================================================================================
UNITED STATES
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 21, 2004
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
================================================================================
Check the appropriate box below if the Form 8-K is intended to simultaneously
satisfy the filing obligation of the Registrant under any of the following
provisions (see General Instruction A.2. below):
[ ] Written communications pursuant to Rule 425 under the Securities Act (17
CFR 230.425)
[ ] Soliciting material pursuant to Rule 14a-12 under the Exchange Act (17
CFR 240.14a-12)
[ ] Pre-commencement communications pursuant to Rule 14d-2(b) under the
Exchange Act (17 CFR 240.14d-2(b))
[ ] Pre-commencement communications pursuant to Rule 13e-4(c) under the
Exchange Act (17 CFR 240.13e-4(c))
SECTION 2 - FINANCIAL INFORMATION
Item 2.02. Results of Operations and Financial Condition
- ---------- ---------------------------------------------
On October 21, 2004, Occidental Petroleum Corporation released information
regarding its results of operations for the fiscal period ended September 30,
2004. The exhibits to this Form 8-K and the information set forth in this Item
2.02 are being furnished pursuant to Item 2.02, Results of Operations and
Financial Condition. The full text of the press release is attached to this
report as Exhibit 99.1. The full text of the speeches given by Dr. Ray R. Irani
and Stephen I. Chazen are attached to this report as Exhibit 99.2. Investor
Relations Supplemental Schedules are attached to this report as Exhibit 99.3.
1
SECTION 8 - OTHER EVENTS
Item 8.01. Other Events
- ---------- ------------
Occidental Petroleum Corporation announced on October 21, 2004 record net
income for the third quarter 2004 of $758 million ($1.91 per share), compared
with $446 million ($1.16 per share) for the third quarter 2003. Earnings of
$1.83 billion ($4.63 per share) for the first nine months of 2004 were 55
percent higher than the $1.15 billion ($2.99 per share) the company earned in
the comparable period last year.
Core earnings for the first nine months of 2004 were $1.81 billion ($4.60
per share), compared with $1.25 billion ($3.27 per share) for 2003. The
debt-to-total capitalization at the end of the third quarter was 29 percent,
compared with 37 percent at the end of last year. Interest expense of $187
million for the first nine months of 2004 was 31 percent lower than the
comparable 2003 period.
Oil and Gas
-----------
Oil and gas segment earnings were $1.0 billion for the third quarter 2004,
compared with $660 million for the third quarter 2003, an increase of 52
percent. The improvement in the third quarter 2004 earnings reflected higher
worldwide crude oil and natural gas prices, partially offset by increased DD&A
rates and higher operating costs.
Chemicals
---------
Chemical segment earnings were $137 million for the third quarter 2004,
compared with $61 million for the third quarter 2003, an increase of 125
percent. The improvement in the third quarter 2004 was primarily due to higher
sales prices and margins in chlorine, ethylene dichloride, polyvinyl chloride
and vinyl chloride monomer, partially offset by higher ethylene and energy
costs. Chemical earnings of $272 million for the nine months were almost double
that of 2003.
See the attached schedules for a reconciliation of net income to core
earnings for the third quarter and nine months.
Statements in this release that contain words such as "will" or "expect", or
otherwise relate to the future, are forward-looking and involve risks and
uncertainties that could significantly affect expected results. Factors that
could cause results to differ materially include, but are not limited to: global
commodity pricing fluctuations and supply/demand considerations for oil, gas and
chemicals; higher-than-expected costs; political risk; and not successfully
completing (or any material delay in) any expansion, capital expenditure,
acquisition, or disposition. Occidental disclaims any obligation to update any
forward-looking statements.
2
SUMMARY OF SEGMENT NET SALES AND EARNINGS
Third Quarter Nine Months
($ millions, except --------------------- ---------------------
per-share amounts) 2004 2003 2004 2003
================================= ======== ======== ======== ========
SEGMENT NET SALES
Oil and gas $ 2,033 $ 1,480 $ 5,509 $ 4,473
Chemical 973 793 2,767 2,368
Other 27 46 87 115
-------- -------- -------- --------
Net sales $ 3,033 $ 2,319 $ 8,363 $ 6,956
================================= ======== ======== ======== ========
SEGMENT EARNINGS
Oil and gas $ 1,003 $ 660 $ 2,567 $ 2,024
Chemical 137 61 272 139
-------- -------- -------- --------
1,140 721 2,839 2,163
UNALLOCATED CORPORATE ITEMS
Interest expense, net (a)--
debt and trust preferred
distributions (59) (71) (187) (270)
Income taxes (b) (274) (160) (673) (505)
Other (49) (44) (153) (175)
-------- -------- -------- --------
Income from Continuing Operations 758 446 1,826 1,213
Cumulative effect of changes in
accounting principles, net -- -- -- (68)
-------- -------- -------- --------
NET INCOME $ 758 $ 446 $ 1,826 $ 1,145
======== ======== ======== ========
BASIC EARNINGS PER COMMON SHARE
Income from continuing
operations $ 1.91 $ 1.16 $ 4.63 $ 3.17
Cumulative effect of changes in
accounting principles, net -- -- -- (0.18)
-------- -------- -------- --------
$ 1.91 $ 1.16 $ 4.63 $ 2.99
======== ======== ======== ========
DILUTED EARNINGS PER COMMON SHARE
Income from continuing
operations $ 1.88 $ 1.14 $ 4.57 $ 3.14
Cumulative effect of changes in
accounting principles, net -- -- -- (0.18)
-------- -------- -------- --------
$ 1.88 $ 1.14 $ 4.57 $ 2.96
======== ======== ======== ========
AVERAGE BASIC COMMON SHARES
OUTSTANDING 396.3 385.5 394.1 382.6
================================= ======== ======== ======== ========
See footnotes on following page.
3
(a) The third quarter 2004 includes a $2 million pre-tax interest charge to
purchase in the open market and retire $19 million of Occidental's senior
notes and a $3 million pre-tax interest charge to redeem all the $157
million outstanding 6.5 percent senior notes which were due in 2005. The
nine months 2004 also includes an $11 million pre-tax interest charge to
redeem all the outstanding 8.16 percent Trust Preferred Redeemable
Securities on January 20, 2004. The nine months 2003 includes a $61 million
pre-tax interest charge to repay a $450 million 6.4 percent senior notes
issue that had ten years of remaining life, but was subject to re-marketing
on April 1, 2003.
(b) The nine months 2004 includes a $20 million credit related to a first
quarter settlement of an issue with the Internal Revenue Service. The nine
months 2004 also reflected a lower U.S. income tax rate resulting from the
crediting of foreign income taxes.
SUMMARY OF CAPITAL EXPENDITURES AND DD&A EXPENSE
Third Quarter Nine Months
--------------------- ---------------------
($ millions) 2004 2003 2004 2003
================================ ======== ======== ======== ========
CAPITAL EXPENDITURES $ 467 $ 360 $ 1,271 $ 1,151
======== ======== ======== ========
DEPRECIATION, DEPLETION
AND AMORTIZATION
OF ASSETS $ 322 $ 295 $ 972 $ 866
================================ ======== ======== ======== ========
4
SUMMARY OF OPERATING STATISTICS
Third Quarter Nine Months
--------------------- ---------------------
2004 2003 2004 2003
==================================== ======== ======== ======== ========
NET OIL, GAS AND LIQUIDS
PRODUCTION PER DAY
United States
Crude oil and liquids (MBBL)
California 77 80 77 79
Permian 154 151 155 150
Horn Mountain 17 24 22 19
Hugoton 3 4 3 4
-------- -------- -------- --------
Total 251 259 257 252
Natural Gas (MMCF)
California 228 248 235 254
Hugoton 124 136 128 141
Permian 122 134 131 128
Horn Mountain 14 16 15 12
-------- -------- -------- --------
Total 488 534 509 535
Latin America
Crude oil (MBBL)
Colombia 38 31 37 35
Ecuador 49 27 46 20
-------- -------- -------- --------
Total 87 58 83 55
Middle East
Crude oil (MBBL)
Oman 14 13 13 12
Qatar 44 44 44 47
Yemen 28 34 33 36
-------- -------- -------- --------
Total 86 91 90 95
Natural Gas (MMCF)
Oman 88 -- 52 --
Other Eastern Hemisphere
Crude oil (MBBL)
Pakistan 7 10 8 10
Natural Gas (MMCF)
Pakistan 73 71 74 74
BARRELS OF OIL EQUIVALENT (MBOE)
Subtotal consolidated subsidiaries 539 519 544 514
Other Interests
Colombia-minority interest (4) (4) (5) (4)
Russia-Occidental net interest 27 30 29 30
Yemen-Occidental net interest 1 1 1 1
-------- -------- -------- --------
TOTAL WORLDWIDE PRODUCTION (MBOE) 563 546 569 541
==================================== ======== ======== ======== ========
5
SIGNIFICANT TRANSACTIONS AND EVENTS AFFECTING EARNINGS
Occidental's results of operations often include the effects of significant
transactions and events affecting earnings that vary widely and unpredictably in
nature, timing, and amount. Therefore, management uses a measure called "core
earnings", which excludes those items. This non-GAAP measure is not meant to
disassociate those items from management's performance, but rather is meant to
provide useful information to investors interested in comparing Occidental's
earnings performance between periods. Reported earnings are considered
representative of management's performance over the long term. Core earnings is
not considered to be an alternative to operating income in accordance with
generally accepted accounting principles.
The following table sets forth the core earnings and significant items affecting
earnings for each operating segment and corporate:
Third Quarter
($ millions, except -----------------------------------------------
per-share amounts) 2004 EPS 2003 EPS
================================ ======== ======== ======== ========
TOTAL REPORTED EARNINGS $ 758 $ 1.91 $ 446 $ 1.16
======== ======== ======== ========
OIL AND GAS
Segment Earnings $ 1,003 $ 660
No significant items
affecting earnings -- --
-------- --------
Segment Core Earnings 1,003 660
-------- --------
CHEMICALS
Segment Earnings 137 61
No significant items
affecting earnings -- --
-------- --------
Segment Core Earnings 137 61
-------- --------
CORPORATE
Results (382) (275)
No significant items
affecting earnings -- --
-------- --------
TOTAL CORE EARNINGS $ 758 $ 1.91 $ 446 $ 1.16
================================ ======== ======== ======== ========
* These amounts are shown after-tax.
6
SIGNIFICANT TRANSACTIONS AND EVENTS AFFECTING EARNINGS (CONTINUED)
Nine Months
($ millions, except -----------------------------------------------
per-share amounts) 2004 EPS 2003 EPS
================================ ======== ======== ======== ========
TOTAL REPORTED EARNINGS $ 1,826 $ 4.63 $ 1,145 $ 2.99
======== ======== ======== ========
OIL AND GAS
Segment Earnings $ 2,567 $ 2,024
No significant items
affecting earnings -- --
-------- --------
Segment Core Earnings 2,567 2,024
-------- --------
CHEMICALS
Segment Earnings 272 139
No significant items
affecting earnings -- --
-------- --------
Segment Core Earnings 272 139
-------- --------
CORPORATE
Results (1,013) (1,018)
Less:
6.4% senior note remarket fee -- (61)
Trust preferred redemption
charge (11) --
IRS settlement 20 --
Tax effect of pre-tax adjustment 4 21
Changes in accounting
principles, net* -- (68)
-------- --------
TOTAL CORE EARNINGS $ 1,813 $ 4.60 $ 1,253 $ 3.27
================================ ======== ======== ======== ========
* These amounts are shown after-tax.
7
ITEMS AFFECTING COMPARABILITY OF CORE EARNINGS BETWEEN PERIODS
Third Quarter Nine Months
--------------------- ---------------------
($ millions) 2004 2003 2004 2003
================================ ======== ======== ======== ========
PRE-TAX
INCOME / (EXPENSE)
OIL AND GAS
Gain on sale of GOM assets (a) $ -- $ -- $ -- $ 14
CHEMICALS
Chlorine derivatives asset
impairment -- -- -- (9)
Reorganizations/severance -- -- -- (15)
CORPORATE
Environmental remediation -- -- -- (13)
Equity earnings 15 (6) 13 (42)
Interest expense - early debt
extinguishments - 2004/
consolidation of variable
interest entity - 2003 (5) -- (5) 6
(a) Net of tax.
8
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 21, 2004 S. P. Dominick, Jr.
--------------------------------------------------
S. P. Dominick, Jr., Vice President and Controller
(Chief Accounting and Duly Authorized Officer)
EXHIBIT INDEX
99.1 Press release dated October 21, 2004.
99.2 Full text of speeches given by Dr. Ray R. Irani and Stephen I.
Chazen
99.3 Investor Relations Supplemental Schedules
EXHIBIT 99.1
====================================================================
[OXY LOGO] NEWS RELEASE OCCIDENTAL PETROLEUM CORPORATION
====================================================================
10889 Wilshire Boulevard, Los Angeles, California 90024 (310) 208-8800
For Immediate Release: October 21, 2004
OCCIDENTAL PETROLEUM ANNOUNCES
------------------------------
RECORD THIRD QUARTER 2004 RESULTS
---------------------------------
LOS ANGELES -- Occidental Petroleum Corporation (NYSE:OXY) announced record
net income for the third quarter 2004 of $758 million ($1.91 per share),
compared with $446 million ($1.16 per share) for the third quarter 2003.
Earnings of $1.83 billion ($4.63 per share) for the first nine months of 2004
were 55 percent higher than the $1.15 billion ($2.99 per share) the company
earned in the comparable period last year.
In announcing the results, Dr. Ray R. Irani, chairman and chief executive
officer, said, "Earnings of $758 million, $1.91 per share, were 65 percent
higher than the third quarter 2003. High oil prices and robust gas prices, plus
improved chemical margins, contributed to the record high income for both the
third quarter and the nine month period. Oil and gas production per day was up 3
percent for the quarter and 5 percent year-to-date over the comparable periods
last year."
Core earnings for the first nine months of 2004 were $1.81 billion ($4.60
per share), compared with $1.25 billion ($3.27 per share) for 2003. The
debt-to-total capitalization at the end of the third quarter was 29 percent,
compared with 37 percent at the end of last year. Interest expense of $187
million for the first nine months of 2004 was 31 percent lower than the
comparable 2003 period.
OIL AND GAS
-----------
Oil and gas segment earnings were $1.0 billion for the third quarter 2004,
compared with $660 million for the third quarter 2003, an increase of 52
percent. The improvement in the third quarter 2004 earnings reflected higher
worldwide
crude oil and natural gas prices, partially offset by increased DD&A rates and
higher operating costs.
CHEMICALS
---------
Chemical segment earnings were $137 million for the third quarter 2004,
compared with $61 million for the third quarter 2003, an increase of 125
percent. The improvement in the third quarter 2004 was primarily due to higher
sales prices and margins in chlorine, ethylene dichloride, polyvinyl chloride
and vinyl chloride monomer, partially offset by higher ethylene and energy
costs. Chemical earnings of $272 million for the nine months were almost double
that of 2003.
See the attached schedules for a reconciliation of net income to core
earnings for the third quarter and nine months.
-0-
Contacts: Lawrence P. Meriage (media)
310-443-6562
Kenneth J. Huffman (investors)
212-603-8183
For further analysis of Occidental's quarterly
performance, please visit the website: www.oxy.com
Statements in this release that contain words such as "will" or "expect", or
otherwise relate to the future, are forward-looking and involve risks and
uncertainties that could significantly affect expected results. Factors that
could cause results to differ materially include, but are not limited to: global
commodity pricing fluctuations and supply/demand considerations for oil, gas and
chemicals; higher-than-expected costs; political risk; and not successfully
completing (or any material delay in) any expansion, capital expenditure,
acquisition, or disposition. Occidental disclaims any obligation to update any
forward-looking statements.
2
SUMMARY OF SEGMENT NET SALES AND EARNINGS
Third Quarter Nine Months
($ millions, except --------------------- ---------------------
per-share amounts) 2004 2003 2004 2003
================================= ======== ======== ======== ========
SEGMENT NET SALES
Oil and gas $ 2,033 $ 1,480 $ 5,509 $ 4,473
Chemical 973 793 2,767 2,368
Other 27 46 87 115
-------- -------- -------- --------
Net sales $ 3,033 $ 2,319 $ 8,363 $ 6,956
================================= ======== ======== ======== ========
SEGMENT EARNINGS
Oil and gas $ 1,003 $ 660 $ 2,567 $ 2,024
Chemical 137 61 272 139
-------- -------- -------- --------
1,140 721 2,839 2,163
UNALLOCATED CORPORATE ITEMS
Interest expense, net (a)--
debt and trust preferred
distributions (59) (71) (187) (270)
Income taxes (b) (274) (160) (673) (505)
Other (49) (44) (153) (175)
-------- -------- -------- --------
Income from Continuing Operations 758 446 1,826 1,213
Cumulative effect of changes in
accounting principles, net -- -- -- (68)
-------- -------- -------- --------
NET INCOME $ 758 $ 446 $ 1,826 $ 1,145
======== ======== ======== ========
BASIC EARNINGS PER COMMON SHARE
Income from continuing
operations $ 1.91 $ 1.16 $ 4.63 $ 3.17
Cumulative effect of changes in
accounting principles, net -- -- -- (0.18)
-------- -------- -------- --------
$ 1.91 $ 1.16 $ 4.63 $ 2.99
======== ======== ======== ========
DILUTED EARNINGS PER COMMON SHARE
Income from continuing
operations $ 1.88 $ 1.14 $ 4.57 $ 3.14
Cumulative effect of changes in
accounting principles, net -- -- -- (0.18)
-------- -------- -------- --------
$ 1.88 $ 1.14 $ 4.57 $ 2.96
======== ======== ======== ========
AVERAGE BASIC COMMON SHARES
OUTSTANDING 396.3 385.5 394.1 382.6
================================= ======== ======== ======== ========
See footnotes on following page.
3
(a) The third quarter 2004 includes a $2 million pre-tax interest charge to
purchase in the open market and retire $19 million of Occidental's senior
notes and a $3 million pre-tax interest charge to redeem all the $157
million outstanding 6.5 percent senior notes which were due in 2005. The
nine months 2004 also includes an $11 million pre-tax interest charge to
redeem all the outstanding 8.16 percent Trust Preferred Redeemable
Securities on January 20, 2004. The nine months 2003 includes a $61 million
pre-tax interest charge to repay a $450 million 6.4 percent senior notes
issue that had ten years of remaining life, but was subject to re-marketing
on April 1, 2003.
(b) The nine months 2004 includes a $20 million credit related to a first
quarter settlement of an issue with the Internal Revenue Service. The nine
months 2004 also reflected a lower U.S. income tax rate resulting from the
crediting of foreign income taxes.
SUMMARY OF CAPITAL EXPENDITURES AND DD&A EXPENSE
Third Quarter Nine Months
--------------------- ---------------------
($ millions) 2004 2003 2004 2003
================================ ======== ======== ======== ========
CAPITAL EXPENDITURES $ 467 $ 360 $ 1,271 $ 1,151
======== ======== ======== ========
DEPRECIATION, DEPLETION
AND AMORTIZATION
OF ASSETS $ 322 $ 295 $ 972 $ 866
================================ ======== ======== ======== ========
4
SUMMARY OF OPERATING STATISTICS
Third Quarter Nine Months
--------------------- ---------------------
2004 2003 2004 2003
==================================== ======== ======== ======== ========
NET OIL, GAS AND LIQUIDS
PRODUCTION PER DAY
United States
Crude oil and liquids (MBBL)
California 77 80 77 79
Permian 154 151 155 150
Horn Mountain 17 24 22 19
Hugoton 3 4 3 4
-------- -------- -------- --------
Total 251 259 257 252
Natural Gas (MMCF)
California 228 248 235 254
Hugoton 124 136 128 141
Permian 122 134 131 128
Horn Mountain 14 16 15 12
-------- -------- -------- --------
Total 488 534 509 535
Latin America
Crude oil (MBBL)
Colombia 38 31 37 35
Ecuador 49 27 46 20
-------- -------- -------- --------
Total 87 58 83 55
Middle East
Crude oil (MBBL)
Oman 14 13 13 12
Qatar 44 44 44 47
Yemen 28 34 33 36
-------- -------- -------- --------
Total 86 91 90 95
Natural Gas (MMCF)
Oman 88 -- 52 --
Other Eastern Hemisphere
Crude oil (MBBL)
Pakistan 7 10 8 10
Natural Gas (MMCF)
Pakistan 73 71 74 74
BARRELS OF OIL EQUIVALENT (MBOE)
Subtotal consolidated subsidiaries 539 519 544 514
Other Interests
Colombia-minority interest (4) (4) (5) (4)
Russia-Occidental net interest 27 30 29 30
Yemen-Occidental net interest 1 1 1 1
-------- -------- -------- --------
TOTAL WORLDWIDE PRODUCTION (MBOE) 563 546 569 541
==================================== ======== ======== ======== ========
5
SIGNIFICANT TRANSACTIONS AND EVENTS AFFECTING EARNINGS
Occidental's results of operations often include the effects of significant
transactions and events affecting earnings that vary widely and unpredictably in
nature, timing, and amount. Therefore, management uses a measure called "core
earnings", which excludes those items. This non-GAAP measure is not meant to
disassociate those items from management's performance, but rather is meant to
provide useful information to investors interested in comparing Occidental's
earnings performance between periods. Reported earnings are considered
representative of management's performance over the long term. Core earnings is
not considered to be an alternative to operating income in accordance with
generally accepted accounting principles.
The following table sets forth the core earnings and significant items affecting
earnings for each operating segment and corporate:
Third Quarter
($ millions, except -----------------------------------------------
per-share amounts) 2004 EPS 2003 EPS
================================ ======== ======== ======== ========
TOTAL REPORTED EARNINGS $ 758 $ 1.91 $ 446 $ 1.16
======== ======== ======== ========
OIL AND GAS
Segment Earnings $ 1,003 $ 660
No significant items
affecting earnings -- --
-------- --------
Segment Core Earnings 1,003 660
-------- --------
CHEMICALS
Segment Earnings 137 61
No significant items
affecting earnings -- --
-------- --------
Segment Core Earnings 137 61
-------- --------
CORPORATE
Results (382) (275)
No significant items
affecting earnings -- --
-------- --------
TOTAL CORE EARNINGS $ 758 $ 1.91 $ 446 $ 1.16
================================ ======== ======== ======== ========
* These amounts are shown after-tax.
6
SIGNIFICANT TRANSACTIONS AND EVENTS AFFECTING EARNINGS (CONTINUED)
Nine Months
($ millions, except -----------------------------------------------
per-share amounts) 2004 EPS 2003 EPS
================================ ======== ======== ======== ========
TOTAL REPORTED EARNINGS $ 1,826 $ 4.63 $ 1,145 $ 2.99
======== ======== ======== ========
OIL AND GAS
Segment Earnings $ 2,567 $ 2,024
No significant items
affecting earnings -- --
-------- --------
Segment Core Earnings 2,567 2,024
-------- --------
CHEMICALS
Segment Earnings 272 139
No significant items
affecting earnings -- --
-------- --------
Segment Core Earnings 272 139
-------- --------
CORPORATE
Results (1,013) (1,018)
Less:
6.4% senior note remarket fee -- (61)
Trust preferred redemption
charge (11) --
IRS settlement 20 --
Tax effect of pre-tax adjustment 4 21
Changes in accounting
principles, net* -- (68)
-------- --------
TOTAL CORE EARNINGS $ 1,813 $ 4.60 $ 1,253 $ 3.27
================================ ======== ======== ======== ========
* These amounts are shown after-tax.
7
ITEMS AFFECTING COMPARABILITY OF CORE EARNINGS BETWEEN PERIODS
Third Quarter Nine Months
--------------------- ---------------------
($ millions) 2004 2003 2004 2003
================================ ======== ======== ======== ========
PRE-TAX
INCOME / (EXPENSE)
OIL AND GAS
Gain on sale of GOM assets (a) $ -- $ -- $ -- $ 14
CHEMICALS
Chlorine derivatives asset
impairment -- -- -- (9)
Reorganizations/severance -- -- -- (15)
CORPORATE
Environmental remediation -- -- -- (13)
Equity earnings 15 (6) 13 (42)
Interest expense - early debt
extinguishments - 2004/
consolidation of variable
interest entity - 2003 (5) -- (5) 6
(a) Net of tax.
8
EXHIBIT 99.1
OCCIDENTAL PETROLEUM CORPORATION
DR. RAY R. IRANI
CHAIRMAN AND CHIEF EXECUTIVE OFFICER
- CONFERENCE CALL -
THIRD QUARTER 2004 EARNINGS ANNOUNCEMENT
OCTOBER 21, 2004
Los Angeles, California
Good morning and thank you for joining us. We're pleased to report record
third quarter earnings of $758 million, or $1.91 per share, which are up 65
percent over the third quarter of 2003. Our nine months earnings of $1.8
billion, or $4.63 per share, are 55 percent higher than the same period in 2003.
Higher oil prices, continued strong natural gas prices, and increased oil
production gave us record Oil and Gas segment earnings as well, for both the
third quarter and the first nine months. Our nine month oil and gas production
was a record 569,000 barrels of oil per day -- up 5 percent from the first nine
months of 2003.
In the Chemicals business, continuing improvement in commodity chemical
prices, along with higher volumes, contributed to our strongest quarterly
earnings since the second quarter of 2000. Core chemical earnings for the third
quarter were more than twice the earnings in the third quarter of last year.
Occidental's overall financial health has never been better. The strong
cash flow has enabled us to further strengthen our balance sheet. This allows us
to continue pursuing business opportunities in our core areas. In
1
that regard, the Dolphin project in the Middle East is moving forward on
schedule. And in Libya, our negotiations continue to progress.
I'll now turn the call over to Steve Chazen who will discuss the details of
Occidental's record performance.
2
OCCIDENTAL PETROLEUM CORPORATION
STEPHEN CHAZEN
SENIOR EXECUTIVE VICE PRESIDENT AND CHIEF FINANCIAL OFFICER
- CONFERENCE CALL -
THIRD QUARTER 2004 EARNINGS ANNOUNCEMENT
OCTOBER 21, 2004
Los Angeles, California
Thank you Ray.
Occidental's reported and core earnings for the third quarter were $758
million, or $1.91 per share, our best quarterly earnings in history. This
compares to $446 million, or $1.16 per share, in the third quarter of last year.
Our strong performance was driven by four factors: higher prices; improved
chemical earnings; higher production and lower interest expense.
For the THIRD QUARTER:
o Oil and gas third quarter earnings were a record $1 billion. This was
52 percent higher than the $660 million in earnings during the same
period a year ago.
o Worldwide oil and gas production was 563,000 barrels of oil equivalent
per day - an increase of 3 percent compared with 546,000 barrels we
produced in last year's third quarter.
o The price of WTI for the quarter averaged $43.87 per barrel compared
to $30.20 per barrel in last year's third quarter. Occidental's
realized oil price for the quarter was $37.87 per barrel compared to
$26.81 per barrel in last year's third quarter.
3
o The chemical segment reported earnings were $137 million - more than
double the third quarter 2003 earnings of $61 million. The increase is
primarily due to higher sales prices for chlorine, ethylene
dichloride, polyvinyl chloride and vinyl chloride monomer, but is
partially offset by higher feedstock and energy costs. Increased
volumes for chlorine, caustic and polyvinyl chloride also contributed
to stronger earnings.
o Our net interest expense declined to $59 million for the quarter,
including $5 million related to buying back debt. Our net interest
expense for the third quarter of 2003 was $71 million.
Turning now to Occidental's performance through the FIRST NINE MONTHS:
o Core earnings were a record $1.81 billion, or $4.60 per share - 41
percent higher than the $1.25 billion, or $3.27 per share, in the
comparable period last year.
o Oil and gas earnings were $2.57 billion, which represents a $543
million increase over the first nine months in 2003.
o Oil and gas production for the first nine months averaged 569,000 BOE
per day, up from 541,000 - or 5 percent - from the same period last
year.
o WTI averaged $39.11 per barrel compared with $30.98 for the comparable
period last year. Occidental's realized oil price was $33.78 per
barrel compared to $27.20 per barrel in 2003. September WTI increased
$1.06 per barrel compared to August, however, Occidental's realized
international oil prices dropped 48 cents per barrel. This change was
primarily the result of a
4
significant volume increase in worldwide sour crude sales. This price
affects our realizations, especially in Qatar, Oman and Yemen. For
example, in Qatar, price differentials through August averaged $5.17
per barrel. In September, that widened to $8.90 per barrel. For 2003,
the differential was $3.61.
o Oil and Gas operating costs have increased approximately $1.50 per
barrel compared to the first nine months of last year. Approximately
35 percent of the increase was a result of higher energy prices
pushing utility, gas plant, ad valorem taxes and carbon dioxide, or
CO2, costs up. Higher DD&A rates represented approximately 28 percent
of the increase. The remaining cost changes were the result of
increased workover, maintenance and other costs.
o In chemicals, core earnings were $272 million, which represents a $133
million - or 96 percent - improvement compared to the first nine
months of last year. The increase is primarily due to higher sales
prices for chlorine, ethylene dichloride, polyvinyl chloride, and
vinyl chloride monomer; and higher volumes for chlorine, caustic and
polyvinyl chloride. The gains were partially offset by higher
feedstock and energy costs.
o Our net interest expense for the first nine months declined to $187
million - compared to $270 million for the same period last year.
5
Other Items:
o Capital spending was $467 million for the quarter and $1.27 billion
for the first nine months. We expect total capital spending for the
year to be approximately $1.8 billion - with oil and gas accounting
for more than 90 percent of the expenditures.
o Cash flow from operations for the nine-month period was $2.7 billion.
o At the end of the quarter, stockholders' equity had grown to $9.8
billion, and our debt-to-total capitalization was down to 29 percent,
compared to 37 percent at the end of last year. At the end of the
quarter, the company had $998 million in cash.
As we look ahead in the current quarter:
We expect fourth quarter production to be about the same as third quarter
production, including our estimates of the impact of the following:
o We expect lower October production due to Horn Mountain operations
being shut-in because of Hurricane Ivan. Our net production from Horn
Mountain is approximately 21,000 BOE per day
o Fourth quarter production will be impacted by product prices that
affect our production sharing contracts in Oman, Qatar, Yemen and Long
Beach. In this product price range for this quarter, each dollar
change in the price of oil per barrel changes production by
approximately 1,000 barrels per day.
6
In regards to prices:
o Each dollar per barrel change in oil prices impacts Oil and Gas
segment fourth quarter earnings by about $29 million before the impact
of foreign income taxes. This current impact is lower than in prior
quarters due to the September sour crude differential changes that I
discussed earlier.
o A swing of 10-cents per million BTUs in gas prices has a $5 million
impact on quarterly segment earnings. Our realized domestic gas price
in the fourth quarter is expected to be $5.16.
Additionally:
o Exploration expense for the quarter is estimated to be about $80
million, primarily for drilling in Latin America and the Middle East.
o In the chemical business, the demand for chlorine and caustic soda is
expected to stay strong. However, the fourth and first quarters are
typically the weakest quarters due to seasonal factors. We anticipate
fourth quarter feedstock and energy costs to be higher than in the
third quarter. Fourth quarter chemical earnings are expected to be
about $115 million.
o Fourth quarter interest expense is expected to be approximately $53
million.
o Our worldwide effective tax rate for the third quarter was 39 percent
and we expect the rate for the rest of this year to be about 40
percent. Both our U. S. and foreign tax rates are included in the
"Investor Relations Supplemental Schedule".
7
o We record the equity earnings from our investment in Lyondell Chemical
Company in corporate "Other". We currently own about 41 million
Lyondell shares. We have no way of forecasting the quarterly equity
earnings from our Lyondell investment, although the outlook for the
business appears to be favorable.
Copies of the press release announcing our third quarter earnings and the
Investor Relations Supplemental Schedules are available on our website
www.oxy.com or through the SEC's EDGAR system.
Now we're ready to take your questions.
----------------------------------------------------------------------
See the investor relations supplemental schedules for the
reconciliation of non-GAAP items. 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; political risk;
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. 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.
----------------------------------------------------------------------
8
EXHIBIT 99.2
Investor Relations Supplemental Schedules
[OXY LOGO]
OCCIDENTAL PETROLEUM
2004 THIRD QUARTER
NET INCOME (LOSS)
($ MILLIONS)
REPORTED CORE
INCOME SIGNIFICANT ITEMS AFFECTING INCOME EARNINGS
------------ ---------------------------------- ------------
Oil & Gas $ 1,003 $ 1,003
Chemical 137 137
Corporate
Interest expense, net - debt and
trust preferred distributions (59) (59)
Other (49) (49)
Taxes (274) (274)
------------ ------------ ------------
NET INCOME $ 758 $ -- $ 758
============ ============ ============
BASIC EARNINGS PER COMMON SHARE $ 1.91 $ 1.91
============ ============
1
Investor Relations Supplemental Schedules
[OXY LOGO]
OCCIDENTAL PETROLEUM
2003 THIRD QUARTER
NET INCOME (LOSS)
($ MILLIONS)
REPORTED CORE
INCOME SIGNIFICANT ITEMS AFFECTING INCOME EARNINGS
------------ ---------------------------------- ------------
Oil & Gas $ 660 $ 660
Chemical 61 61
Corporate
Interest expense, net - debt and
trust preferred distributions (71) (71)
Other (44) (44)
Taxes (160) (160)
------------ ------------ ------------
NET INCOME $ 446 $ -- $ 446
============ ============ ============
BASIC EARNINGS PER COMMON SHARE $ 1.16 $ 1.16
============ ============
2
Investor Relations Supplemental Schedules
[OXY LOGO]
OCCIDENTAL PETROLEUM
2004 FIRST NINE MONTHS
NET INCOME (LOSS)
($ MILLIONS)
REPORTED CORE
INCOME SIGNIFICANT ITEMS AFFECTING INCOME EARNINGS
------------ ---------------------------------- ------------
Oil & Gas $ 2,567 $ 2,567
Chemical 272 272
Corporate
Interest expense, net - debt and
trust preferred distributions (187) 11 Trust pfd redemption charge (176)
Other (153) (153)
Taxes (673) (20) IRS settlement (697)
(4) Tax effect of adjustments
------------ ------------ ------------
NET INCOME $ 1,826 $ (13) $ 1,813
============ ============ ============
BASIC EARNINGS PER COMMON SHARE $ 4.63 $ 4.60
============ ============
3
Investor Relations Supplemental Schedules
[OXY LOGO]
OCCIDENTAL PETROLEUM
2003 FIRST NINE MONTHS
NET INCOME (LOSS)
($ MILLIONS)
REPORTED CORE
INCOME SIGNIFICANT ITEMS AFFECTING INCOME EARNINGS
------------ ---------------------------------- ------------
Oil & Gas $ 2,024 $ 2,024
Chemical 139 139
Corporate
Interest expense, net - debt and
trust preferred distributions (270) 61 Debt repayment fee (209)
Other (175) (175)
Taxes (505) (21) Tax effect of adjustments (526)
------------ ------------ ------------
Income from continuing operations 1,213 40 1,253
Cumulative effect of accounting (68) 68 Cumulative effect of acct --
changes changes
------------ ------------ ------------
NET INCOME $ 1,145 $ 108 $ 1,253
============ ============ ============
BASIC EARNINGS PER COMMON SHARE
Income from continuing operations $ 3.17 $ 3.27
Cumulative effect of accounting changes (0.18) --
------------ ------------
$ 2.99 $ 3.27
============ ============
4
Investor Relations Supplemental Schedules
[OXY LOGO]
OCCIDENTAL PETROLEUM
ITEMS AFFECTING COMPARABILITY OF CORE EARNINGS BETWEEN PERIODS
PRE-TAX
INCOME / (EXPENSE) THIRD QUARTER NINE MONTHS
----------------------------- ------------------------------
2004 2003 2004 2003
------------ ------------ ------------ -------------
OIL & GAS
Gain on sale of GOM assets (a) -- -- -- 14
CHEMICALS
Reorganizations / severance -- -- -- (15)
Chlorine derivatives asset impairment -- -- -- (9)
CORPORATE
Equity earnings 15 (6) 13 (42)
Environmental remediation -- -- -- (13)
Interest expense - early debt (5) -- (5) 6
extinguishments - 2004 / consolidation
of variable interest entity - 2003
(a) Amount shown after-tax
5
Investor Relations Supplemental Schedules
[OXY LOGO]
OCCIDENTAL PETROLEUM
WORLDWIDE EFFECTIVE TAX RATE
---------------------------------------------- -----------------------------
QUARTERLY YEAR TO-DATE
---------------------------------------------- -----------------------------
2004 2004 2003 2004 2003
REPORTED INCOME QTR 3 QTR 2 QTR 3 9 MONTHS 9 MONTHS
------------ ------------ ------------ ------------ ------------
Oil & Gas (a) 1,221 985 799 3,125 2,436
Chemicals 139 88 63 279 147
Corporate & other (108) (109) (116) (340) (447)
------------ ------------ ------------ ------------ ------------
Pre-tax income 1,252 964 746 3,064 2,136
Income tax expense
Federal and state 277 213 163 681 517
Foreign (included in segments) (a) 217 170 137 557 406
------------ ------------ ------------ ------------ ------------
Total 494 383 300 1,238 923
------------ ------------ ------------ ------------ ------------
Income from continuing operations 758 581 446 1,826 1,213
============ ============ ============ ============ ============
WORLDWIDE EFFECTIVE TAX RATE 39% 40% 40% 40% 43%
2004 2004 2003 2004 2003
CORE INCOME QTR 3 QTR 2 QTR 3 9 MONTHS 9 MONTHS
------------ ------------ ------------ ------------ ------------
Oil & Gas (a) 1,221 985 799 3,125 2,436
Chemicals 139 88 63 279 147
Corporate & other (108) (109) (116) (329) (386)
------------ ------------ ------------ ------------ ------------
Pre-tax income 1,252 964 746 3,075 2,197
Income tax expense
Federal and state 277 213 162 705 537
Foreign (included in segments) (a) 217 170 138 557 407
------------ ------------ ------------ ------------ ------------
Total 494 383 300 1,262 944
------------ ------------ ------------ ------------ ------------
Income from continuing operations 758 581 446 1,813 1,253
============ ============ ============ ============ ============
WORLDWIDE EFFECTIVE TAX RATE 39% 40% 40% 41% 43%
(a) Revenues and income tax expense include taxes owed by Occidental but paid by
governmental entities on its behalf. Oil and gas pre-tax income includes the
following revenue amounts by periods.
2004 2004 2003 2004 2003
QTR 3 QTR 2 QTR 3 9 MONTHS 9 MONTHS
------------ ------------ ------------ ------------ ------------
149 116 104 382 295
6
Investor Relations Supplemental Schedules
[OXY LOGO]
OCCIDENTAL PETROLEUM
2004 THIRD QUARTER NET INCOME (LOSS)
REPORTED INCOME COMPARISON
THIRD SECOND
QUARTER QUARTER
2004 2004 B / (W)
------------ ------------ ------------
OIL & GAS $ 1,003 $ 814 $ 189
CHEMICAL 137 85 52
CORPORATE
INTEREST EXPENSE, NET - DEBT AND
TRUST PREFERRED DISTRIBUTIONS (59) (60) 1
OTHER (49) (49) --
TAXES (274) (209) (65)
------------ ------------ ------------
NET INCOME $ 758 $ 581 $ 177
============ ============ ============
BASIC EARNINGS PER COMMON SHARE $ 1.91 $ 1.48 $ 0.43
============ ============ ============
WORLDWIDE EFFECTIVE TAX RATE 39% 40% 1%
============ ============ ============
================================================================================
OCCIDENTAL PETROLEUM
2004 THIRD QUARTER NET INCOME (LOSS)
CORE EARNINGS COMPARISON
THIRD SECOND
QUARTER QUARTER
2004 2004 B / (W)
------------ ------------ ------------
OIL & GAS $ 1,003 $ 814 $ 189
CHEMICAL 137 85 52
CORPORATE
INTEREST EXPENSE, NET - DEBT AND
TRUST PREFERRED DISTRIBUTIONS (59) (60) 1
OTHER (49) (49) --
TAXES (274) (209) (65)
------------ ------------ ------------
NET INCOME $ 758 $ 581 $ 177
============ ============ ============
BASIC EARNINGS PER COMMON SHARE $ 1.91 $ 1.48 $ 0.43
============ ============ ============
WORLDWIDE EFFECTIVE TAX RATE 39% 40% 1%
============ ============ ============
7
Investor Relations Supplemental Schedules
[OXY LOGO]
OCCIDENTAL PETROLEUM
OIL & GAS
CORE EARNINGS VARIANCE ANALYSIS
($ MILLIONS)
2004 3rd Quarter $ 1,003
2004 2nd Quarter 814
------------
$ 189
============
Price Variance $ 212
Volume/Mix Variance (21)
Exploration Expense Variance 3
All Others (5)
------------
TOTAL VARIANCE $ 189
============
================================================================================
OCCIDENTAL PETROLEUM
CHEMICAL
CORE EARNINGS VARIANCE ANALYSIS
($ MILLIONS)
2004 3rd Quarter $ 137
2004 2nd Quarter 85
------------
$ 52
============
Sales Price $ 55
Sales Volume/Mix (2)
Operations/Manufacturing (6)
All Others 5
------------
TOTAL VARIANCE $ 52
============
8
Investor Relations Supplemental Schedules
[OXY LOGO]
OCCIDENTAL PETROLEUM
2004 THIRD QUARTER NET INCOME (LOSS)
REPORTED INCOME COMPARISON
THIRD THIRD
QUARTER QUARTER
2004 2003 B / (W)
------------ ------------ ------------
OIL & GAS $ 1,003 $ 660 $ 343
CHEMICAL 137 61 76
CORPORATE
INTEREST EXPENSE, NET - DEBT AND
TRUST PREFERRED DISTRIBUTIONS (59) (71) 12
OTHER (49) (44) (5)
TAXES (274) (160) (114)
------------ ------------ ------------
NET INCOME $ 758 $ 446 $ 312
============ ============ ============
BASIC EARNINGS PER COMMON SHARE $ 1.91 $ 1.16 $ 0.75
============ ============ ============
WORLDWIDE EFFECTIVE TAX RATE 39% 40% 1%
============ ============ ============
================================================================================
OCCIDENTAL PETROLEUM
2004 THIRD QUARTER NET INCOME (LOSS)
CORE EARNINGS COMPARISON
THIRD THIRD
QUARTER QUARTER
2004 2003 B / (W)
------------ ------------ ------------
OIL & GAS $ 1,003 $ 660 $ 343
CHEMICAL 137 61 76
CORPORATE
INTEREST EXPENSE, NET - DEBT AND
TRUST PREFERRED DISTRIBUTIONS (59) (71) 12
OTHER (49) (44) (5)
TAXES (274) (160) (114)
------------ ------------ ------------
NET INCOME $ 758 $ 446 $ 312
============ ============ ============
BASIC EARNINGS PER COMMON SHARE $ 1.91 $ 1.16 $ 0.75
============ ============ ============
WORLDWIDE EFFECTIVE TAX RATE 39% 40% 1%
============ ============ ============
9
Investor Relations Supplemental Schedules
[OXY LOGO]
OCCIDENTAL PETROLEUM
OIL & GAS
CORE EARNINGS VARIANCE ANALYSIS
($ MILLIONS)
2004 3rd Quarter $ 1,003
2003 3rd Quarter 660
------------
$ 343
============
Price Variance $ 451
Volume/Mix Variance (21)
Exploration Expense Variance --
All Others (87)
------------
TOTAL VARIANCE $ 343
============
================================================================================
OCCIDENTAL PETROLEUM
CHEMICAL
CORE EARNINGS VARIANCE ANALYSIS
($ MILLIONS)
2004 3rd Quarter $ 137
2003 3rd Quarter 61
------------
$ 76
============
Sales Price $ 112
Sales Volume/Mix 12
Operations/Manufacturing (55) *
All Others 7
------------
TOTAL VARIANCE $ 76
============
* Higher energy, feedstock costs and other manufacturing costs
10
Investor Relations Supplemental Schedules
[OXY LOGO]
OCCIDENTAL PETROLEUM
SUMMARY OF OPERATING STATISTICS
THIRD QUARTER NINE MONTHS
----------------------------- -----------------------------
2004 2003 2004 2003
------------ ------------ ------------ ------------
NET PRODUCTION PER DAY:
UNITED STATES
CRUDE OIL AND LIQUIDS (MBL)
California 77 80 77 79
Permian 154 151 155 150
Horn Mountain 17 24 22 19
Hugoton 3 4 3 4
------------ ------------ ------------ ------------
TOTAL 251 259 257 252
NATURAL GAS (MMCF)
California 228 248 235 254
Hugoton 124 136 128 141
Permian 122 134 131 128
Horn Mountain 14 16 15 12
------------ ------------ ------------ ------------
TOTAL 488 534 509 535
LATIN AMERICA
CRUDE OIL (MBL)
Colombia 38 31 37 35
Ecuador 49 27 46 20
------------ ------------ ------------ ------------
TOTAL 87 58 83 55
MIDDLE EAST
CRUDE OIL (MBL)
Oman 14 13 13 12
Qatar 44 44 44 47
Yemen 28 34 33 36
------------ ------------ ------------ ------------
TOTAL 86 91 90 95
NATURAL GAS (MMCF)
Oman 88 -- 52 --
OTHER EASTERN HEMISPHERE
CRUDE OIL (MBL)
Pakistan 7 10 8 10
NATURAL GAS (MMCF)
Pakistan 73 71 74 74
BARRELS OF OIL EQUIVALENT (MBOE)
- --------------------------------------------------
SUBTOTAL CONSOLIDATED SUBSIDIARIES 539 519 544 514
OTHER INTERESTS
COLOMBIA - MINORITY INTEREST (4) (4) (5) (4)
RUSSIA - OCCIDENTAL NET INTEREST 27 30 29 30
YEMEN - OCCIDENTAL NET INTEREST 1 1 1 1
------------ ------------ ------------ ------------
TOTAL WORLDWIDE PRODUCTION (MBOE) 563 546 569 541
============ ============ ============ ============
11
Investor Relations Supplemental Schedules
[OXY LOGO]
OCCIDENTAL PETROLEUM
SUMMARY OF OPERATING STATISTICS
THIRD QUARTER NINE MONTHS
----------------------------- -----------------------------
2004 2003 2004 2003
------------ ------------ ------------ ------------
OIL & GAS:
- ----------
PRICES
UNITED STATES
Crude Oil ($/BBL) 40.29 28.24 36.07 28.83
Natural gas ($/MCF) 5.87 5.00 5.25 4.93
LATIN AMERICA
Crude Oil ($/BBL) 36.07 25.84 32.00 27.29
MIDDLE EAST
Crude Oil ($/BBL) 37.76 27.14 34.00 27.59
Natural Gas ($/MCF) 0.97 -- 0.97 --
OTHER EASTERN HEMISPHERE
Crude Oil ($/BBL) 35.44 25.61 32.13 26.49
Natural Gas ($/MCF) 2.30 2.13 2.33 1.98
TOTAL WORLDWIDE
Crude Oil ($/BBL) 37.87 26.81 33.78 27.20
Natural Gas ($/MCF) 4.77 4.63 4.52 4.55
THIRD QUARTER NINE MONTHS
----------------------------- -----------------------------
2004 2003 2004 2003
------------ ------------ ------------ ------------
EXPLORATION EXPENSE
Domestic $ 23 $ 25 $ 83 $ 70
Latin America 1 2 4 8
Middle East 1 6 15 12
Other Eastern Hemisphere 12 4 29 4
------------ ------------ ------------ ------------
TOTAL $ 37 $ 37 $ 131 $ 94
============ ============ ============ ============
12
Investor Relations Supplemental Schedules
[OXY LOGO]
OCCIDENTAL PETROLEUM
CHEMICALS
VOLUME (M TONS, EXCEPT PVC RESINS)
THIRD QUARTER NINE MONTHS
----------------------------- -----------------------------
MAJOR PRODUCTS 2004 2003 2004 2003
------------ ------------ ------------ ------------
Chlorine 730 681 2,176 2,031
Caustic 795 697 2,346 2,053
Ethylene Dichloride 102 135 324 374
PVC Resins (millions of pounds) 1,044 1,009 3,205 2,944
CHEMICALS
PRICES (INDEX)
THIRD QUARTER NINE MONTHS
----------------------------- -----------------------------
MAJOR PRODUCTS 2004 2003 2004 2003
------------ ------------ ------------ ------------
Chlorine 2.23 1.76 1.94 1.73
Caustic 0.84 0.85 0.72 0.85
Ethylene Dichloride 1.64 1.13 1.48 1.18
PVC Resins 1.13 0.88 1.05 0.91
1987 through 1990 average price = 1.00
CHLORINE
- --------
OXYCHEM COMMENTARY
- ------------------
o Chlorine operating rates remained strong throughout the 3rd quarter.
Unscheduled chlor-alkali outages were the only source of reduced production
within the quarter.
o As contract terms permitted, OxyChem fully implemented the $20 per ton
price increase announced in the 2nd quarter.
o OxyChem announced an additional $20 per ton increase to be effective
October 1 to most accounts. Other U.S. chlor-alkali producers announced
similar increases. Market conditions are expected to remain favorable for
the successful implementation of the announced price increase.
o Hurricane Ivan and unscheduled outages in the 3rd quarter combined to
further tighten the supply/demand balance. 4th quarter operating rates are
expected to remain high as the demand for downstream products continues to
be strong.
13
Investor Relations Supplemental Schedules
[OXY LOGO]
o Order control programs for chlorine are still in effect and are expected to
remain so through the 4th quarter for OxyChem and other U.S. producers.
INFLUENCING FACTORS:
- --------------------
Avoiding customer shutdowns will remain difficult due to tight chorine
supply/demand conditions and scheduled 4th quarter outages. Many large chlorine
consumers have been forced to curtail production rates due to lack of chlorine
availability. A smaller than expected fall-off in seasonal demand has
contributed to the tightening of the supply/demand balance.
CAUSTIC
- -------
OXYCHEM COMMENTARY
- ------------------
o 3rd quarter demand for caustic soda remained strong with sales volumes
consistent with those of the 2nd quarter. The organic, bleach and alumina
market segments contributed significantly to the strength of the 3rd
quarter.
o The order control programs instituted in the 2nd quarter by OxyChem and
other U.S. producers continued throughout the 3rd quarter and are expected
to remain through the 4th quarter.
o U.S. producers successfully implemented the $95 DST price increase
announced in the 2nd quarter. U.S. producers have announced an additional
price increase of $110 DST to be implemented in the 4th quarter.
INFLUENCING FACTORS:
- --------------------
The supply/demand balance for liquid caustic soda continues to lend support for
future price improvement in 2004. Continued strength in the U.S. manufacturing
sector is expected to keep liquid caustic soda demand in line with high chlorine
industry operating rates.
EDC
- ---
OXYCHEM COMMENTARY
- ------------------
o Sky-rocketing ethylene costs in Asia increased 3rd quarter demand for U.S.
produced EDC and offset any seasonal pricing pressures. As a result of the
increased demand, prices rose rapidly during the quarter.
o The accelerating EDC prices narrowed the gap with VCM and PVC that had
developed in the first half of 2004. By the middle of the 3rd quarter,
prices for EDC and its downstream products VCM and PVC had gained upward
momentum.
14
Investor Relations Supplemental Schedules
[OXY LOGO]
o EDC availability to China increased in September when Japan experienced a
typhoon that damaged several of their VCM facilities.
INFLUENCING FACTORS:
- --------------------
The supply/demand balance for EDC in Asia is expected to remain tight. High raw
material and energy costs will support continued demand for U.S. produced
material. Chlorine availability within the U.S. for EDC production is expected
to be limited.
PVC/VCM
- -------
OXYCHEM COMMENTARY
- ------------------
o Strong domestic PVC demand coupled with a robust export market led to a
sold out position in the 3rd quarter. The export demand along with PVC
plant outages has contributed to a supply/demand position that is balanced
to tight on the domestic side.
o Domestic PVC industry operating rates dipped slightly from the 2nd quarter
due to outages. VCM and PVC inventories at the producer level declined
while PVC levels at pipe producers and distributors remained moderate.
o Strong demand from PVC producers, VCM plant outages and low operating rates
at Pemex tightened the VCM supply/demand balance. PVC production was
interrupted at some producers due to VCM availability.
o Both the Westlake Geismar and Shintech Addis facilities remain idle. There
is some indication that Westlake will attempt to restart the PVC plant at
low rates in November.
o Domestic PVC resin prices were flat in July and increased $0.01 per pound
in both August and September. An additional increase of $0.01 per pound is
expected for November.
INFLUENCING FACTORS:
- --------------------
Continued strong demand and pricing to the export market is expected through the
4th quarter, providing support for future price improvements throughout the
vinyls chain. However, increases in energy and ethylene costs will offset some
of the margin improvement gained in the 3rd quarter.
15
Investor Relations Supplemental Schedules
[OXY LOGO]
OCCIDENTAL PETROLEUM
SUMMARY OF OPERATING STATISTICS
THIRD QUARTER NINE MONTHS
----------------------------- -----------------------------
CAPITAL EXPENDITURES ($MM) 2004 2003 2004 2003
------------ ------------ ------------ ------------
Oil & Gas
California $ 87 $ 58 $ 231 $ 155
Permian 81 72 206 187
Other - U.S. 18 11 30 37
Latin America 40 30 123 67
Middle East 191 152 550 376
Other Eastern Hemisphere 7 5 28 14
Chemicals 40 27 96 300 (a)
Corporate 3 5 7 15
------------ ------------ ------------ ------------
TOTAL $ 467 $ 360 $ 1,271 $ 1,151
============ ============ ============ ============
(a) Includes $180 million for the buyout of a VCM plant lease and $44 million
for buyout of railcar leases
THIRD QUARTER NINE MONTHS
DEPRECIATION, DEPLETION & ----------------------------- -----------------------------
AMORTIZATION OF ASSETS ($MM) 2004 2003 2004 2003
------------ ------------ ------------ ------------
Oil & Gas
Domestic $ 153 $ 158 $ 466 $ 481
Latin America 24 15 72 42
Middle East 67 49 201 150
Other Eastern Hemisphere 13 12 35 33
Chemicals 61 57 184 149
Corporate 4 4 14 11
------------ ------------ ------------ ------------
TOTAL $ 322 $ 295 $ 972 $ 866
============ ============ ============ ============
16
Investor Relations Supplemental Schedules
[OXY LOGO]
OCCIDENTAL PETROLEUM
CORPORATE
($ MILLIONS)
30-SEP-04 31-DEC-03
--------------- ---------------
CAPITALIZATION
Oxy Long-Term Debt (including current maturities) $ 3,832 $ 4,016
Trust Preferred Securities -- 453
Subsidiary Preferred Stock 75 75
Others 26 26
--------------- ---------------
TOTAL DEBT $ 3,933 $ 4,570
=============== ===============
EQUITY $ 9,778 $ 7,929
=============== ===============
Total Debt To Total Capitalization 29% 37%
=============== ===============
17
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; political risk; 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.
18