LOS ANGELES, Oct 21, 2002 (PRIMEZONE) -- Occidental Petroleum Corporation (NYSE:OXY) announced net income for the third quarter 2002 of $402 million ($1.07 per share), compared with $444 million ($1.19 per share) for the third quarter 2001. Earnings before special items and discontinued operations were $329 million ($0.87 per share) for the third quarter 2002, compared with $316 million ($0.85 per share) for the third quarter 2001. The third quarter 2002 included special items and discontinued operations of a net $73 million gain related to asset sales, primarily the sale of the investment in Equistar, partially offset by the impairment of various chemical assets. The third quarter 2001 special items and discontinued operations included a net $128 million gain related to the sale of non-strategic assets.
In announcing the results, Dr. Ray R. Irani, chairman and chief executive officer, said, "Occidental turned in another strong performance in the third quarter. Earnings before special items and discontinued operations not only exceeded last year's third quarter results, but also this year's second quarter results.
"For the first nine months of this year, our production of 513,000 BOE per day increased by over 8 percent compared with the same period in 2001. We have exceeded the production forecast of 500,000 BOE per day for 2002 that we provided earlier this year, and we are reaffirming our forecast for 2003 of 525,000 BOE per day.
"Income from our chemical businesses continued to improve in the third quarter from the second quarter as a result of improving margins, mainly from chloro-vinyls products."
Oil and Gas
Oil and gas segment earnings before special items were $483 million for the third quarter 2002, compared with $528 million for the third quarter 2001. The decline in the third quarter 2002 earnings reflected the effect of lower natural gas prices partially offset by lower exploration expense and higher crude oil prices.
Oil and gas segment earnings were $490 million for the third quarter 2002, compared with $927 million for the third quarter 2001. The special items in both years included after-tax gains related to the sale of non-strategic assets, $7 million in the third quarter 2002 and $399 million in the third quarter 2001.
Chemicals
Chemical segment earnings before special items were $87 million for the third quarter 2002, compared with $38 million for the third quarter 2001. The improvement in the third quarter 2002 earnings reflected higher sales prices for PVC, chlorine and EDC, and improved performance of the Equistar petrochemical investment partially offset by lower caustic soda prices.
Chemical segment earnings were $214 million for the third quarter 2002. The third quarter 2002 special items included a $164 million net of tax gain from the sale of the investment in Equistar and a $37 million pre-tax charge for the impairment of various operating assets. There were no special items in the third quarter 2001.
Nine Months Results
For the first nine months of 2002, net income was $667 million ($1.77 per share), compared with $1.401 billion ($3.77 per share) for the first nine months of 2001. Earnings before special items and discontinued operations were $702 million ($1.87 per share) for 2002, compared with $1.291 billion ($3.47 per share) for the same period of 2001.
EITF Issue 02-3
Occidental adopted EITF Issue 02-3 in the third quarter of 2002 and reflected the appropriate changes in all periods presented. Revenues and cost of sales for oil and gas trading activities were reduced by equal and offsetting amounts, as discussed in the footnote to the Summary of Segment Net Sales and Earnings in this press release. There was no change in margins, income, EPS or cash flow for any period as a result of this adoption. Energy companies that have revenues from trading activities were required to implement this issue in the third quarter.
Statements in this presentation that contain words such as "will" or "expect," or otherwise related 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 consideration, 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.
SUMMARY OF SEGMENT NET SALES AND EARNINGS
(Millions, except per-share amounts)
Third Quarter Nine Months
Periods Ended September 30 2002 2001 2002 2001
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SEGMENT NET SALES
Oil and gas (a) $ 1,224 $ 1,251 $ 3,347 $ 4,310
Chemical 739 732 2,006 2,408
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Net sales $ 1,963 $ 1,983 $ 5,353 $ 6,718
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SEGMENT EARNINGS
Oil and gas $ 490 $ 927 $ 1,217 $ 2,679
Chemical 214 38 217 14
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704 965 1,434 2,693
Unallocated Corporate Items
Interest expense, net (b) (73) (60) (195) (207)
Income taxes (c) (105) (128) (250) (550)
Trust preferred distributions
& other (12) (13) (35) (43)
Other (d) (38) (321) (114) (467)
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Income from continuing operations 476 443 840 1,426
Discontinued operations (e) (74) 1 (78) 2
Extraordinary loss, net -- -- -- (3)
Cumulative effect of changes
in accounting principles, net -- -- (95) (24)
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NET INCOME $ 402 $ 444 $ 667 $ 1,401
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BASIC EARNINGS PER COMMON SHARE
Income from continuing
operations $ 1.26 $ 1.19 $ 2.23 $ 3.83
Discontinued operations (e) (.19) -- (.21) .01
Extraordinary loss, net -- -- -- (.01)
Cumulative effect of changes
in accounting principles, net -- -- (.25) (.06)
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$ 1.07 $ 1.19 $ 1.77 $ 3.77
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DILUTED EARNINGS PER COMMON SHARE
Income from continuing
operations $ 1.25 $ 1.18 $ 2.22 $ 3.81
Discontinued operations (e) (.19) -- (.21) .01
Extraordinary loss, net -- -- -- (.01)
Cumulative effect of changes
in accounting principles, net -- -- (.25) (.06)
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$ 1.06 $ 1.18 $ 1.76 $ 3.75
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AVERAGE BASIC COMMON SHARES
OUTSTANDING 377.1 373.5 376.0 371.9
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(a) Oil and gas revenues reflect the adoption of EITF 02-3 effective
in the third quarter of 2002. Segment net sales (revenues) and
cost of sales were reduced by equal and offsetting amounts to
report revenue from oil and gas trading activities on a net basis
as follows:
Third Quarter Nine Months
2001 2001
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Previously reported sales $2,521 $9,097
Adjustments pursuant to EITF 02-3 (1,270) (4,787)
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Sales as adjusted $1,251 $4,310
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There was no change in margins, income, EPS or cash flow for any
period as a result of this adoption.
(b) Includes interest income on notes receivable from Altura
partners. The nine months year-to-date 2002 includes $22 million
and the third quarter and nine months year-to-date 2001 include
$24 million and $85 million, respectively.
(c) Includes an offset for charges and credits in lieu of U.S.
federal income taxes allocated to the segments. Oil and gas
segment earnings have been impacted by charges of $3 million and
$35 million in the third quarters of 2002 and 2001, respectively.
The oil and gas segment third quarters of 2002 and 2001 includes
the tax effects from asset sales of $4 million and $35 million,
respectively. Chemical segment earnings have been impacted by
credits of $395 million in the third quarter of 2002 and $16
million in the third quarter of 2001. The chemical segment third
quarters of 2002 and 2001 include the tax effects from asset
sales/dispositions of $392 million and $12 million, respectively.
(d) Includes preferred distributions to the Occidental Permian
partners. The nine months year-to-date 2002 includes $20
million. The third quarter and nine months year-to-date 2001
include $25 million and $87 million, respectively. These amounts
are essentially offset by the interest income discussed in (b)
above. The third quarter and nine months year-to-date 2001 also
include a $272 million net-of-tax loss related to the sale of
Occidental's residual interest in Occidental Texas Pipeline
Company.
(e) Occidental's chromium business and Brazilian vinyl operations
have been reclassified to discontinued operations. Occidental
announced on October 11, 2002 it has agreed to sell its chromium
chemical business to Elementis plc. As a result of the pending
sale, Occidental recognized an after-tax loss of $30 million in
the third quarter 2002. Occidental is currently in discussions
with a buyer for its Brazilian vinyl operations. Occidental
recognized a loss of $39 million related to write-down of these
assets in the third quarter 2002.
SUMMARY OF OPERATING STATISTICS
Third Quarter Nine Months
Periods Ended September 30 2002 2001 2002 2001
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NET OIL, GAS AND LIQUIDS
PRODUCTION PER DAY
United States
Crude oil and liquids (MBBL)
California 84 78 87 75
Permian 143 137 141 136
Other 3 -- 3 --
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Total 230 215 231 211
Natural Gas (MMCF)
California 283 302 293 305
Hugoton 149 154 152 161
Permian 132 146 129 147
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Total 564 602 574 613
Latin America
Crude oil and condensate (MBBL)
Colombia 33 35 34 19
Ecuador 13 13 13 13
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Total 46 48 47 32
Eastern Hemisphere
Crude oil and condensate (MBBL)
Oman 9 10 14 10
Pakistan 12 7 10 7
Qatar 44 45 43 43
Russia 26 27 27 27
Yemen 29 32 36 33
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Total 120 121 130 120
Natural Gas (MMCF)
Pakistan 74 50 58 49
Barrels of Oil Equivalent (MBOE) 502 493 513 473
CAPITAL EXPENDITURES (millions) $ 283 $ 395 $ 840 $ 908
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DEPRECIATION, DEPLETION AND
AMORTIZATION OF ASSETS (millions) $ 245 $ 243 $ 759 $ 722
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