volume Variance (8)
Exploration Expense Variance (47)
All Other 24
--------
TOTAL VARIANCE $ (162)
========
================================================================================
OCCIDENTAL PETROLEUM
CHEMICAL
SEGMENT EARNINGS BEFORE SPECIAL ITEMS VARIANCE ANALYSIS
($ MILLIONS)
2001 3rd Quarter $ 40
2000 3rd Quarter 47
--------
$ (7)
========
Sales Price $ (68)
Sales Volume/Mix (6)
Operations/Manufacturing 90 *
All Other (23) **
--------
TOTAL VARIANCE $ (7)
========
* Higher energy and lower feedstock costs.
** Lower equity earnings partially offset by lower costs.
17
Investor Relations Supplemental Schedules
[OXY LOGO]
OCCIDENTAL PETROLEUM
SUMMARY OF OPERATING STATISTICS
-------------------------------
THIRD QUARTER NINE MONTHS
--------------- ---------------
2001 2000 2001 2000
------ ------ ------ ------
NET PRODUCTION PER DAY:
UNITED STATES
CRUDE OIL AND LIQUIDS (MBL)
California 78 74 75 68
Permian 137 136 136 89
US Other -- -- -- 2
------ ------ ------ ------
TOTAL 215 210 211 159
NATURAL GAS (MMCF)
California 302 305 305 302
Hugoton 154 178 161 168
Permian 146 161 147 106
US Other -- 43 -- 89
------ ------ ------ ------
TOTAL 602 687 613 665
LATIN AMERICA
CRUDE OIL (MBL)
Colombia 35 21 19 33
Ecuador 13 21 13 19
------ ------ ------ ------
TOTAL 48 42 32 52
EASTERN HEMISPHERE
CRUDE OIL (MBL)
Oman 10 8 10 9
Pakistan 7 8 7 6
Qatar 45 48 43 50
Russia 27 28 27 27
Yemen 32 32 33 32
------ ------ ------ ------
TOTAL 121 124 120 124
NATURAL GAS (MMCF)
Pakistan 52 47 50 49
BARRELS OF OIL EQUIVALENT (MBOE) 493 499 473 454
-------------------------------- ------ ------ ------ ------
United States: US Other natural gas production is down due to the sale of a
partial interest in the Gulf of Mexico assets in the third quarter of last year.
Latin America: 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.
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Investor Relations Supplemental Schedules
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SUMMARY OF OPERATING STATISTICS
THIRD QUARTER NINE MONTHS
------------------- -------------------
2001 2000 2001 2000
-------- -------- -------- --------
OIL & GAS:
----------
PRICES
UNITED STATES
Crude Oil ($/BBL) 23.03 28.10 23.48 26.19
Natural gas ($/MCF) 4.59 4.18 7.74 3.21
LATIN AMERICA
Crude oil ($/BBL) 21.14 26.18 21.40 26.13
EASTERN HEMISPHERE
Crude oil ($/BBL) 22.60 26.39 22.66 24.76
Natural Gas ($/MCF) 2.16 1.98 2.25 1.80
THIRD QUARTER NINE MONTHS
--------------- ---------------
2001 2000 2001 2000
------ ------ ------ ------
EXPLORATION EXPENSE
Domestic $ 15 $ 27 $ 37 $ 46
Latin America 68 12 72 14
Eastern Hemisphere 8 4 21 4
------ ------ ------ ------
TOTAL $ 91 $ 43 $ 130 $ 64
====== ====== ====== ======
19
Investor Relations Supplemental Schedules
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OCCIDENTAL PETROLEUM
CHEMICALS
VOLUME (M TONS)
THIRD QUARTER NINE MONTHS
--------------- ---------------
2001 2000 2001 2000
------ ------ ------ ------
MAJOR PRODUCTS
Chlorine 720 690 2,211 2,294
Caustic 760 825 2,179 2,470
Ethylene Dichloride 208 128 584 674
PVC Resins 475 413 1,472 1,350
CHEMICALS
PRICES (INDEX)
THIRD QUARTER NINE MONTHS
--------------- ---------------
2001 2000 2001 2000
------ ------ ------ ------
MAJOR PRODUCTS
Chlorine 0.68 1.72 0.78 1.60
Caustic 1.36 0.59 1.37 0.66
Ethylene Dichloride 0.43 1.22 0.66 1.57
PVC Resins 0.65 0.99 0.71 0.99
CHLORINE
--------
OXYCHEM COMMENTARY
------------------
o Demand for chlorine remains weak and is not expected to improve in the 4th
quarter. Chlorine to EDC is expected to remain significantly below 2000
levels although some improvement in the 4th quarter is expected because
inventory levels have been reduced substantially.
o Prices are expected to continue their gradual decline throughout the 4th
quarter as total demand weakens.
INFLUENCING FACTORS:
--------------------
Overall chlorine demand is lackluster and demand in West Europe is weak. Demand
for chlorine going into the vinyls sector has not improved. However, there are
some early indications that demand for chlorine derivatives in the Far East may
be picking up and prices are expected to increase.
CAUSTIC
-------
OXYCHEM COMMENTARY
------------------
o The slowdown in economic activity has contributed to a slight oversupply
and operating rates remain low.
20
o Pricing is expected to soften through the 4th quarter due to continued
downward pressure on demand.
INFLUENCING FACTORS:
--------------------
The U.S. and global economic slowdown has weakened caustic soda demand and will
continue the downward pressure on prices.
EDC
---
OXYCHEM COMMENTARY
------------------
o Demand in general is expected to remain weak. Total sales for 2001 are
expected to be the lowest since 1991.
o Pricing continues to come under pressure due to weak demand and oversupply.
INFLUENCING FACTORS:
--------------------
Lower demand into the export vinyls market continues to soften prices, although
they are expected to increase slightly in the 4th quarter as demand in Asia
improves.
PVC/VCM OXYCHEM INDUSTRY (CHEM DATA)
--------- ------- --------
Operating Rates (U.S.): 3Q-01 87% 84%
OXYCHEM COMMENTARY
------------------
o PVC resin demand remained weak but steady through the 3rd quarter until the
second half of September when orders declined. PVC resin inventories, as
well as downstream customer inventories, remained at very low levels. An
increase in demand, which could occur as early as the 1st quarter 2002 in
anticipation of a rebound in the economy, may result in supply problems as
customers struggle to rebuild inventories.
o Domestic PVC resin prices deteriorated through the 3 rd quarter, down from
a current year high in April 2001. This decline in revenue has been
partially offset by lower feedstock and energy costs.
o Domestic demand for VCM is weaker than previous quarters. Despite outages
at Dow, OxyVinyls, Formosa, and Georgia Gulf, VCM supply capability
continues to outpace current demand. Outages in Europe have resulted in an
outlet for some of the excess. VCM shipments from the U.S. have increased
as netbacks have improved recently.
INFLUENCING FACTORS:
--------------------
Prices will remain under pressure due to excess capacity and economic
uncertainty. Feedstock price declines have helped to stabilize depressed
margins.
21
Investor Relations Supplemental Schedules
[OXY LOGO]
SUMMARY OF OPERATING STATISTICS
-------------------------------
THIRD QUARTER NINE MONTHS
--------------- ---------------
2001 2000 2001 2000
------ ------ ------ ------
CAPITAL EXPENDITURES ($MM)
Oil & Gas
California $ 115 $ 48 $ 238 $ 132
Permian 69 51 195 88
Other - U.S. 47 38 114 70
Latin America 23 27 61 59
Eastern Hemisphere 100 68 244 170
Chemicals 24 40 69 84
Corporate 40 3 44 5
------ ------ ------ ------
TOTAL $ 418 $ 275 $ 965 $ 608
====== ====== ====== ======
DEPRECIATION, DEPLETION &
AMORTIZATION OF ASSETS ($MM)
Oil & Gas
Domestic $ 134 $ 154 $ 396 $ 340
Latin America 8 10 18 30
Eastern Hemisphere 46 47 139 141
Chemicals 47 47 144 145
Corporate 9 10 29 31
------ ------ ------ ------
TOTAL $ 244 $ 268 $ 726 $ 687
====== ====== ====== ======
22
Investor Relations Supplemental Schedules
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OCCIDENTAL PETROLEUM
CORPORATE
($ MILLIONS)
30-Sep-01 31-Dec-00
--------- ---------
CAPITALIZATION
Oxy Long-Term Debt (including current maturities) $ 3,506 $ 3,541
Permian Non-Recourse Debt 700 1,900
Gas Sales Obligation (current and non-current) 315 411
Trust Preferred Securities 467 473
Others 29 31
--------- ---------
TOTAL DEBT $ 5,017 $ 6,356
========= =========
EQUITY $ 5,863 $ 4,774
========= =========
Total Debt To Total Capitalization 46% 57%
========= =========
23
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.
24
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 16, 2001 S. P. Dominick, Jr.
---------------------------------------------------
S. P. Dominick, Jr., Vice President and Controller
(Chief Accounting and Duly Authorized Officer)
