LOS ANGELES, Oct. 19, 1999 (PRIMEZONE) -- Occidental Petroleum Corporation today reported net income of $126 million ($.35 per share) for the third quarter of 1999, compared with net income of $38 million ($.10 per share) for the third quarter of 1998.
Earnings before special items were $125 million for the third quarter of 1999, compared with earnings before special items of $3 million for the third quarter of 1998. Sales were $2.1 billion for the third quarter of 1999, compared with sales of $1.7 billion for the same period in 1998.
Dr. Ray R. Irani, chairman and chief executive officer, said, "Occidental's earnings improved from both the third quarter of 1998 and each of the first two quarters of 1999. Oil and gas margins improved due to higher prices as well as lower operating and overhead expenses resulting from significant cost-cutting efforts."
Dr. Irani also pointed out that:
-- In the chemical division, there were price increases in
chlorine, caustic soda and PVC in the third quarter, but
the full impact of the increases may not be realized until
early in 2000.
-- Occidental is on target to reduce corporate-wide selling,
general and administrative costs by at least $250 million
annually by 2001, compared with its 1997 base.
Oil and Gas
Oil and gas divisional earnings before special items were $278 million for the third quarter of 1999, compared with $61 million for the third quarter of 1998, primarily as a result of higher crude oil and natural gas prices, lower exploration costs and lower operating costs resulting from a more focused base of operations.
Oil and gas third quarter 1999 earnings were 69 percent greater than second quarter 1999 earnings.
Oil and gas results after special items for the third quarter of 1999 and 1998 were $279 million and $156 million, respectively. The 1999 results include a charge of $10 million for the recently announced closing of the Bakersfield office and income of $11 million for a contingent payment on the 1998 sale of Occidental's interests in the Netherlands. The 1998 results included gains on asset sales, the write-off of its investment in certain exploration projects and a charge for reorganization.
In the Horn Mountain discovery in Mississippi Canyon Block 127, announced in August by operator Vastar Resources, an exploratory well encountered 285 feet of net pay. Appraisal work is under way. Occidental has a one-third interest.
Chemicals
Chemical divisional earnings were $40 million for the third quarter of 1999, compared with $62 million for the third quarter of 1998. The decline is due primarily to higher raw material costs, partially offset by increased sales price realization.
Chemical third quarter 1999 earnings were 135 percent greater than second quarter 1999 earnings before special items.
During the third quarter, significant posted price increases were announced for chlorine, caustic soda and PVC. Due to competitive conditions and contract provisions, earnings may not reflect the full impact of these increases until the first quarter of next year.
Other
Unallocated corporate other expenses were $23 million for the third quarter of 1999, compared to $25 million for the same period in 1998. Distributions paid on the Trust Preferred Securities issued by a subsidiary trust of Occidental in the first quarter were $11 million in the third quarter of 1999.
For the first nine months of 1999, Occidental's net income was $65 million ($.17 per share), compared with net income of $401 million ($1.11 per share) for the first nine months of 1998. The nine months results before special items were net income of $61 million for 1999, compared with earnings before special items of $139 million in 1998. Sales were $5.1 billion for the nine months of 1999, compared with sales of $4.9 billion for the same period of 1998.
For additional information on Occidental Petroleum Corporation, see the company's website at www.oxy.com
Forward-looking statements and estimates regarding exploration and production activities, oil, gas and commodity chemical prices and their related earnings effects, and cost reductions in this release are based on assumptions concerning market, competitive, regulatory, environmental, operational and other conditions. Actual results could differ materially as a result of factors discussed in Occidental's Annual Report on Form 10-K.
SUMMARY OF DIVISIONAL NET SALES AND EARNINGS
(Millions, except per-share amounts)
Third Quarter Nine Months
Periods Ended September 30 1999 1998 1999 1998
========================= ======= ======= ======= =======
Divisional net sales
Oil and Gas $ 1,265 $ 1,030 $ 2,955 $ 2,509
Chemical 848 631 2,149 2,395
------- ------- ------- -------
$ 2,113 $ 1,661 $ 5,104 $ 4,904
========================= ======= ======= ======= =======
Divisional earnings
Oil and Gas $ 279 $ 156 $ 507 $ 768
Chemical 40 62 78 280
------- ------- ------- -------
319 218 585 1,048
Unallocated corporate items
Interest expense, net (118) (106) (357) (336)
Income taxes (a) (41) (49) (65) (291)
Trust preferred
distributions (11) - (30) -
Other (23) (25) (52) (58)
------- ------- ------- -------
Income from continuing
operations 126 38 81 363
Discontinued operations,
Net - - - 38
Extraordinary loss, net (b) - - (3) -
Cumulative effect of changes
in accounting principles,
net (c) - - (13) -
------- ------- ------- -------
Net income 126 38 65 401
Preferred dividends - (4) (7) (13)
------- ------- ------- -------
Earnings applicable to common
stock $ 126 $ 34 $ 58 $ 388
======= ======= ======= =======
Earnings per common share
Basic
Income from continuing
operations $ .35 $ .10 $ .22 $ 1.00
Discontinued operations,
Net - - - .11
Extraordinary loss,
net (b) - - (.01) -
Cumulative effect of
changes in accounting
principles, net (c) - - (.04) -
------- ------- ------- -------
Basic earnings per common
share (d) $ .35 $ .10 $ .17 $ 1.11
======= ======= ======= =======
Diluted
Income from continuing
operations $ .35 $ .10 $ .22 $ .99
Discontinued operations,
Net - - - .10
Extraordinary loss,
net (b) - - (.01) -
Cumulative effect of
changes in accounting
principles, net (c) - - (.04) -
------- ------- ------- -------
Diluted earnings per
common share $ .35 $ .10 $ .17 $ 1.09
======= ======= ======= =======
Average common shares
outstanding 357.6 350.0 351.3 351.2
================= ======= ======= ======= ======= =======
See footnotes on following page.
SUMMARY OF OPERATING STATISTICS
Third Quarter Nine Months
Periods Ended September 30 1999 1998 1999 1998
=========================== ======= ======= ======= =======
Net oil, gas and liquids
production per day
United States
Crude oil and condensate
(thousands of barrels) 62 69 64 75
Natural gas liquids
(thousands of barrels) 9 9 9 8
Natural gas
(millions of cubic feet) 673 603 664 603
Other Western Hemisphere
Crude oil and condensate
(thousands of barrels) 95 79 103 84
Eastern Hemisphere
Crude oil and condensate
(thousands of barrels) 127 164 141 146
Natural gas
(millions of cubic feet) 51 54 53 105
Capital expenditures
(millions) $ 120 $ 254 $ 383 $ 840
======= ======= ======= =======
Depreciation, depletion and
amortization of assets
(millions) $ 198 $ 202 $ 598 $ 653
--------------------- ------ ------- ------- ------- -------
(a) Includes an offset for charges and credits in lieu of U.S.
federal income taxes allocated to the divisions. Divisional
earnings have been impacted from allocations of a $1 million
charge and $4 million credit at oil and gas and chemical,
respectively, in the third quarter of 1999 and by $2 million
and $7 million credits at oil and gas and chemical,
respectively, in the third quarter of 1998.
(b) The nine months of 1999 reflects the partial early
extinguishment of 11-1/8% senior debentures at a redemption
price of 105.563% of the principal amount. The impact of the
early extinguishment is a $3 million charge which is net of a
$1 million income tax benefit.
(c) The nine months of 1999 reflects the adoption of SOP 98-5
"Reporting on the Costs of Start-Up Activities", which requires
expensing of start-up costs as incurred and those costs that
are currently capitalized at date of adoption. The impact of
SOP 98-5 is a $15 million charge which is net of an $8 million
income tax benefit. Also reflects the adoption of EITF 98-10
"Accounting for Contracts Involved in Energy Trading and Risk
Management Activities", which requires energy trading contracts
to be marked to market. The impact of EITF 98-10 is a
$2 million credit which is net of a $1 million income tax
charge.
(d) The 1999 earnings per share calculations include the effect
of preferred stock being converted into common stock as a
result of the previously announced September 16, 1999
conversion.
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