10-QPeriod: Q1 FY2003

OCCIDENTAL PETROLEUM CORP /DE/ Quarterly Report for Q1 Ended Mar 31, 2003

Filed May 8, 2003For Securities:OXYOXY-WT

Summary

Occidental Petroleum Corporation (OXY) reported a significant improvement in its financial performance for the first quarter of 2003 compared to the same period in 2002. Net income surged to $325 million from $25 million, driven by higher crude oil and natural gas prices, as well as improved chemical prices. This strong earnings growth was reflected in a substantial increase in net sales, which rose to $2.4 billion from $1.5 billion. The company's oil and gas segment was the primary driver of this growth, benefiting from substantially higher commodity prices. The chemical segment also showed a positive turnaround, moving from a net loss to a net profit, aided by better pricing for key products like PVC and chlorine. Occidental generated robust operating cash flow of $674 million, demonstrating its ability to fund its operations and capital expenditures, which stood at $298 million for the quarter, primarily in oil and gas and chemical segments. The company also maintained significant liquidity with $1.8 billion in unused committed bank credit lines.

Key Highlights

  • 1Significant increase in net income to $325 million in Q1 2003, up from $25 million in Q1 2002.
  • 2Net sales grew substantially to $2.4 billion in Q1 2003, compared to $1.5 billion in Q1 2002, primarily due to higher oil, natural gas, and chemical prices.
  • 3Oil and Gas segment earnings improved dramatically, reaching $727 million in Q1 2003, driven by higher commodity prices.
  • 4Chemical segment turned profitable, reporting earnings of $35 million in Q1 2003, a significant improvement from a $31 million loss in Q1 2002.
  • 5Operating cash flow was strong at $674 million for Q1 2003.
  • 6Capital expenditures were $298 million for Q1 2003, with significant investment in the oil and gas and chemical segments.
  • 7The company has $1.8 billion in available unused committed bank credit facilities, indicating strong liquidity.

Frequently Asked Questions

The primary drivers were significantly higher prices for crude oil and natural gas, which boosted the performance of the Oil and Gas segment. Additionally, improved pricing for key chemical products such as PVC, chlorine, and ethylene dichloride contributed to the turnaround in the Chemical segment's profitability.

Occidental Petroleum generated $674 million in net cash from operating activities in the first quarter of 2003, a substantial increase from the prior year. The company also maintained strong liquidity, with $1.8 billion in available, unused committed bank credit lines, indicating its ability to meet financial obligations and invest in its business.

Yes, the first quarter of 2003 results included a $61 million pre-tax debt repayment charge and a $68 million after-tax cumulative effect of adopting SFAS No. 143 (Accounting for Asset Retirement Obligations). The first quarter of 2002 included a $95 million after-tax cumulative effect of a change in accounting principles and a $3 million after-tax charge for discontinued operations.

Occidental expects second quarter 2003 production to be approximately 535,000 barrels of oil equivalent (BOE) per day. For the chemical segment, earnings are projected to be between $40 million and $70 million, assuming energy prices do not spike as they did in the first quarter.