Summary
Occidental Petroleum Corporation reported a significant turnaround in its financial performance for the nine months ended September 30, 2000, compared to the same period in 1999. Net income surged from $65 million to $1.237 billion, driven by a substantial increase in revenues from $5.1 billion to $10.3 billion. This growth was primarily fueled by higher global prices for oil, natural gas, and chemicals, as well as increased production volumes from strategic acquisitions, notably the significant Altura Energy Ltd. acquisition. The company also benefited from gains on asset dispositions, including the sale of its stake in Canadian Occidental Petroleum Ltd. (CanOxy).
Key Highlights
- 1Net income for the nine months ended September 30, 2000, increased dramatically to $1.237 billion from $65 million in the prior year period.
- 2Total revenues more than doubled, reaching $10.3 billion for the nine months ended September 30, 2000, compared to $5.1 billion in the same period of 1999, largely due to higher commodity prices.
- 3The significant acquisition of Altura Energy Ltd. in April 2000 bolstered oil and gas production volumes and reserves.
- 4Occidental completed the sale of its stake in Canadian Occidental Petroleum Ltd. (CanOxy) for approximately $1.2 billion Canadian, realizing a substantial pre-tax gain.
- 5The company experienced a strong improvement in its Oil and Gas division's pretax operating profit, which rose to $2.084 billion for the nine months ended September 30, 2000, from $713 million in the prior year.
- 6Despite an overall positive trend, the company recorded a $120 million pre-tax charge related to exiting several chemical intermediate businesses.
- 7Cash flow from operations significantly improved to $1.7 billion for the first nine months of 2000 from $509 million in the prior year, supporting debt reduction efforts.
Frequently Asked Questions
The primary driver was a substantial increase in net income to $1.237 billion from $65 million in the prior year. This was fueled by a combination of significantly higher global commodity prices for oil, natural gas, and chemicals, along with increased production volumes resulting from strategic acquisitions, most notably the acquisition of Altura Energy Ltd. Additionally, gains from asset dispositions, such as the sale of Occidental's stake in CanOxy, contributed positively to the bottom line.
These acquisitions significantly boosted Occidental's oil and gas production volumes and proved reserves. The Altura acquisition, in particular, was substantial, valued at approximately $3.6 billion, and is expected to increase Occidental's worldwide oil and gas production significantly. This led to higher revenues and contributed to the overall improved financial results for the period.
Occidental had a target of reducing total debt by $2.0 billion by the end of 2000 and reported exceeding this target through asset sales and internal cash flow. The company expects to continue reducing its debt. For capital expenditures, Occidental anticipated spending approximately $900 million in 2000, with the majority allocated to the oil and gas division. The company also maintained substantial available, unused lines of committed bank credit.
Yes, there were several significant items. The company recorded a $120 million pre-tax charge related to the decision to exit several chemical intermediate businesses. Other items impacting results included gains on asset sales, such as the partial sale of Gulf of Mexico assets and the sale of CanOxy, and a write-down of various oil and gas assets, real estate, and investments. There was also a small extraordinary gain from the early extinguishment of debt.