What is the primary reason for the year-over-year decline in reported net income for the third quarter?

The reported net income for the third quarter of 2002 was $402 million, a decrease from $444 million in the same period of 2001. This decline was primarily due to the timing and magnitude of gains from asset sales and other special items. While Q3 2002 included a $73 million net gain from asset sales (mainly Equistar), Q3 2001 had a larger $128 million gain from non-strategic asset sales. Additionally, Q3 2002 included impairment charges on chemical assets not present in the prior year's comparable quarter.

How did the company's core operational performance fare in the third quarter, excluding special items?

Excluding special items and discontinued operations, Occidental Petroleum's performance improved. Earnings before special items and discontinued operations for the third quarter of 2002 were $329 million ($0.87 per share), an increase from $316 million ($0.85 per share) in the third quarter of 2001. This indicates that the underlying business operations, particularly oil and gas production and chemical margins, showed underlying strength and growth.

What is the outlook for Occidental's oil and gas production?

Occidental demonstrated strong production growth, with the first nine months of 2002 averaging 513,000 BOE per day, exceeding its previous forecast of 500,000 BOE per day for the year. The company reaffirmed its production forecast for 2003 at 525,000 BOE per day. Future growth is expected from projects like Horn Mountain in the Gulf of Mexico and the Eden Yuturi field in Ecuador.

How did the chemical segment perform, and what factors drove the improvement?

The chemical segment showed a significant turnaround. Earnings before special items rose to $87 million in the third quarter of 2002, compared to $38 million in the third quarter of 2001. This improvement was driven by higher sales prices for chloro-vinyls products (like PVC and chlorine) and better performance from its Equistar investment. The company also noted that its core chloro-vinyls business has historically provided stable earnings and is expected to continue doing so.

OXY/OXY-WT 8-K SEC Disclosure

Summary

Occidental Petroleum Corporation (OXY) reported its third quarter 2002 results on October 21, 2002. The company announced a net income of $402 million ($1.07 per share), a decrease from the $444 million ($1.19 per share) reported in the third quarter of 2001. However, earnings before special items and discontinued operations showed improvement, reaching $329 million ($0.87 per share) compared to $316 million ($0.85 per share) in the prior year's third quarter. The results were influenced by significant one-time items, including a $73 million net gain from asset sales, primarily the disposal of the Equistar investment, partially offset by impairment charges on chemical assets. The prior year's comparable quarter included a $128 million gain from non-strategic asset sales. The company also highlighted continued production growth in its oil and gas segment, exceeding forecasts and reaffirming its 2003 production outlook. Chemical segment performance saw notable improvement due to better margins, particularly in chloro-vinyls products.

Key Highlights

1Reported third quarter 2002 net income of $402 million ($1.07 per share), down from $444 million ($1.19 per share) in Q3 2001.
2Earnings before special items and discontinued operations increased to $329 million ($0.87 per share) from $316 million ($0.85 per share) in Q3 2001, indicating underlying operational strength.
3Third quarter 2002 included a $73 million net gain from asset sales (notably Equistar investment) and chemical asset impairments.
4Oil and gas production for the first nine months of 2002 increased by over 8% to 513,000 BOE per day, exceeding the 2002 forecast and reaffirming the 2003 forecast of 525,000 BOE per day.
5Chemical segment earnings before special items significantly improved to $87 million from $38 million in the prior year, driven by higher chloro-vinyls product prices and improved performance of the Equistar investment.
6The company adopted EITF Issue 02-3, affecting the presentation of oil and gas trading revenues by showing them on a net basis without impacting margins, income, EPS, or cash flow.
7Total debt to capitalization decreased to 43% from 46% at year-end 2001, reflecting a focus on balance sheet strengthening.

OCCIDENTAL PETROLEUM CORP /DE/ 8-K Report (Oct 21, 2002)

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