Summary
Occidental Petroleum Corporation (OXY) reported its second quarter and six-month results for 2006, revealing a significant increase in oil and gas segment earnings driven by higher crude oil prices and production volumes. For the second quarter of 2006, OXY reported income from continuing operations of $2.77 per diluted share, down from $3.63 per diluted share in the prior year's quarter. Net income also declined to $857 million ($1.97 per diluted share) compared to $1.536 billion ($3.77 per diluted share) in Q2 2005. However, the company highlighted "core earnings," a non-GAAP measure, which increased to $1.204 billion ($2.77 per diluted share) in Q2 2006 from $799 million ($1.96 per diluted share) in Q2 2005. This core earnings improvement was primarily fueled by a substantial 56% rise in oil and gas segment earnings to $1.953 billion, largely due to a $557 million increase from higher crude oil prices and a $262 million increase from higher production. The chemical segment also showed modest growth in earnings. Investors should note the classification of Ecuador Block 15 operations as discontinued operations due to a contract termination and asset seizure by the Ecuadorian government.
Key Highlights
- 1Occidental Petroleum's Q2 2006 net income was $857 million ($1.97 per diluted share), a decrease from $1.536 billion ($3.77 per diluted share) in Q2 2005.
- 2Core earnings, a non-GAAP measure, showed a strong increase, reaching $1.204 billion ($2.77 per diluted share) in Q2 2006, up from $799 million ($1.96 per diluted share) in Q2 2005.
- 3The oil and gas segment earnings surged by 56% to $1.953 billion in Q2 2006, driven by significantly higher crude oil prices (average $70.70/bbl for WTI vs $53.17/bbl in Q2 2005) and increased production.
- 4Worldwide oil and gas daily production from continuing operations increased by 18% to 609,000 BOE in Q2 2006 compared to 516,000 BOE in Q2 2005, boosted by Vintage and Libya production.
- 5Chemical segment earnings improved to $250 million in Q2 2006 from $225 million in Q2 2005, primarily due to higher chlor-alkali volumes.
- 6Occidental has classified its Ecuador Block 15 operations as discontinued operations due to a contract termination and asset seizure by the Ecuadorian government in May 2006.
- 7For the first six months of 2006, core earnings were $2.355 billion ($5.45 per diluted share), a significant increase from $1.612 billion ($3.96 per diluted share) in the same period of 2005.