What drove the significant increase in Occidental Petroleum's earnings in Q3 2004 and the first nine months of 2004?

The substantial earnings growth was primarily driven by higher worldwide crude oil and natural gas prices, which boosted the Oil and Gas segment's performance. Additionally, the Chemicals segment experienced significant improvement due to higher sales prices and margins for its products, despite increased raw material and energy costs.

How has Occidental Petroleum's financial leverage changed?

Occidental Petroleum has successfully reduced its financial leverage. The debt-to-total capitalization ratio decreased to 29% at the end of the third quarter of 2004, compared to 37% at the end of 2003. This deleveraging is further supported by a 31% decrease in interest expense for the first nine months of 2004, indicating improved financial health and reduced borrowing costs.

What is 'core earnings' and why does the company report it?

Core earnings is a non-GAAP (Generally Accepted Accounting Principles) measure that Occidental Petroleum uses to present earnings performance. It excludes significant transactions and events that can be unpredictable in nature, timing, and amount. Management uses core earnings to provide investors with a clearer view for comparing earnings performance between periods, as it aims to represent the company's ongoing operational profitability without the impact of unusual items.

What are the main risks and uncertainties mentioned in the filing?

The company highlights several forward-looking risks and uncertainties that could materially affect future results. These include fluctuations in global commodity prices for oil, gas, and chemicals, supply and demand considerations, higher-than-expected operating costs, political risks in operating regions, and the potential for delays or failure in completing expansion projects, capital expenditures, acquisitions, or dispositions.

OXY/OXY-WT 8-K: Earnings & Results

Summary

Occidental Petroleum Corporation (OXY) reported robust financial results for the third quarter and the first nine months of 2004, exceeding prior-year performance significantly. The company achieved record net income for the third quarter of $758 million ($1.91 per share), a substantial increase from $446 million ($1.16 per share) in the same period of 2003. For the first nine months of 2004, net income reached $1.83 billion ($4.63 per share), up 55% from $1.15 billion ($2.99 per share) in the comparable 2003 period. This strong performance was driven by significant earnings growth in both the Oil and Gas and Chemicals segments. The company also demonstrated improved financial health, with its debt-to-total capitalization ratio decreasing to 29% at the end of Q3 2004 from 37% at year-end 2003, accompanied by a 31% reduction in interest expense for the nine-month period. The Oil and Gas segment saw a 52% increase in earnings driven by higher commodity prices, while the Chemicals segment more than doubled its earnings due to improved sales prices and margins. Management provided forward-looking statements, cautioning investors about potential risks and uncertainties, including commodity price fluctuations and operational costs.

Key Highlights

1Record third-quarter net income of $758 million ($1.91 per share), a significant jump from $446 million ($1.16 per share) in Q3 2003.
2Nine-month net income of $1.83 billion ($4.63 per share) represents a 55% increase compared to the same period in 2003.
3Oil and Gas segment earnings grew 52% year-over-year in Q3 2004, driven by higher crude oil and natural gas prices.
4Chemical segment earnings surged 125% year-over-year in Q3 2004, primarily due to increased sales prices and margins.
5Debt-to-total capitalization ratio improved to 29% by the end of Q3 2004, down from 37% at the end of 2003.
6Interest expense for the first nine months of 2004 decreased by 31% compared to the prior year.
7Company management is using 'core earnings' as a non-GAAP measure to provide investors with a view that excludes significant, unpredictable items for performance comparison.

OCCIDENTAL PETROLEUM CORP /DE/ 8-K Report, Financial Results (Oct 21, 2004)

Summary

Key Highlights

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