8-KEarnings & ResultsOther EventsExhibits & Filings

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

Filed July 24, 2007For Securities:OXYOXY-WT

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.

Frequently Asked Questions

Occidental's net income in Q2 2007 was significantly boosted by $419 million in after-tax gains from the sale of non-core assets. These included gains from the sale of Lyondell shares, Pakistan operations to BP, and a swap of Horn Mountain assets with BP, among others.

The core Oil and Gas segment earnings for Q2 2007 decreased to $1.682 billion compared to $1.857 billion in the same quarter of 2006. This decline was primarily due to lower crude oil prices, increased DD&A rates, and higher exploration and operating expenses, although partially offset by higher production volumes and natural gas prices.

Excluding divested operations like Pakistan and Horn Mountain, Occidental's daily oil and gas production showed a slight increase in Q2 2007, averaging 558,000 BOE per day, up from 551,000 BOE per day in Q2 2006. For the six-month period, production on this basis also increased to 559,000 BOE per day from 542,000 BOE per day.

The Chemicals segment earnings declined in both Q2 and the first six months of 2007 compared to the prior year. This is attributed to lower margins for chloro-vinyl products.