What is the primary reason for the decrease in Occidental Petroleum's net income in Q3 2009 compared to Q3 2008?

The primary reason for the significant decrease in net income was the substantial decline in commodity prices, particularly crude oil and natural gas. This led to a sharp reduction in earnings within the Oil and Gas segment, which is a core contributor to Occidental's overall financial performance.

Did Occidental Petroleum see an increase or decrease in production volumes despite lower prices?

Yes, Occidental Petroleum saw an increase in production volumes. For the third quarter of 2009, daily oil and gas sales volumes averaged 628,000 barrels of oil equivalent (BOE), an increase from 588,000 BOE per day in the third quarter of 2008. This growth was driven by higher volumes domestically (California, Permian) and in the Middle East/North Africa.

How did the Chemical segment perform in Q3 2009?

The Chemical segment experienced a significant decline in earnings, reporting $72 million in Q3 2009 compared to $219 million in Q3 2008. This was attributed to continued weakness in key sectors like U.S. housing, automotive, and durable goods, which resulted in lower margins and volumes for products such as caustic soda and polyvinyl chloride.

What is 'core results' and why does the company highlight it?

The company uses 'core results' as a non-GAAP measure that excludes significant transactions and events that can cause earnings to vary unpredictably. Occidental presents core results to provide investors with a measure that may be useful for comparing earnings performance between periods, as it aims to exclude items that are not part of the company's ongoing, core operational performance.

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

Summary

Occidental Petroleum Corporation (OXY) reported its third quarter and nine-month results for 2009 on October 22, 2009. The company experienced a significant year-over-year decline in net income, reporting $927 million ($1.14 per diluted share) for Q3 2009 compared to $2.3 billion ($2.77 per diluted share) in Q3 2008. This decrease was primarily driven by lower commodity prices, particularly for crude oil and natural gas, which impacted the Oil and Gas segment earnings substantially. Despite the revenue decline, OXY demonstrated resilience through increased production volumes in its Oil and Gas segment, with daily sales volumes rising to 628,000 BOE per day in Q3 2009 from 588,000 BOE per day in the prior year's quarter. This volume growth was seen domestically and in the Middle East/North Africa, though partially offset by a decrease in Latin America. The Chemical segment also saw reduced earnings due to a weak economic environment affecting margins and volumes.

Key Highlights

1Net income for Q3 2009 was $927 million ($1.14 per diluted share), a decrease from $2.3 billion ($2.77 per diluted share) in Q3 2008.
2Oil and Gas segment earnings decreased to $1.5 billion in Q3 2009 from $3.6 billion in Q3 2008, largely due to lower crude oil and natural gas prices.
3Worldwide crude oil prices realized by OXY fell to $62.79 per barrel in Q3 2009 from $104.15 per barrel in Q3 2008.
4Domestic natural gas prices saw a significant drop, from $9.35 per MCF in Q3 2008 to $3.04 per MCF in Q3 2009.
5Despite lower prices, Oil and Gas sales volumes increased to an average of 628,000 BOE per day in Q3 2009, up from 588,000 BOE per day in Q3 2008.
6Chemical segment earnings declined to $72 million in Q3 2009 from $219 million in Q3 2008, attributed to weak economic conditions impacting margins and volumes.
7Midstream, Marketing and Other segment earnings improved slightly to $77 million in Q3 2009 from $66 million in Q3 2008.

OCCIDENTAL PETROLEUM CORP /DE/ 8-K Report, Financial Results (Oct 22, 2009)

Summary

Key Highlights

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