================================================================================
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 25, 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 April 25, 2002, Occidental Petroleum Corporation announced earnings
before special items including changes in accounting principles for the first
quarter 2002 were $129 million ($0.34 per share), compared with $510 million
($1.38 per share) for the first quarter of 2001 and $35 million ($0.09 per
share) for the fourth quarter of 2001.
In announcing the results, Dr. Ray R. Irani, chairman and chief executive
officer, said, "Oxy's first quarter oil and gas earnings were nearly 85 percent
higher than the fourth quarter 2001 due to higher oil prices and volumes. Oil
and gas production of 525,000 barrels of oil equivalent per day was 9 percent
higher than our fourth quarter production. Earnings from our chloro-vinyls
chemical business were relatively flat with the fourth quarter, but we see
encouraging signs of improvement in the months ahead in the form of rising
demand and prices and better margins. The key to a strong recovery in chemicals
is the continued strengthening of the economy. Our loss in chemicals before
special items was due to our Equistar petrochemical joint venture. The expected
third quarter closing of the sale of our Equistar interest to Lyondell will
substantially reduce our future exposure to petrochemicals."
Net income for the first quarter of 2002 was $25 million ($0.07 per share),
compared with $484 million ($1.31 per share) for first quarter of 2001.
Changes in accounting principles relating to goodwill impairment in the
chemicals segment resulted in an after-tax charge of $95 million, reducing
earnings by $0.25 per share. There is no remaining goodwill on the balance
sheet. In addition, the chemicals segment took a $14 million pre-tax charge for
severance expense which, after-taxes, reduced earnings by $0.02 per share.
OIL AND GAS
-----------
Oil and gas segment earnings were $306 million for the first quarter 2002,
compared with $946 million for the same period in 2001. Lower prices for
worldwide crude oil and domestic natural gas accounted for approximately $670
million of the decline in earnings, partially offset by higher crude oil
volumes. Production volumes were 525,000 barrels of oil equivalent in the first
quarter of 2002 compared with 478,000 in the first quarter of 2001.
CHEMICALS
---------
Chemical segment results before special items were a loss of $21 million
for the first quarter 2002, compared with a loss of $53 million for the first
quarter 2001. The improvement in results reflects lower energy and feedstock
costs, partially offset by lower sales prices for caustic, chlorine and PVC and
higher Equistar petrochemical joint venture losses.
Chemical segment results for the first quarter 2002 were a loss of $35
million, compared with a loss of $79 million for the first quarter 2001. The
first quarter 2002 results included a $14 million pre-tax expense for employee
severance. The first quarter 2001 results included $26 million pre-tax expense
for employee severance, plant write-down costs and plant shut-down costs.
1
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, 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.
2
SUMMARY OF SEGMENT NET SALES AND EARNINGS
(Millions, except per-share amounts)
First Quarter
------------------
Periods ended March 31 2002 2001
============================================ ======== ========
SEGMENT NET SALES
Oil and gas $ 1,937 $ 3,612
Chemical 588 863
-------- --------
Net sales $ 2,525 $ 4,475
============================================ ======== ========
SEGMENT EARNINGS (LOSSES)
Oil and gas $ 306 $ 946
Chemical (35) (79)
-------- --------
271 867
UNALLOCATED CORPORATE ITEMS
Interest expense, net (a) (56) (76)
Income taxes (b) (43) (175)
Trust preferred distributions & other (11) (16)
Other (c) (41) (89)
-------- --------
INCOME BEFORE EXTRAORDINARY ITEMS AND EFFECT
OF CHANGES IN ACCOUNTING PRINCIPLES 120 511
Extraordinary loss, net -- (3)
Cumulative effect of changes in accounting
principles, net (d) (95) (24)
-------- --------
NET INCOME $ 25 $ 484
======== ========
BASIC EARNINGS PER COMMON SHARE
Income before extraordinary items and
effect of changes in accounting principles $ 0.32 $ 1.38
Extraordinary loss, net -- (0.01)
Cumulative effect of changes
in accounting principles, net (0.25) (0.06)
-------- --------
$ 0.07 $ 1.31
======== ========
DILUTED EARNINGS PER COMMON SHARE
Income before extraordinary items and
effect of changes in accounting principles $ 0.32 $ 1.37
Extraordinary loss, net -- (0.01)
Cumulative effect of changes
in accounting principles, net (0.25) (0.06)
-------- --------
$ 0.07 $ 1.30
======== ========
WEIGHTED AVERAGE BASIC COMMON SHARES
OUTSTANDING 374.5 370.2
============================================ ======== ========
See footnotes on following page.
3
(a) Includes interest income on notes receivable from Occidental Permian
partners of $14 million and $33 million for the first quarters of 2002 and
2001, respectively.
(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 both the first quarters of 2002 and 2001.
(c) Includes preferred distributions to the Occidental Permian partners of $15
million and $34 million for the first quarters of 2002 and 2001,
respectively. This is essentially offset by the interest income discussed
in (a) above. The first quarter 2001 includes a $49 million environmental
remediation accrual.
(d) Effective January 1, 2002, Occidental implemented SFAS No. 142 - "Goodwill
and Other Intangible Assets." Adoption of this new accounting standard
resulted in a cumulative after-tax reduction in net income of $95 million.
Effective January 1, 2001, Occidental implemented SFAS 133, "Accounting for
Derivative Instruments and Hedging Activities," as amended. Adoption of
this new standard resulted in a cumulative after-tax reduction in net
income of $24 million.
4
SUMMARY OF OPERATING STATISTICS
First Quarter
--------------------
Periods ended March 31 2002 2001
============================================ ======== ========
NET OIL, GAS AND LIQUIDS
PRODUCTION PER DAY
United States
Liquids (MBBL)
California 90 73
Permian 140 134
Other 3 --
-------- --------
Total 233 207
Natural Gas (MMCF)
California 305 317
Hugoton 157 167
Permian 129 148
-------- --------
Total 591 632
Latin America
Crude oil & condensate (MBBL)
Colombia 31 21
Ecuador 13 13
-------- --------
Total 44 34
Eastern Hemisphere
Crude oil and condensate (MBBL)
Oman 17 11
Pakistan 8 6
Qatar 44 42
Russia 25 28
Yemen 47 36
-------- --------
Total 141 123
Natural Gas (MMCF)
Pakistan 50 49
Barrels of Oil Equivalent (MBOE) 525 478
CAPITAL EXPENDITURES (millions) $ 274 $ 238
======== ========
DEPRECIATION, DEPLETION AND
AMORTIZATION OF ASSETS (millions) $ 261 $ 245
============================================ ======== ========
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 2002 Earnings Announcement
April 25, 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 first quarter earnings, along with the Investor Relations Supplemental
Schedules, can find them on our website oxy.com or through the SEC's EDGAR
system.
Our first quarter income before special items and changes in accounting
principles, was $129 million, or $0.34 per share - compared to $35 million, or
$0.09 per share, we earned in the fourth quarter of 2001. The change was
primarily due to the following factors:
o Oil and natural gas production increased from 482,000 BOE per day to
525,000 barrels - an increase of 9 percent.
o The average price for West Texas Intermediate crude oil increased from
$20.43 per barrel to $21.64 - an increase of 6-percent.
o Chemical earnings before special items went from negative $4 million to
negative $21 million.
o Interest expense, including distributions on trust preferred securities,
decreased from $86 million to $82 million - for a decline of 5-percent.
Changes in accounting principles relating to goodwill impairment in our
chemicals segment resulted in an after-tax charge of $95 million, reducing
earnings by $0.25 per share. We have no remaining goodwill on our balance sheet.
In addition, our chemicals segment took a $14 million pre-tax charge for
severance expense which, after-taxes, reduced earnings by $0.02 per share.
Therefore, our net income for the quarter was $25 million, or $.07 per share,
compared with last year's fourth quarter loss of $247 million, or $.66 per
share.
6
Oil and gas segment earnings for the quarter were $306 million compared
with $166 million in the fourth quarter. Exploration expense was $27 million
compared to $54 million in the fourth quarter.
The most significant change in the oil and gas results from the fourth to
the first quarter was the increase in production and prices. The rise in
production from 482,000 to 525,000 BOE per day was due to four factors.
First, production from Yemen averaged 47,000 barrels per day compared to
32,000 in the fourth quarter. Because of the cost recovery mechanisms in our
Yemen production-sharing contracts, we typically see adjustments in the first
quarter.
Second, our production from Colombia averaged 31,000 barrels per day
compared to 17,000 in the fourth quarter due to less downtime on the Cano Limon
pipeline.
Third, California liquids production is 8,000 barrels per day higher than
the fourth quarter primarily due to the continued success of our Elk Hills
development program - including success in drilling and acidizing the lower
shales.
And finally, we caught up on a fourth quarter under-lift in Oman that
increased first quarter production to 17,000 barrels per day compared to 14,000
barrels in the fourth quarter.
We expect second quarter production to be approximately 495,000 BOE per
day.
Our sensitivity to changes in oil and gas prices is similar to prior
quarters. The average WTI price in the first quarter was $21.64 per barrel and
our average price realization for natural gas was $2.38 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.
The downward pressure on chemicals that depressed fourth quarter results
continued into the first quarter. Chemical earnings before special items were a
loss of $21 million compared to a loss of $4 million in the fourth quarter. The
fourth and first quarters are typically sluggish quarters for the commodity
chemicals business due to seasonal factors.
Our core chemical operations had earnings before special items of $15
million for the quarter, but these results were more than offset by $36 million
from our share of Equistar losses. Since the Equistar transactions will not
close until the third quarter, the depressed state of the petrochemicals
business will continue to negatively impact our results during the second
quarter.
As our chairman will discuss with you shortly, there are encouraging signs
of improvement in our core cholovinyls and chloralkali businesses.
Cash flow from operations for the quarter was approximately $200 million.
Our debt-to-capitalization ratio remains at 46 percent.
Capital spending for the quarter was $274 million, with total spending for
the year expected to be $1.1 billion - with oil and gas accounting for
approximately $1 billion.
7
Finally, we expect interest and exploration expense to remain flat from the
first through the second quarters.
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 2002 Earnings Announcement
April 25, 2002
Los Angeles, California
Thank you, Steve.
There are several items I want to cover this morning - beginning with the
outlook for our chemical operations where we see encouraging signs of recovery.
We entered 2002 on the heels of the worst year in two decades for the
chlorovinyls and chloralkali businesses, but we're now looking at the beginning
of a modest recovery - with PVC leading the way. PVC demand and price increases
are being driven by improved economic conditions and re-stocking of inventories
that have also led to a surge in demand for the key intermediates - ethylene
dichloride and vinyl chloride monomer. Margins for these products have increased
- - with additional price increases likely if this trend continues.
It's also important to note that due to seasonal factors, the first quarter
is generally the weakest quarter and is typically followed by a stronger second
quarter due to a seasonal upturn in demand.
Overall, we expect 2002 to be a period of gradual recovery for our base
chemical business - with significant improvement in 2003.
Let's shift now to oil and gas. We recently completed a comparative study
of finding and development costs using data reported in SEC 10-K filings for
1999 through 2001. For 2001, Occidental's F&D costs of $4.54 per BOE excluding
purchases, and $4.80 including purchases, are the second lowest among our
industry competitors. For the three year period 1999 through 2001, average
annual F&D costs of $3.84 excluding purchases, and $3.90 including purchases,
also are the second lowest among our industry peers. These results show that
we're succeeding in keeping our F&D costs low whether we're adding proven
reserves through exploration, enhanced oil recovery projects or acquisitions.
The Government of Pakistan is moving forward with its privatization
initiative in the energy sector and we're pleased to be able to participate in
that initiative. Occidental has been
8
active in Pakistan for nearly 40 years and post September 11 events have had no
impact on our investment interests.
Occidental and BP are awaiting final word on our joint bid for the
Government's interests in Badin-1 and Badin-2R. Gross production from these
blocks currently account for 50 percent of Pakistan's oil production and 7
percent of its gas production.
The Government has a 40 percent interest in Badin-1 and a 25 percent
interest Badin-2R. Occidental and BP each currently have a 30 percent interest
in Badin-1 and a 25.5 percent interest in the much smaller Badin-2R. We expect
to learn the Government's decision within a few days.
Occidental's first quarter production in Pakistan averaged approximately
16,000 BOE per day - and if our bid is accepted it will result in net
incremental production to Occidental of an additional 8,300 barrels per day.
Today, I'm announcing the successful testing of our first deep gas well in
California. Last week the 18,000 foot deep Thunderball well, which was drilled
on property adjacent to Elk Hills, achieved a flow rate of 14 million cubic feet
per day with a choke of 18/64th inch at a flowing tubing pressure of
approximately 9,000 pounds per square inch. The well has been shut in and
development plans are moving forward to bring the well on production. Occidental
has a 100 percent working interest in the well.
Thank you - and we're now ready to answer questions.
- --------------------------------------------------------------------------------
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.
- --------------------------------------------------------------------------------
9
Supplemental Investor Information
---------------------------------
Investor Relations Supplemental Schedules
[OXY LOGO]
OCCIDENTAL PETROLEUM
2002 First Quarter
Net Income (Loss)
($ millions)
EARNINGS
REPORTED BEFORE
INCOME ADJUSTMENTS SPECIAL ITEMS
---------- ------------- ---------------
Oil & Gas $ 306 $ -- $ 306
Chemical (35) 14 Severance (21)
Corporate
Interest (70) (70)
Trust Pfd Distributions & Other (12) (12)
Other (26) (26)
Taxes (43) (5) Tax effect of adjustments (48)
---------- ------------- ---------------
Income before cumulative effect of changes 120 9 129
in accounting principles
Cumulative effect of changes in accounting (95) 95 Goodwill impairment --
principles, net
---------- ------------- ---------------
NET INCOME $ 25 $ 104 $ 129
========== ============= ===============
BASIC EARNINGS PER SHARE
Income before cumulative effect of changes $ 0.32 $ 0.34
in accounting principles
Cumulative effect of changes in accounting (0.25) --
principles
---------- ---------------
NET INCOME $ 0.07 $ 0.34
========== ===============
10
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 & plant shut down costs (53)
Corporate
Interest - Permian Non-recourse debt (33) (33)
Interest - all others (76) (76)
Trust Pfd Distributions & Other (17) (17)
Other (55) 49 Environmental remediation (12)
(6) OIL insurance dividend
Taxes (175) (70) State tax reserve reversal (245)
---------- ------------- ---------------
Income before extraordinary loss and 511 (1) 510
cumulative effect of changes in accounting
principles
Extraordinary loss, net (3) 3 Early debt defeasance --
Cumulative effect of changes in accounting (24) 24 Derivative & hedge accounting --
principles, net
---------- ------------- ---------------
NET INCOME $ 484 $ 26 $ 510
========== ============= ===============
BASIC EARNINGS PER SHARE
Income before extraordinary loss and $ 1.38 $ 1.38
cumulative effect of changes in accounting
principles
Extraordinary loss, net (0.01) --
Cumulative effect of changes in accounting (0.06) --
principles, net
---------- ---------------
NET INCOME $ 1.31 $ 1.38
========== ===============
11
Investor Relations Supplemental Schedules
[OXY LOGO]
OCCIDENTAL PETROLEUM
2002 First Quarter Net Income (Loss)
Reported Income Comparison
FIRST FOURTH
QUARTER QUARTER
2002 2001 B / (W)
--------- --------- ---------
Oil & Gas $ 306 $ 166 $ 140
Chemical (35) (413) 378
Corporate
Interest - Permian Non-recourse debt -- (5) 5
Interest - all others (70) (68) (2)
Trust Pfd Distributions & Other (12) (13) 1
Other (26) (96) 70
Taxes (43) 187 (230)
--------- --------- ---------
Income Before Extraordinary Loss 120 (242) 362
and Cumulative Effect of Changes in
Accounting Principles, Net
Extraordinary Loss -- (5) 5
Cumulative Effect of Changes in Accounting (95) -- (95)
Principles, Net
--------- --------- ---------
Net Income $ 25 $ (247) $ 272
========= ========= =========
Basic Earnings Per Share $ 0.07 $ (0.66) $ 0.73
========= ========= =========
Effective Tax Rate 24% 42% 18%
========= ========= =========
================================================================================
OCCIDENTAL PETROLEUM
2002 First Quarter Net Income (Loss)
Income Before Special Items Comparison
FIRST FOURTH
QUARTER QUARTER
2002 2001 B / (W)
--------- --------- ---------
Oil & Gas $ 306 $ 166 $ 140
Chemical (21) (4) (17)
Corporate
Interest - Permian Non-recourse debt -- (5) 5
Interest - all others (70) (68) (2)
Trust Pfd Distributions & Other (12) (13) 1
Other (26) (36) 10
Taxes (48) (5) (43)
--------- --------- ---------
Net Income $ 129 $ 35 $ 94
========= ========= =========
Basic Earnings Per Share $ 0.34 $ 0.09 $ 0.25
========= ========= =========
Effective Tax Rate 25% 0% -25%
========= ========= =========
12
Investor Relations Supplemental Schedules
[OXY LOGO]
OCCIDENTAL PETROLEUM
Oil & Gas
Segment Earnings Before Special Items Variance Analysis
($ millions)
2002 1st Quarter $ 306
2001 4th Quarter 166
-----------
$ 140
===========
Price Variance $ 63
Volume Variance 32
Exploration Expense Variance 27
All Other 18
-----------
TOTAL VARIANCE $ 140
===========
================================================================================
OCCIDENTAL PETROLEUM
Chemical
Segment Earnings Before Special Items Variance Analysis
($ millions)
2002 1st Quarter $ (21)
2001 4th Quarter (4)
-----------
$ (17)
===========
Sales Price $ (29)
Sales Volume/Mix (2)
Operations/Manufacturing 18
All Other (4)
-----------
TOTAL VARIANCE $ (17)
===========
13
Investor Relations Supplemental Schedules
[OXY LOGO]
OCCIDENTAL PETROLEUM
2002 First Quarter Net Income (Loss)
Reported Income Comparison
FIRST FIRST
QUARTER QUARTER
2002 2001 B / (W)
--------- --------- ---------
Oil & Gas $ 306 $ 946 $ (640)
Chemical (35) (79) 44
Corporate
Interest - Permian Non-recourse debt -- (33) 33
Interest - all others (70) (76) 6
Trust Pfd Distributions & Other (12) (17) 5
Other (26) (55) 29
Taxes (43) (175) 132
--------- --------- ---------
Income Before Extraordinary Loss and 120 511 (391)
Cumulative Effect of Changes in
Accounting Principles
Extraordinary Loss, net -- (3) 3
Cumulative Effect of Changes in (95) (24) (71)
Accounting Principles, net
--------- --------- ---------
Net Income $ 25 $ 484 $ (459)
========= ========= =========
Basic Earnings Per Share $ 0.07 $ 1.31 $ (1.24)
========= ========= =========
Effective Tax Rate 24% 25% 1%
========= ========= =========
================================================================================
OCCIDENTAL PETROLEUM
2002 First Quarter Net Income (Loss)
Income Before Special Items Comparison
FIRST FIRST
QUARTER QUARTER
2002 2001 B / (W)
--------- --------- ---------
Oil & Gas $ 306 $ 946 $ (640)
Chemical (21) (53) 32
Corporate
Interest - Permian non-recourse debt -- (33) 33
Interest - all others (70) (76) 6
Trust Pfd Distributions & Other (12) (17) 5
Other (26) (12) (14)
Taxes (48) (245) 197
--------- --------- ---------
Net Income $ 129 $ 510 $ (381)
========= ========= =========
Basic Earnings Per Share $ 0.34 $ 1.38 $ (1.04)
========= ========= =========
Effective Tax Rate 25% 32% 7%
========= ========= =========
14
Investor Relations Supplemental Schedules
[OXY LOGO]
OCCIDENTAL PETROLEUM
Oil & Gas
Segment Earnings Before Special Items Variance Analysis
($ Millions)
2002 1st Quarter $ 306
2001 1st Quarter 946
-----------
$ (640)
===========
Price Variance $ (672)
Volume Variance 41
Exploration Expense Variance (6)
All Other (3)
-----------
TOTAL VARIANCE $ (640)
===========
================================================================================
OCCIDENTAL PETROLEUM
Chemical
Segment Earnings Before Special Items Variance Analysis
($ Millions)
2002 1st Quarter $ (21)
2001 1st Quarter (53)
-----------
$ 32
===========
Sales Price $ (124)
Sales Volume/Mix (6)
Operations/Manufacturing 168 *
All Other (6) **
-----------
TOTAL VARIANCE $ 32
===========
* Lower energy and lower feedstock costs.
** Includes lower equity earnings offset by lower costs
15
Investor Relations Supplemental Schedules
[OXY LOGO]
SUMMARY OF OPERATING STATISTICS
-------------------------------
FIRST QUARTER
---------------------
2002 2001
-------- --------
NET PRODUCTION PER DAY:
UNITED STATES
CRUDE OIL AND LIQUIDS (MBL)
California 90 73
Permian 140 134
Other 3 --
-------- --------
TOTAL 233 207
NATURAL GAS (MMCF)
California 305 317
Hugoton 157 167
Permian 129 148
-------- --------
TOTAL 591 632
LATIN AMERICA
CRUDE OIL (MBL)
Colombia 31 21
Ecuador 13 13
-------- --------
TOTAL 44 34
EASTERN HEMISPHERE
CRUDE OIL (MBL)
Oman 17 11
Pakistan 8 6
Qatar 44 42
Russia 25 28
Yemen 47 36
-------- --------
TOTAL 141 123
NATURAL GAS (MMCF)
Pakistan 50 49
BARRELS OF OIL EQUIVALENT (MBOE) 525 478
- -------------------------------- -------- --------
16
Investor Relations Supplemental Schedules
[OXY LOGO]
SUMMARY OF OPERATING STATISTICS
-------------------------------
FIRST QUARTER
---------------------
2002 2001
-------- --------
OIL & GAS:
PRICES
UNITED STATES
Crude Oil ($/BBL) 18.83 24.32
Natural gas ($/MCF) 2.38 10.01
LATIN AMERICA
Crude oil ($/BBL) 18.22 22.69
EASTERN HEMISPHERE
Crude oil ($/BBL) 18.47 22.04
Natural Gas ($/MCF) 2.51 2.20
FIRST QUARTER
---------------------
2002 2001
-------- --------
EXPLORATION EXPENSE
Domestic $ 10 $ 13
Latin America 7 2
Eastern Hemisphere 10 6
-------- --------
TOTAL $ 27 $ 21
======== ========
17
Investor Relations Supplemental Schedules
[OXY LOGO]
OCCIDENTAL PETROLEUM
CHEMICALS
Volume (M Tons)
FIRST QUARTER
---------------------
MAJOR PRODUCTS 2002 2001
-------- --------
Chlorine 701 705
Caustic 574 669
Ethylene Dichloride 152 222
PVC Resins * 1,042 1,063
* Restated to include OxyVinyls plant production
CHEMICALS
Prices (Index)
FIRST QUARTER
---------------------
MAJOR PRODUCTS 2002 2001
-------- --------
Chlorine 0.50 0.92
Caustic 0.95 1.31
Ethylene Dichloride 0.61 0.81
PVC Resins 0.54 0.72
CHLORINE
- --------
OXYCHEM COMMENTARY
- ------------------
o Demand for chlorine improved steadily through the first quarter of 2002.
Industry operating rates climbed from 77% in December to 84% in January and
again to 88% in February. The total year 2002 is expected to be greater
than 90% due to the increased demand and the idling of facilities such as
the OxyVinyls Deer Park chlor-alkali plant and Pioneer's plant in Tacoma,
WA.
o 1st quarter prices declined early in the first quarter as compared to the
4th quarter 2001. However, a rapid change in the supply/demand balance led
to the announcement of price increases later in the quarter. The industry
announced increases totaling $50/ton at the end of February.
o The supply of chlorine has become extremely tight since mid-to-late
February. Several producers are operating at reduced rates due to their
inability to sell and store caustic soda. A few modest capacity
curtailments recently have added to the severity of the
18
Investor Relations Supplemental Schedules
[OXY LOGO]
problem. While the announced curtailments represent only 4% of the total
U.S. capacity, it actually represents 15% of the merchant market.
INFLUENCING FACTORS:
- --------------------
We have seen improvement in markets related to the constructions sector. Further
improvement depends on the recovery of the economy, particulary the sustained
health of the vinyls market.
CAUSTIC
- -------
OXYCHEM COMMENTARY
- ------------------
o Caustic soda demand in domestic and export markets remain weak, which is
not unusual during the early phase of an economic recovery.
o Market prices continued to weaken in the 1st quarter. Spot prices declined
by approximately $100 per ton (70%) between early January and late March
2002.
INFLUENCING FACTORS:
- --------------------
Caustic soda demand is closely related to economic activity in the manufacturing
sector but typically lags recovery of the chlorine market by several months.
Chlorine demand has begun to recover, which has negatively influenced the
supply/demand fundamentals for caustic soda due to its co-product nature.
EDC
- ---
OXYCHEM COMMENTARY
- ------------------
o Demand has improved through the first quarter as the Far Eastern PVC
producers have been running hard to meet demand in China. Supply remains
extremely tight worldwide.
o Pricing has steadily improved as a result of the tight supply/demand
balance. Market prices in March were almost 7.5 cents per pound higher than
in January. Further improvement is expected.
INFLUENCING FACTORS:
- --------------------
EDC is in short supply, which is driving prices upward. Sustainability of
long-term pricing depends upon the continued higher demand for PVC in Asia.
PVC/VCM
- -------
OXYCHEM COMMENTARY
- ------------------
o PVC resin demand increased significantly in the 1st quarter due to domestic
economic improvement, low beginning inventories and a strong export market.
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Investor Relations Supplemental Schedules
[OXY LOGO]
o OxyVinyls' PVC operating rates for the 1st quarter improved to 93%. Rates
in the 2nd quarter are expected to remain at this level. The estimated
industry average operating rate by the end of the quarter was 89%. This
includes both the Borden Geismar and the former Borden Addis facilities,
which were operating for most of the quarter but are currently idle. With
both of these facilities down and excluded from the calculation, operating
rates in the 2nd quarter for the industry are expected to be 94%.
o Domestic PVC resin prices increased $.02/lb in February and $.02/lb in
March, halting 11 months of price erosion. Further increases of $0.02/lb
have been announced for April and May respectively.
o Demand for VCM has steadily improved throughout the 1st quarter and is
expected to be strong throughout the 2nd quarter. The domestic VCM market
rebounded from the low levels seen in the 4th quarter, driven by higher PVC
demand. Plant outages and operating problems at several U.S. VCM producers
have exacerbated the supply issues and helped drive prices as the quarter
progressed.
o Demand for VCM overseas is very strong to Asia, Europe and South America.
The tightness in overseas markets is being driven by a shortage of chlorine
and EDC in the Asian market as chlorine operating rates are curtailed due
to low caustic prices. This trend is expected to continue throughout the
2nd quarter. There has also been a series of planned and unplanned VCM
outages in other regions, most notably Asia and Europe, which have
contributed to the shortage. Inventory levels are very low across the
board.
INFLUENCING FACTORS:
- --------------------
A tight VCM domestic market, strengthening export VCM and PVC markets, idled
plants and very low VCM and PVC inventories will continue to drive improving
performance.
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Investor Relations Supplemental Schedules
[OXY LOGO]
SUMMARY OF OPERATING STATISTICS
-------------------------------
FIRST QUARTER
---------------------
2002 2001
-------- --------
CAPITAL EXPENDITURES ($MM)
Oil & Gas
California $ 64 $ 59
Permian 59 50
Other - U.S. 22 23
Latin America 13 21
Eastern Hemisphere 89 66
Chemicals 15 18
Corporate 12 1
-------- --------
TOTAL $ 274 $ 238
======== ========
DEPRECIATION, DEPLETION &
AMORTIZATION OF ASSETS ($MM)
Oil & Gas
Domestic $ 149 $ 132
Latin America 9 6
Eastern Hemisphere 53 48
Chemicals 48 49
Corporate 2 10
-------- --------
TOTAL $ 261 $ 245
======== ========
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Investor Relations Supplemental Schedules
[OXY LOGO]
OCCIDENTAL PETROLEUM
CORPORATE
($ millions)
31-MAR-02 31-DEC-01
------------- -------------
CAPITALIZATION
Oxy Long-Term Debt (including current maturities) $ 4,051 $ 4,065
Gas Sales Obligation (current and non-current) 249 282
Trust Preferred Securities 461 463
Others 26 80
------------- -------------
TOTAL DEBT $ 4,787 $ 4,890
============= =============
EQUITY $ 5,579 $ 5,634
============= =============
Total Debt To Total Capitalization 46% 46%
============= =============
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Investor Relations Supplemental Schedules
[OXY LOGO]
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.
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 24, 2002 Stephen I. Chazen
------------------------------------------------
Stephen I. Chazen, Chief Financial Officer and
Executive Vice President - Corporate Development