8-KOther Events

OCCIDENTAL PETROLEUM CORP /DE/ 8-K Report (Jul 19, 2001)

Filed July 19, 2001For Securities:OXYOXY-WT

Summary

Occidental Petroleum Corporation (OXY) reported strong second quarter 2001 financial results, with earnings before special items reaching $466 million ($1.25 per share), a significant 34% increase compared to the same period in the prior year. This performance was primarily driven by robust energy prices, particularly in the California natural gas market. The company also announced a return to profitability in its chemical segment after several quarters of losses. OXY highlighted substantial progress in its debt reduction efforts, reducing total debt by $480 million in the first half of 2001, bringing the total reduction to nearly $3.3 billion since April 2000. The company anticipates further significant debt reduction through the sale of non-core assets, including its interest in the Tangguh LNG project and a Texas pipeline entity, which are expected to yield an additional $750 million in after-tax proceeds. These actions are strengthening the company's balance sheet, with the debt-to-capitalization ratio improving to 51% as of June 30, 2001.

Key Highlights

  • 1Q2 2001 earnings before special items were $466 million ($1.25 per share), up 34% year-over-year.
  • 2Strong performance driven by high natural gas prices, especially in California.
  • 3Chemical segment returned to profitability in Q2 2001 after prior losses.
  • 4Significant debt reduction of $480 million in H1 2001, bringing total reduction to nearly $3.3 billion since April 2000.
  • 5Announced sale of Tangguh LNG interest and Texas pipeline entity for $750 million in after-tax proceeds, dedicated to further debt reduction.
  • 6Debt-to-capitalization ratio improved to 51% at the end of Q2 2001.
  • 7First half 2001 earnings before special items of $976 million ($2.63 per share) marked a company record.

Frequently Asked Questions

The primary driver was strong energy prices, particularly for natural gas in the California market. The company also benefited from the chemical segment returning to profitability after a period of losses.

Occidental Petroleum is aggressively reducing its debt. In the first half of 2001, they reduced total debt by $480 million, and plan to further reduce debt by an additional $750 million through the sale of non-core assets. Their total debt reduction since April 2000 is nearly $3.3 billion.

The chemical segment returned to profitability in Q2 2001 due to lower energy and feedstock costs and overhead reduction efforts. While demand remains weak, inventory liquidation appears to be over, and the company is seeing sequential improvement.

The announced sales of the Tangguh LNG interest and the Texas pipeline entity are expected to generate $750 million in after-tax proceeds. This will significantly accelerate Occidental's debt reduction program, effectively advancing their goal by about one year and strengthening their balance sheet further.