Summary
Occidental Petroleum Corporation (OXY) filed a Form 8-K on October 17, 2001, reporting on its third-quarter 2001 financial and operational results. The company announced strong earnings before special items of $317 million ($0.85 per share) for the quarter, and a remarkable $1.3 billion ($3.48 per share) for the first nine months, positioning it for another record year. This performance was driven by the oil and gas segment, which despite lower crude oil prices, showed robust earnings. The chemical segment also contributed, albeit with slightly lower earnings compared to the prior year. A key highlight for investors is the significant debt reduction achieved during the quarter, lowering total debt to $5.0 billion and reducing the debt-to-capitalization ratio to 46%, the lowest in nearly two decades. This was largely due to $750 million in after-tax proceeds from the sale of non-strategic assets, including its interest in the Tangguh LNG project and a Texas pipeline entity, combined with strong cash flow from operations. This deleveraging, along with favorable interest rate movements, led to a substantial decrease in interest expenses.
Key Highlights
- 1Occidental Petroleum reported earnings before special items of $317 million ($0.85 per share) for Q3 2001, and $1.3 billion ($3.48 per share) for the first nine months of 2001.
- 2The company achieved a significant debt reduction, lowering total debt to $5.0 billion from $6.4 billion at the end of 2000.
- 3Occidental's debt-to-capitalization ratio dropped to 46%, its lowest level in nearly two decades.
- 4Q3 2001 results included $750 million in after-tax proceeds from the sale of non-strategic assets, specifically its interest in the Tangguh LNG project and a Texas pipeline entity.
- 5Oil and gas segment earnings before special items were $528 million for Q3 2001, impacted by lower crude oil prices and higher exploration expenses, including a write-off in Colombia.
- 6Chemical segment earnings were $40 million for Q3 2001, showing a slight decrease from the prior year due to lower earnings from petrochemical equity investments.
- 7Both Standard & Poor's and Moody's upgraded the company's debt ratings in the third quarter, reflecting its improved balance sheet.