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 ======================= ======= ======= SEGMENT NET SALES Oil and gas $ 1,937 $ 3,612 Chemical 588 863 ------- ------- Net sales $ 2,525 $ 4,475 ======================= ======= ======= SEGMENT EARNINGS (LOSSES) Oil and gas $ 306 $ 946 Chemical (35) (79) ------- ------- 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) ------- ------- 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) ------- ------- NET INCOME $ 25 $ 484 ======= ======= 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) ------- ------- $ 0.07 $ 1.31 ======= ======= 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) ------- ------- $ 0.07 $ 1.30 ======= ======= WEIGHTED AVERAGE BASIC COMMON SHARES OUTSTANDING 374.5 370.2 ==================================== ======= ======= 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 ====================== ======= ======= NET OIL, GAS AND LIQUIDS PRODUCTION PER DAY United States Liquids (MBBL) California 90 73 Permian 140 134 Other 3 -- ------- ------- Total 233 207 Natural Gas (MMCF) California 305 317 Hugoton 157 167 Permian 129 148 ------- ------- Total 591 632 Latin America Crude oil & condensate (MBBL) Colombia 31 21 Ecuador 13 13 ------- ------- 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 ------- ------- Total 141 123 Natural Gas (MMCF) Pakistan 50 49 Barrels of Oil Equivalent (MBOE) 525 478 CAPITAL EXPENDITURES (millions) $ 274 $ 238 ======= ======= DEPRECIATION, DEPLETION AND AMORTIZATION OF ASSETS (millions) $ 261 $ 245 ================================== ======= =======