LOS ANGELES, April 28, 2000 (PRIMEZONE) -- Occidental Petroleum Corporation (NYSE:OXY) said today it expects to maintain strong earnings per share throughout 2000 as it continues to focus on developing high-return assets and on cost reductions.
"The actions we have taken over the last two years have made Occidental stronger than ever and Oxy's prospects for the future have never been better," Dr. Ray R. Irani, Occidental's chairman and chief executive officer, told stockholders at the company's annual meeting.
Dr. Irani pointed out that Occidental's earnings before special items increased steadily over the past three quarters from 35 cents per share in the third quarter of 1999 to 52 cents in the fourth quarter to 72 cents per share in the first quarter of 2000.
"First quarter earnings are nearly 40 percent higher than last year's fourth quarter. In fact, our earnings were higher in the first quarter of this year than in all of 1999," Dr. Irani said.
"Our first quarter performance was fueled in part by the strong performance of our chemical business," Dr. Irani said. "This year's first quarter chemical earnings of $143 million virtually equaled the 1999 total year. We believe that chemical earnings and cash flow will continue to improve substantially in 2000."
Occidental has strengthened its mix of oil and gas and chemical assets by acquisitions, by swapping or selling low-margin assets for ones with higher-margin potential, and by creating strategic alliances.
In oil and gas, Occidental has narrowed its focus to three core regions -- the United States, the Middle East and Latin America. In 1997, Occidental's oil and gas division had operations in 24 countries. Today, that number is nine.
"The real significance of these changes is that we have a larger production base and higher-margin barrels, despite being active in fewer countries," Dr. Irani said.
With the recent acquisition of Altura Energy in the Permian Basin of Texas and New Mexico, and with the enlarging of its California operations, Occidental is now the largest independent oil and gas producer in the United States. The company expects its net worldwide production this year will average 480,000 barrels per day, an increase of 13 percent from 1999.
In Occidental's chemical division, despite having to absorb $300 million in higher energy and feedstock costs, earnings rose steadily throughout 1999 to $70 million in the fourth quarter.
Dr. Irani noted that the market for chlorine strengthened through 1999 and is expected to remain strong this year as a result of high demand for PVC. PVC prices and margins rose in 1999 and are expected to increase this year as worldwide demand for PVC strengthens.
Dr. Irani said Occidental expects to continue paying down debt. During the past year, Occidental reduced its ratio of total debt to total capitalization from 64 percent to 59 percent. This year, Occidental expects to reduce debt from free cash flow by $500 million and also eliminate $300 million in the non-recourse debt of the Altura partnership.
Dr. Irani said Occidental also is continuing to reduce costs. Between 1997 and 1999, selling, general and administrative costs was reduced by $190 million, from a base of $750 million to $560 million. This year, Occidental hopes to further reduce these costs.
Dr. Dale R. Laurance, Occidental's president, termed the Altura acquisition, which was completed earlier this month, as the most important recent development in the oil and gas division's strategy of building large properties in core areas.
"These assets have lower operating costs than their local competitors, very long lives, and they provide a solid platform for future growth in production, reserves, profits and enhanced shareholder value. We expect Altura to sustain a steady flow of profits and cash flow well into the future," Dr. Laurance said.
On an oil equivalent basis, Altura adds 850 million barrels of proved reserves and 135,000 barrels per day of production.
Note: This press release may contain forward-looking statements that reflect management's expectations and are based upon data available at the time. Actual results are subject to future events and uncertainties that could materially impact performance.