What is the difference between OXY's reported net income and its 'core results'?

Reported net income includes all revenues and expenses, including one-time gains or losses from asset sales, litigation settlements, or debt restructuring. 'Core results' are a non-GAAP measure used by OXY to present ongoing operational performance by excluding these significant, non-recurring items. For Q1 2007, core results excluded a gain from the sale of the Vanyoganneft joint venture and litigation settlements, among other items.

Why did OXY's core results decrease despite an increase in oil and gas production?

While production increased, the decrease in core results was primarily driven by lower commodity prices for both oil and natural gas, and higher operating expenses and depreciation, depletion, and amortization (DD&A) rates. The decline in average realized prices for crude oil and natural gas significantly impacted the profitability of the oil and gas segment.

What is the impact of the Vanyoganneft joint venture sale on the financial results?

Occidental sold its 50% interest in the Russian Vanyoganneft joint venture in January 2007, resulting in an after-tax gain of $412 million. This gain is included in the reported net income but excluded from the 'core results' for the first quarter of 2007.

How did the Chemical segment perform in the first quarter of 2007?

The Chemical segment experienced a significant decline in earnings, reporting $137 million in Q1 2007 compared to $250 million in Q1 2006. This decrease was attributed by the company to lower margins in caustic soda and polyvinyl chloride.

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

Summary

Occidental Petroleum Corporation (OXY) reported its first quarter 2007 financial results on April 24, 2007. The company announced a net income of $1.212 billion, or $1.43 per diluted share, which is slightly down from $1.231 billion, or $1.43 per diluted share, in the first quarter of 2006. However, when excluding certain significant items, "core results" showed a decline to $831 million ($0.98 per diluted share) from $1.153 billion ($1.34 per diluted share) in the prior year period. The primary driver for this shift in core results appears to be the decline in oil and gas prices and increased operating expenses, despite a modest increase in production. The company's Chemical segment also experienced a notable decrease in earnings due to lower margins. Investors should note the company's use of "core results" as a non-GAAP measure to provide a clearer view of ongoing operational performance by excluding one-time gains and charges, such as the gain from the sale of its Vanyoganneft joint venture and litigation settlements.

Key Highlights

1First quarter 2007 net income was $1.212 billion ($1.43 per diluted share), compared to $1.231 billion ($1.43 per diluted share) in Q1 2006.
2Core results for Q1 2007 were $831 million ($0.98 per diluted share), a decrease from $1.153 billion ($1.34 per diluted share) in Q1 2006, primarily due to lower commodity prices and higher expenses.
3Oil and gas segment earnings were $2.070 billion in Q1 2007, up from $1.910 billion in Q1 2006, but core oil and gas earnings (excluding specific gains) decreased.
4Average crude oil prices (WTI) decreased to $58.24/barrel in Q1 2007 from $63.48/barrel in Q1 2006.
5Average natural gas prices (NYMEX) significantly declined to $7.17/MCF in Q1 2007 from $11.42/MCF in Q1 2006.
6Worldwide oil and gas production increased to 587,000 BOE per day in Q1 2007 from 563,000 BOE per day in Q1 2006.
7Chemical segment earnings decreased to $137 million in Q1 2007 from $250 million in Q1 2006, attributed to lower margins.

OCCIDENTAL PETROLEUM CORP /DE/ 8-K Report, Financial Results (Apr 24, 2007)

Summary

Key Highlights

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