8-KEarnings & ResultsOther Events

OCCIDENTAL PETROLEUM CORP /DE/ 8-K Report, Financial Results (Apr 25, 2006)

Filed April 25, 2006For Securities:OXYOXY-WT

Summary

Occidental Petroleum Corporation reported strong financial results for the first quarter of 2006, with net income soaring to $1.23 billion ($2.90 per share) from $846 million ($2.11 per share) in the prior year's first quarter. This significant increase was primarily driven by record earnings in the Oil and Gas segment, which saw a 48% jump to $2.0 billion. This performance was fueled by a substantial rise in both higher energy prices and increased production volumes. The company also highlighted a record high in average daily oil and gas production, reaching 636,000 barrels of oil equivalent (BOE) per day, a 13% increase year-over-year. This growth was supported by contributions from new production (Vintage, Libya) and acquisitions (Permian). The Chemical segment also demonstrated improvement, with earnings rising to $248 million from $214 million, attributed to higher volumes and improved margins, despite increased energy and feedstock costs.

Key Highlights

  • 1Net income for Q1 2006 reached $1.23 billion ($2.90 basic EPS), a significant increase from $846 million ($2.11 basic EPS) in Q1 2005.
  • 2Oil and Gas segment earnings hit a record $2.0 billion, up 48% year-over-year, driven by higher energy prices and increased production.
  • 3Average daily oil and gas production set a record at 636,000 BOE per day, a 13% increase compared to Q1 2005.
  • 4New production from Vintage and Libya, along with Permian acquisitions, contributed to the production volume growth.
  • 5Chemical segment earnings improved to $248 million in Q1 2006 from $214 million in Q1 2005.
  • 6Capital expenditures increased to $605 million in Q1 2006 from $536 million in Q1 2005.
  • 7Core earnings for Q1 2006 were $1.22 billion ($2.87 basic EPS), showing a substantial increase from $866 million ($2.16 basic EPS) in Q1 2005.

Frequently Asked Questions

The primary drivers were record earnings in the Oil and Gas segment, fueled by significantly higher energy prices and a substantial increase in production volumes. The Chemical segment also contributed positively with improved volumes and margins.

Occidental achieved a record average daily production of 636,000 barrels of oil equivalent (BOE) per day in Q1 2006, which is a 13% increase over the 565,000 BOE per day produced in Q1 2005. This growth was boosted by new production sources and recent acquisitions.

Core earnings is a non-GAAP measure used by Occidental's management to provide investors with a view of earnings performance that excludes items that vary widely and unpredictably. For Q1 2006, core earnings were $1.22 billion ($2.87 per share), compared to reported net income of $1.23 billion ($2.90 per share). Management uses core earnings to compare performance between periods, while reported earnings are considered representative of performance over the long term.

The filing mentions contributions from 'Permian acquisitions that were acquired in the second quarter of 2005' which added 25,000 BOE per day to quarterly production. Additionally, the Vintage properties held for sale are noted as representing discontinued operations in Q1 2006.