LOS ANGELES, Oct. 18, 2000 (PRIMEZONE) -- Occidental Petroleum Corporation (NYSE:OXY) announced net income of $402 million ($1.09 per share) for the third quarter of 2000, compared with $126 million ($0.35 per share) for the corresponding period of 1999.
Earnings before special items for the quarter were $370 million ($1.00 per share) compared with earnings before special items of $125 million ($0.35 per share) for the third quarter of 1999. Sales for the third quarter of 2000 increased to $3.8 billion from $2.1 billion in 1999.
In announcing the results, Dr. Ray R. Irani, chairman and chief executive officer, emphasized Occidental's commitment to debt reduction. "When we announced our intention to purchase Altura Energy, we made a commitment to reduce our total debt by $2 billion by the end of this year from the $9 billion pro-forma level reached in April of this year as a result of purchasing Altura. The reduction is being made through a combination of asset sales and cash flow", he said. "Thanks to strong oil and gas prices and production from the Altura properties, we have reached that goal three months ahead of schedule. The total debt at the end of the third quarter of $7.06 billion includes $2.08 billion of the Altura non-recourse debt. The ratio of debt to total capitalization, which rose with the Altura financing, has declined dramatically and is now essentially unchanged from the beginning of the year. Debt reduction remains our highest priority and we will continue to use our strong cash flow and the proceeds from asset sales to achieve additional reductions in the fourth quarter."
Results for the quarter included after-tax gains of $39 million from the partial-interest sale of the subsidiary that owned Occidental's Gulf of Mexico shelf assets; after-tax income of $41 million from the receipt of contingency payments related to a prior year sale of an oil and gas subsidiary in the Dutch North Sea; and a $1 million extraordinary gain resulting from the early extinguishment of debt. The results also included $49 million of after-tax charges related to the write-down of various oil and gas assets, real estate and investments.
Oil and Gas
The oil and gas division earned $690 million before special items, compared with $279 million for the third quarter of 1999. The improvement is primarily the result of higher worldwide crude oil and natural gas prices combined with increased domestic oil production volumes. The net increase in domestic production volumes, resulting from the acquisitions of Altura and THUMS in the second quarter of 2000, more than offsets lower international production. The overall earnings improvement was partially offset by higher exploration expense.
Oil and gas earnings after special items were $696 million for the third quarter of 2000, compared with $280 million for the third quarter of 1999. The 2000 results included $80 million of net gains from the previously described asset sale and the receipt of contingency payments, partially offset by charges of $74 million, on a pre-tax basis, to write down various oil and gas assets, real estate and investments.
Chemicals
The chemical division earned $47 million for the third quarter of 2000, compared with $44 million for the third quarter of 1999. Since the second quarter of 2000, chemical earnings have declined primarily due to reduced sales prices and volumes in EDC and PVC and higher energy and feedstock costs.
For the first nine months of 2000, Occidental's net income was $1.2 billion ($3.36 per share), compared with $65 million ($0.17 per share) for the first nine months of 1999. Net income for the nine months before special items was $977 million ($2.65 per share), compared with net income of $61 million ($0.15 per share) for 1999. Sales increased from $5.1 billion in the nine months of 1999 to $9.4 billion for the same period of 2000.
A conference call regarding these financial results will be held today at 11:30 a.m. EDT and may be accessed by calling 1-800-275-3210.
Forward-looking statements and estimates regarding exploration and production activities, oil, gas and commodity chemical prices, operating costs and their related earnings effects 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.
SUMMARY OF DIVISIONAL NET SALES AND EARNINGS
(Millions, except per-share amounts)
Third Quarter Nine Months
Periods Ended September 30 2000 1999 2000 1999
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DIVISIONAL NET SALES
Oil and gas $ 2,965 $ 1,265 $ 6,614 $ 2,955
Chemical 840 848 2,827 2,149
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Net sales $ 3,805 $ 2,113 $ 9,441 $ 5,104
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DIVISIONAL EARNINGS (LOSS)
Oil and gas $ 696 $ 280 $ 1,647 $ 511
Chemical 47 44 224 89
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743 324 1,871 600
Unallocated Corporate Items
Interest expense, net (a) (97) (118) (300) (357)
Income taxes (b) (169) (41) (668) (65)
Trust preferred distributions
& other (17) (16) (50) (45)
Other (c) (59) (23) 383 (52)
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Income Before Extraordinary
Items and Effect of Changes
in Accounting Principles 401 126 1,236 81
Extraordinary gain/(loss), net 1 -- 1 (3)
Cumulative effect of changes
in accounting principles,
net -- -- -- (13)
------- ------- ------- -------
Net Income 402 126 1,237 65
Effect of repurchase of Trust
Preferred Securities -- -- 1 --
Preferred dividends -- -- -- (7)
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EARNINGS APPLICABLE TO COMMON
STOCK $ 402 $ 126 $ 1,238 $ 58
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BASIC AND DILUTED EARNINGS
PER COMMON SHARE
Income before extraordinary
items and effect of changes
in accounting principles $ 1.09 $ .35 $ 3.36 $ .22
Extraordinary gain/(loss), net -- -- -- (.01)
Cumulative effect of changes
in accounting principles,
net -- -- -- (.04)
------- ------- ------- -------
$ 1.09 $ .35 $ 3.36 $ .17
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AVERAGE BASIC COMMON SHARES
OUTSTANDING 369.2 357.6 368.7 351.3
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(a) The third quarter and nine months year-to-date 2000 includes $38
million and $68 million, respectively, interest income on notes
receivable from Altura partners.
(b) Includes an offset for charges and credits in lieu of U.S.
federal income taxes allocated to the divisions. Oil and Gas
divisional earnings have been impacted by charges of $42 million
and $1 million in the third quarters of 2000 and 1999,
respectively. The Oil and Gas third quarter of 2000 amount
includes the tax effects from the partial-interest sale of the
subsidiary which 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 divisional earnings have
been impacted by credits of $4 million in the third quarters of
2000 and 1999, respectively.
(c) The third quarter and nine months year-to-date 2000 includes
preferred distributions to the Occidental Permian partners of $38
million and $68 million, respectively. This is offset by the
interest income discussed in (a) above.
SUMMARY OF OPERATING STATISTICS
Third Quarter Nine Months
Periods Ended September 30 2000 1999 2000 1999
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NET OIL, GAS AND LIQUIDS
PRODUCTION PER DAY
United States
Liquids (MBBL)
California 74 50 68 52
Permian 136 14 89 14
US Other - 7 2 7
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Total 210 71 159 73
Natural Gas (MMCF)
California 305 287 302 282
Hugoton 178 174 168 175
Permian 161 55 118 56
US Other 43 157 89 151
------- ------- ------- -------
Total 687 673 677 664
Other Western Hemisphere
Crude oil (MBBL)
Colombia 21 40 33 45
Ecuador 21 15 19 16
Peru - 40 - 41
------- ------- ------- -------
Total 42 95 52 102
Eastern Hemisphere
Crude oil (MBBL)
Oman 8 15 9 15
Pakistan 8 5 6 6
Qatar 48 54 50 61
Russia 28 28 27 27
Yemen 32 26 32 32
------- ------- ------- -------
Total 124 128 124 141
Natural Gas (MMCF)
Bangladesh - 4 - 11
Pakistan 47 47 49 42
------- ------- ------- -------
Total 47 51 49 53
Barrels of Oil Equivalent (MBOE) 499 414 456 436
CAPITAL EXPENDITURES (millions) $ 275 $ 120 $ 608 $ 383
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DEPRECIATION, DEPLETION AND
AMORTIZATION OF ASSETS (millions) $ 268 $ 198 $ 687 $ 598
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