Summary
Occidental Petroleum Corporation (OXY) reported its second quarter 2002 financial results, with net income of $240 million, or $0.64 per share. This represents a significant improvement from the $25 million ($0.07 per share) net income reported in the first quarter of 2002, which was impacted by goodwill write-offs and severance charges. However, the second quarter 2002 net income is down substantially compared to the $473 million ($1.27 per share) reported in the second quarter of 2001. The primary driver for the year-over-year earnings decline was significantly lower natural gas prices, which negatively impacted the oil and gas segment's earnings by approximately $400 million. Despite lower commodity prices, the company saw a notable increase in oil and gas production, up 14% year-over-year to 512,000 barrels of oil equivalent per day, and is on track to increase production by over 5% for the full year. The chemical segment showed improvement from the prior quarter, benefiting from higher prices for certain products and strengthening chemical markets. Looking ahead, Occidental Petroleum expects continued production growth in its oil and gas segment and further improvement in its chemical business. The company also highlighted the completion of a re-audit by KPMG, which confirmed the original financial statements with no changes to balance sheet, net income, cash flow, or earnings per share. The sale of its Equistar interest to Lyondell is expected to close at the end of August 2002, which is anticipated to generate an after-tax gain of at least $100 million.
Key Highlights
- 1Occidental Petroleum reported Q2 2002 net income of $240 million ($0.64/share), a significant increase from Q1 2002 ($25 million, $0.07/share) but down from Q2 2001 ($473 million, $1.27/share).
- 2Lower natural gas prices were the primary reason for the year-over-year earnings decline, impacting the oil and gas segment by approximately $400 million.
- 3Oil and gas production increased by 14% year-over-year to 512,000 BOE/day, with a projected annual growth of over 5% through 2006.
- 4The chemical segment showed improvement sequentially, driven by higher prices for certain products and strengthening markets.
- 5KPMG completed a re-audit of the company's financial statements for the previous three years, resulting in no changes to reported balance sheet, net income, cash flow, or earnings per share.
- 6The sale of the company's Equistar interest to Lyondell is expected to close by the end of August 2002, with an anticipated after-tax gain of at least $100 million.
- 7Capital expenditures for Q2 2002 were $326 million, with full-year guidance remaining at $1.2 billion, primarily for oil and gas projects.