Summary
Occidental Petroleum Corporation (OXY) reported a significant increase in net income for the second quarter of 2007, reaching $1.412 billion ($1.68 per diluted share) compared to $860 million ($0.99 per diluted share) in the prior year's second quarter. This strong performance was largely driven by substantial after-tax gains totaling $419 million from the sale of non-core assets, including its investment in Lyondell, Pakistan operations, and the Horn Mountain asset swap. For the six months ended June 30, 2007, net income also saw an increase to $2.624 billion ($3.11 per diluted share) from $2.091 billion ($2.42 per diluted share) in the same period of 2006. Despite the overall increase in profitability due to asset sales, the core Oil and Gas segment earnings experienced a decline in the second quarter, falling to $1.682 billion from $1.857 billion in Q2 2006. This was attributed to lower crude oil prices, increased depreciation, depletion, and amortization (DD&A) rates, and higher exploration and operating expenses, although partially offset by higher production and natural gas prices. The Chemicals segment also saw a decrease in earnings due to lower margins for chloro-vinyl products. Production levels for oil and gas remained relatively stable on a continuing operations basis.
Key Highlights
- 1Q2 2007 Net Income surged to $1.412 billion ($1.68/share) from $860 million ($0.99/share) in Q2 2006, boosted by $419 million in after-tax gains from asset sales.
- 2Six-month 2007 Net Income rose to $2.624 billion ($3.11/share) compared to $2.091 billion ($2.42/share) in the first six months of 2006.
- 3Core Oil and Gas segment earnings for Q2 2007 decreased to $1.682 billion from $1.857 billion in Q2 2006, impacted by lower crude prices and higher expenses.
- 4Average WTI crude oil prices decreased to $65.05/barrel in Q2 2007 from $70.70/barrel in Q2 2006.
- 5Average realized worldwide crude oil prices declined to $59.11/barrel in Q2 2007 from $61.66/barrel in Q2 2006.
- 6Chemical segment earnings for Q2 2007 were $158 million, down from $251 million in Q2 2006, primarily due to lower chloro-vinyl product margins.
- 7Production on a continuing operations basis (excluding divested assets) saw a slight increase in Q2 2007, averaging 558,000 BOE/day versus 551,000 BOE/day in Q2 2006.