8-KOther Events

OCCIDENTAL PETROLEUM CORP /DE/ 8-K Report (Apr 18, 2001)

Filed April 18, 2001For Securities:OXYOXY-WT

Summary

Occidental Petroleum Corporation reported a significant increase in its first quarter 2001 financial results, with record earnings before special items of $510 million, or $1.38 per share, a substantial jump from $264 million, or $0.72 per share, in the prior year's first quarter. This performance was largely driven by the Oil & Gas segment, which saw earnings surge to $946 million from $394 million, primarily due to a substantial increase in oil and gas production volumes (up over 35%) and significantly higher domestic natural gas prices, particularly benefiting from a premium in the California market. While the Oil & Gas segment excelled, the Chemicals segment experienced a decline, reporting a loss before special items of $53 million compared to income of $143 million in Q1 2000. This downturn was attributed to decreased product demand, higher energy and feedstock costs, and lower sales prices. The company also incurred special items totaling $26 million, primarily for severance and plant write-downs in the chemicals segment, alongside an additional $24 million charge related to adopting new accounting standards for derivatives. Despite these challenges, Occidental Petroleum demonstrated strong financial management by reducing its total debt by $233 million to $6.1 billion and improving its debt-to-total capitalization ratio to 54%.

Key Highlights

  • 1Record first quarter earnings before special items of $510 million ($1.38 per share), a 93% increase year-over-year.
  • 2Oil & Gas segment earnings more than doubled to $946 million, driven by a 36% increase in production volumes and a more than fourfold increase in domestic natural gas prices.
  • 3Significant premium pricing for California natural gas sales, expected to continue for 2-3 years due to supply-demand imbalances.
  • 4Chemicals segment performance declined significantly, with earnings before special items falling to a loss of $53 million from a profit of $143 million, impacted by lower demand and higher costs.
  • 5Total debt reduced by $233 million to $6.1 billion, and debt-to-capitalization ratio improved to 54%.
  • 6Capital expenditures increased to $238 million, with a significant portion allocated to the Oil & Gas segment across various regions.
  • 7Company adopted new accounting standards for derivatives, resulting in a $24 million after-tax charge.

Frequently Asked Questions

The primary driver was a substantial increase in oil and gas production volumes, which grew by over 35% compared to the prior year's first quarter, coupled with significantly higher domestic natural gas prices, especially the premium realized on California gas sales.

The Chemicals segment experienced a significant downturn, reporting a loss before special items of $53 million for the first quarter of 2001, a stark contrast to the $143 million in income reported for the same period in 2000. This was attributed to lower product demand, higher energy and feedstock costs, and reduced sales prices.

Management expects the premium pricing for California natural gas to continue for the next two to three years, driven by an ongoing supply-demand imbalance in the state's market.

Occidental Petroleum reduced its total debt by $233 million during the first quarter of 2001, bringing the total down to $6.1 billion. This action, along with operational performance, improved the debt-to-total capitalization ratio to 54% from 57% at the end of the previous year.