LOS ANGELES, Jan 29, 2003 (PRIMEZONE) -- Occidental Petroleum Corporation (NYSE:OXY) announced net income for the fourth quarter 2002 of $322 million ($0.85 per share), compared with a net loss of $247 million ($0.66 per share) for the fourth quarter 2001. The fourth quarter 2001 included a $240 million after-tax charge, reflecting the effect of the agreement to sell Occidental's interest in Equistar.
In announcing the results, Dr. Ray R. Irani, chairman and chief executive officer, said, "Our strong fourth quarter performance completed another year of major accomplishments that included exceeding our combined oil and natural gas production forecast, the continued strengthening of our balance sheet and the generation of competitive returns on equity and capital employed. Oil and gas production in the fourth quarter averaged 518,000 barrels of oil equivalent (BOE) per day. That's 7.5 percent higher than in the fourth quarter of 2001 and keeps us on target to meet or exceed our 2003 forecast of 525,000 BOE per day. We ended the year with our debt to capitalization ratio at 43 percent, the lowest level in 21 years. Our strong earnings performance produced a return on equity of nearly 17 percent and return on capital employed of almost 11 percent."
Oil and Gas
Oil and gas segment and core earnings were $490 million for the fourth quarter 2002, compared with $166 million for the fourth quarter 2001. The improvement in the fourth quarter 2002 earnings reflected $299 million from higher worldwide crude oil and natural gas prices and a $35 million increase from higher production volumes; partially offset by higher exploration expense.
Chemicals
Chemical segment earnings were $58 million for the fourth quarter 2002, compared with a loss of $412 million for the fourth quarter 2001. The 2001 loss resulted from a $412 million pre-tax charge, reflecting the effect of the sale of the company's interest in the Equistar petrochemicals joint venture.
Chemical core earnings also were $58 million for the fourth quarter 2002, compared with breakeven core earnings for the fourth quarter 2001. The improvement in the fourth quarter 2002 core earnings reflected higher sales prices for PVC, chlorine and EDC, lower self-insured reserve requirements and the absence of the Equistar fourth quarter 2001 loss; partially offset by lower caustic sales prices and higher energy and raw material costs.
Twelve-Month Results
For the twelve months of 2002, net income was $989 million ($2.63 per share), compared with $1.154 billion ($3.10 per share) for the twelve months of 2001.
Core earnings were $999 million for 2002 compared with $1.246 billion for 2001. See the attached schedule for a reconciliation of earnings to core earnings.
For details of items affecting the comparability of core earnings between periods in 2002 and 2001, see the attached schedule.
SUMMARY OF SEGMENT NET SALES AND EARNINGS
($ millions, except per-share amounts)
Fourth Quarter Twelve Months
2002 2001 2002 2001
================================ ======= ======= ======= =======
SEGMENT NET SALES
Oil and gas $ 1,287 $ 824 $ 4,634 $ 5,134
Chemical 698 560 2,704 2,968
------- ------- ------- -------
Net sales $ 1,985 $ 1,384 $ 7,338 $ 8,102
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SEGMENT EARNINGS (LOSSES)
Oil and gas $ 490 $ 166 $ 1,707 $ 2,845
Chemical 58 (412) 275 (399)
------- ------- ------- -------
548 (246) 1,982 2,446
Unallocated Corporate Items
Interest expense, net (a) (58) (62) (253) (272)
Income taxes (b) (114) 190 (364) (359)
Trust preferred distributions
& other (12) (13) (47) (56)
Other (c) (41) (113) (155) (580)
------- ------- ------- -------
Income/(loss) from continuing
operations 323 (244) 1,163 1,179
Discontinued operations, net (1) (3) (79) (1)
Cumulative effect of changes
in accounting principles, net -- -- (95) (24)
------- ------- ------- -------
NET INCOME/(LOSS) $ 322 $ (247) $ 989 $ 1,154
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BASIC EARNINGS PER COMMON SHARE
Income/(loss) from continuing
operations $ 0.85 $ (0.65) $ 3.09 $ 3.16
Discontinued operations, net -- (0.01) (0.21) --
Cumulative effect of changes
in accounting principles, net -- -- (0.25) (0.06)
------- ------- ------- -------
$ 0.85 $ (0.66) $ 2.63 $ 3.10
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DILUTED EARNINGS PER COMMON SHARE
Income/(loss) from continuing
operations $ 0.84 $ (0.65) $ 3.07 $ 3.15
Discontinued operations, net -- $ (0.01) $ (0.21) --
Cumulative effect of changes
in accounting principles, net -- -- (0.25) (0.06)
------- ------- ------- -------
$ 0.84 $ (0.66) $ 2.61 $ 3.09
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AVERAGE BASIC COMMON SHARES
OUTSTANDING 377.6 373.8 376.2 372.4
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(a) Includes interest income on notes receivable from Altura
partners. The partnership exercised an option in May 2002 to
redeem the sellers' remaining partnership interests in exchange
for the outstanding balance on the notes. The twelve months 2002
amount includes $21 million and the fourth quarter and twelve
months 2001 amounts include $17 million and $102 million,
respectively.
(b) Excludes U.S. federal income tax charges and credits allocated to
the segments and foreign taxes. Oil and gas segment earnings
include credits of $1 million in both the fourth quarters of 2002
and 2001. Chemical segment earnings include a credit of $4
million in the fourth quarter of 2001.
The fourth quarter 2001 amount includes a $172 million credit
reflecting the statutory tax effect of the agreement, in
principle, to sell Occidental's interest in Equistar.
Oil and gas segment earnings for the twelve months 2002 and 2001
include charges of $1 million and $36 million, respectively. The
amounts include charges for asset sales of $4 million and $39
million for the years 2002 and 2001, respectively. Chemical
segment earnings have been impacted by credits of $403 million
for the twelve months 2002 and by credits of $42 million for the
twelve months 2001. The 2002 amount includes a $392 million
credit for the tax effects of the sale of the Equistar investment
and the 2001 amount includes $26 million of credits for asset
sales.
(c) Includes preferred distributions to the Occidental Permian
partners. The twelve months 2002 amount includes $22 million. The
fourth quarter and twelve months 2001 amounts include $17 million
and $104 million, respectively. This is essentially offset by the
interest income discussed in (a) above. The partnership exercised
an option in May 2002 to redeem the sellers' remaining
partnership interests in exchange for the outstanding balance on
the notes.
The twelve months 2001 amount includes a $272 million net-of-tax
loss related to the sale of Occidental's residual interest in
Occidental Texas Pipeline Company.
SUMMARY OF OPERATING STATISTICS
Fourth Quarter Twelve Months
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 82 86 76
Permian 142 137 142 137
Other 6 -- 4 --
------- ------- ------- -------
Total 232 219 232 213
Natural Gas (MMCF)
California 266 297 286 303
Hugoton 139 153 148 159
Permian 133 150 130 148
------- ------- ------- -------
Total 538 600 564 610
Latin America
Crude oil (MBBL)
Colombia 41 17 35 18
Ecuador 13 13 13 13
------- ------- ------- -------
Total 54 30 48 31
Eastern Hemisphere
Crude oil (MBBL)
Oman 13 14 13 12
Pakistan 12 7 10 7
Qatar 37 43 42 43
Russia 29 28 27 27
Yemen 39 32 38 33
------- ------- ------- -------
Total 130 124 130 122
Natural Gas (MMCF)
Pakistan 76 51 63 50
Barrels of Oil Equivalent (MBOE) 518 482 515 476
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Consolidated subsidiaries 516 482 514 476
Non-consolidated interests -- net 2 -- 1 --
------- ------- ------- -------
Total worldwide production 518 482 515 476
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CAPITAL EXPENDITURES (millions) $ 396 $ 400 $ 1,236 $ 1,308
======= ======= ======= =======
DEPRECIATION, DEPLETION AND
AMORTIZATION OF ASSETS (millions) $ 253 $ 243 $ 1,012 $ 965
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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 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. 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:
Fourth Quarter Twelve Months
($ millions) 2002 2001 2002 2001
================================ ======= ======= ======= =======
TOTAL EARNINGS (LOSS) $ 322 $ (247) $ 989 $ 1,154
======= ======= ======= =======
Oil and Gas
Segment Earnings $ 490 $ 166 $ 1,707 $ 2,845
Less:
Gain on sale of interest in
the Indonesian Tangguh
LNG project(a) -- -- -- 399
------- ------- ------- -------
Segment Core Earnings 490 166 1,707 2,446
------- ------- ------- -------
Chemicals
Segment Earnings (Loss) 58 (412) 275 (399)
Less:
Gain on sale of Equistar
investment(a) -- -- 164 --
Equistar writedown -- (412) -- (412)
------- ------- ------- -------
Segment Core Earnings 58 -- 111 13
------- ------- ------- -------
Corporate and Other
Results (226) (1) (993) (1,292)
Less:
Loss on sale of pipeline-owning
entity(a) -- -- -- (272)
Settlement of state tax issue -- -- -- 70
Changes in accounting
principles, net(a) -- -- (95) (24)
Discontinued operations, net(a) (1) (3) (79) (1)
Tax effect of pre-tax
adjustments -- 172 -- 148
------- ------- ------- -------
TOTAL CORE EARNINGS (LOSS) $ 323 $ (4) $ 999 $ 1,246
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(a) These amounts are shown after tax.
ITEMS AFFECTING COMPARABILITY OF CORE EARNINGS BETWEEN PERIODS
Fourth Quarter Twelve Months
($ millions) 2002 2001 2002 2001
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INCOME/(EXPENSE)
Oil and Gas
Exploration asset write-offs $(25) $ -- $(58) $(66)
Self insurance and litigation
adjustments (4) -- (4) --
Chemicals
Asset idling and impairments -- (11) (37) (20)
State tax reserves adjustment 7 14 7 14
Self insurance and litigation
adjustments 15 -- 15 --
Reorganizations/severance -- -- (14) (17)
Corporate
Gain on sale of stock investment 32 -- 32 --
Environmental remediation (15) (60) (23) (109)
Equity earnings (a) (22) (20) (58) (80)
Interest -- early debt
extinguishments -- (8) -- (12)
(a) Includes share of Equistar results that were previously reported
in the Chemical segment.
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.