What is the primary reason for the significant year-over-year decline in Occidental's net income?

The primary reason for the significant decline in Occidental's net income for the second quarter of 2009 was the sharp decrease in crude oil and natural gas prices compared to the same period in 2008. This directly impacted the earnings of the company's core Oil and Gas segment, even though sales volumes increased.

Did Occidental see an increase in production volumes despite lower commodity prices?

Yes, Occidental reported an increase in oil and gas sales volumes for the second quarter of 2009. Daily volumes averaged 649,000 BOE, up from 588,000 BOE in the second quarter of 2008. This growth was observed across domestic operations (California, Midcontinent/Rockies), Latin America (primarily Argentina), and the Middle East/North Africa (Oman and Dolphin).

How did the company's Chemical and Midstream segments perform?

Both the Chemical and Midstream segments reported lower earnings. Chemical segment earnings decreased due to weak demand in the U.S. housing, automotive, and durable goods sectors, impacting volumes of chlorine, caustic soda, and polyvinyl chloride. The Midstream segment saw reduced earnings from lower margins in gas processing, marketing, and power generation businesses.

What is 'core results' and why does Occidental report it?

Occidental reports 'core results' as a non-GAAP measure to provide investors with a clearer view of underlying operational performance by excluding items that can be volatile or unpredictable, such as certain charges or gains/losses. While reported earnings are considered representative of long-term performance, core results are intended to aid in comparing earnings performance between periods by excluding these specific items.

OXY/OXY-WT 8-K SEC Disclosure

Summary

Occidental Petroleum Corporation (OXY) reported its second quarter and year-to-date results for 2009. The company experienced a significant decline in net income compared to the prior year, with Q2 2009 net income at $682 million ($0.84 per diluted share) versus $2.3 billion ($2.78 per diluted share) in Q2 2008. This downturn was primarily driven by sharply lower crude oil and natural gas prices, which heavily impacted the Oil and Gas segment's earnings, despite an increase in sales volumes. While the Oil and Gas segment saw increased production volumes across domestic, Latin American, and Middle Eastern/North African operations, the steep drop in realized commodity prices more than offset these gains. The Chemicals and Midstream segments also reported lower earnings, reflecting weak demand in key sectors for chemicals and reduced margins for midstream operations. Management highlighted that core results, which exclude certain items, also showed a substantial decrease year-over-year, underscoring the challenging macroeconomic environment.

Key Highlights

1Q2 2009 net income decreased significantly to $682 million ($0.84/share) from $2.3 billion ($2.78/share) in Q2 2008.
2Oil and Gas segment earnings plummeted to $1.1 billion in Q2 2009 from $3.8 billion in Q2 2008, largely due to lower commodity prices.
3Despite lower prices, oil and gas sales volumes increased year-over-year, with notable growth in Latin America and the Middle East/North Africa.
4Realized crude oil prices fell dramatically to $52.97/barrel in Q2 2009 from $110.12/barrel in Q2 2008.
5Chemical segment earnings declined to $115 million in Q2 2009 from $144 million in Q2 2008, attributed to weak demand in housing, automotive, and durable goods sectors.
6Midstream segment earnings decreased to $63 million in Q2 2009 from $161 million in Q2 2008 due to lower margins.
7Capital expenditures for Q2 2009 were $831 million, down from $1,038 million in Q2 2008, while DD&A expense increased.

OCCIDENTAL PETROLEUM CORP /DE/ 8-K Report, Corporate Update (Jul 23, 2009)

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Key Highlights

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