Summary
Occidental Petroleum Corporation (OXY) reported its fourth quarter and full-year 2001 results, highlighted by a significant strategic shift in its chemical segment. The company announced an agreement in principle to sell its 29.5% equity interest in Equistar to Lyondell Chemical Company. This transaction is expected to reduce earnings volatility and allow OXY to focus on its core oil and gas business. As a result of this divestiture, OXY will record a substantial after-tax loss of approximately $240 million in Q4 2001, with the Equistar interest valued at $440 million. Concurrently, OXY will acquire approximately 21% of Lyondell, providing exposure to Lyondell's broader chemical and refining operations. Financially, OXY reported a net loss of $247 million ($0.66 per share) for the fourth quarter of 2001, a significant decline from the $333 million income ($0.90 per share) in the prior year's quarter. This downturn was primarily driven by a sharp decrease in oil and natural gas prices, which reduced oil and gas segment earnings by approximately $500 million. Despite these challenges, OXY highlighted strong performance in its oil and gas operations for the full year, achieving its highest operating income historically and replacing 138% of its production. The company also made significant strides in strengthening its balance sheet, reducing total debt to its lowest level in 15 years and improving its debt-to-capitalization ratio to 46%.
Key Highlights
- 1Agreement to sell 29.5% stake in Equistar to Lyondell Chemical Company for cash and Lyondell stock, resulting in OXY owning ~21% of Lyondell.
- 2Occidental Petroleum will record an after-tax loss of approximately $240 million in Q4 2001 related to the Equistar sale.
- 3Fourth quarter 2001 net loss of $247 million ($0.66/share) compared to net income of $333 million ($0.90/share) in Q4 2000, largely due to lower commodity prices.
- 4Full-year 2001 net income was $1.2 billion ($3.10/share), the second highest in company history.
- 5Oil and gas segment earnings before special items for the full year 2001 were the highest in OXY's history.
- 6Total debt was reduced to $4.9 billion, its lowest level in 15 years, with the debt-to-capitalization ratio improving to 46% from 57% in the prior year.
- 7Capital expenditures for 2001 were $1.4 billion, with expectations for 2002 to be at or below $1.1 billion.