LOS ANGELES, April 25, 2002 (PRIMEZONE) -- Occidental Petroleum Corporation (NYSE:OXY) announced earnings before special items including changes in accounting principles for the first quarter 2002 were $129 million ($0.34 per share), compared with $510 million ($1.38 per share) for the first quarter of 2001 and $35 million ($0.09 per share) for the fourth quarter of 2001.
In announcing the results, Dr. Ray R. Irani, chairman and chief executive officer, said, "Oxy's first quarter oil and gas earnings were nearly 85 percent higher than the fourth quarter 2001 due to higher oil prices and volumes. Oil and gas production of 525,000 barrels of oil equivalent per day was 9 percent higher than our fourth quarter production. Earnings from our chloro-vinyls chemical business were relatively flat with the fourth quarter, but we see encouraging signs of improvement in the months ahead in the form of rising demand and prices and better margins. The key to a strong recovery in chemicals is the continued strengthening of the economy. Our loss in chemicals before special items was due to our Equistar petrochemical joint venture. The expected third quarter closing of the sale of our Equistar interest to Lyondell will substantially reduce our future exposure to petrochemicals."
Net income for the first quarter of 2002 was $25 million ($0.07 per share), compared with $484 million ($1.31 per share) for first quarter of 2001.
Changes in accounting principles relating to goodwill impairment in the chemicals segment resulted in an after-tax charge of $95 million, reducing earnings by $0.25 per share. There is no remaining goodwill on the balance sheet. In addition, the chemicals segment took a $14 million pre-tax charge for severance expense which, after-taxes, reduced earnings by $0.02 per share.
Oil and Gas
Oil and gas segment earnings were $306 million for the first quarter 2002, compared with $946 million for the same period in 2001. Lower prices for worldwide crude oil and domestic natural gas accounted for approximately $670 million of the decline in earnings, partially offset by higher crude oil volumes. Production volumes were 525,000 barrels of oil equivalent in the first quarter of 2002 compared with 478,000 in the first quarter of 2001.
Chemicals
Chemical segment results before special items were a loss of $21 million for the first quarter 2002, compared with a loss of $53 million for the first quarter 2001. The improvement in results reflects lower energy and feedstock costs, partially offset by lower sales prices for caustic, chlorine and PVC and higher Equistar petrochemical joint venture losses.
Chemical segment results for the first quarter 2002 were a loss of $35 million, compared with a loss of $79 million for the first quarter 2001. The first quarter 2002 results included a $14 million pre-tax expense for employee severance. The first quarter 2001 results included $26 million pre-tax expense for employee severance, plant write-down costs and plant shut-down costs.
Statements in this presentation that contain words such as "will" or "expect", or otherwise relate 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, 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)
First Quarter
Periods ended March 31 2002 2001
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SEGMENT NET SALES
Oil and gas $ 1,937 $ 3,612
Chemical 588 863
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Net sales $ 2,525 $ 4,475
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SEGMENT EARNINGS (LOSSES)
Oil and gas $ 306 $ 946
Chemical (35) (79)
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271 867
Unallocated Corporate Items
Interest expense, net (a) (56) (76)
Income taxes (b) (43) (175)
Trust preferred distributions & other (11) (16)
Other (c) (41) (89)
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Income before extraordinary items and effect
of changes in accounting principles 120 511
Extraordinary loss, net -- (3)
Cumulative effect of changes in accounting
principles, net (d) (95) (24)
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NET INCOME $ 25 $ 484
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BASIC EARNINGS PER COMMON SHARE
Income before extraordinary items and
effect of changes in accounting principles $ 0.32 $ 1.38
Extraordinary loss, net -- (0.01)
Cumulative effect of changes
in accounting principles, net (0.25) (0.06)
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$ 0.07 $ 1.31
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DILUTED EARNINGS PER COMMON SHARE
Income before extraordinary items and
effect of changes in accounting principles $ 0.32 $ 1.37
Extraordinary loss, net -- (0.01)
Cumulative effect of changes
in accounting principles, net (0.25) (0.06)
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$ 0.07 $ 1.30
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WEIGHTED AVERAGE BASIC COMMON SHARES
OUTSTANDING 374.5 370.2
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See footnotes on following page.
(a) Includes interest income on notes receivable from Occidental
Permian partners of $14 million and $33 million for the first
quarters of 2002 and 2001, respectively.
(b) Includes an offset for credits in lieu of U.S. federal income
taxes allocated to the divisions. Divisional earnings have
benefited from credits allocated by $1 million and $4 million at
oil and gas and chemical, respectively, in both the first
quarters of 2002 and 2001.
(c) Includes preferred distributions to the Occidental Permian
partners of $15 million and $34 million for the first quarters of
2002 and 2001, respectively. This is essentially offset by the
interest income discussed in (a) above. The first quarter 2001
includes a $49 million environmental remediation accrual.
(d) Effective January 1, 2002, Occidental implemented SFAS No. 142 -
"Goodwill and Other Intangible Assets." Adoption of this new
accounting standard resulted in a cumulative after-tax reduction
in net income of $95 million. Effective January 1, 2001,
Occidental implemented SFAS 133, "Accounting for Derivative
Instruments and Hedging Activities," as amended. Adoption of
this new standard resulted in a cumulative after-tax reduction in
net income of $24 million.
SUMMARY OF OPERATING STATISTICS
First Quarter
Periods ended March 31 2002 2001
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NET OIL, GAS AND LIQUIDS
PRODUCTION PER DAY
United States
Liquids (MBBL)
California 90 73
Permian 140 134
Other 3 --
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Total 233 207
Natural Gas (MMCF)
California 305 317
Hugoton 157 167
Permian 129 148
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Total 591 632
Latin America
Crude oil & condensate (MBBL)
Colombia 31 21
Ecuador 13 13
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Total 44 34
Eastern Hemisphere
Crude oil and condensate (MBBL)
Oman 17 11
Pakistan 8 6
Qatar 44 42
Russia 25 28
Yemen 47 36
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Total 141 123
Natural Gas (MMCF)
Pakistan 50 49
Barrels of Oil Equivalent (MBOE) 525 478
CAPITAL EXPENDITURES (millions) $ 274 $ 238
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DEPRECIATION, DEPLETION AND
AMORTIZATION OF ASSETS (millions) $ 261 $ 245
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