Summary
Occidental Petroleum Corporation (OXY) reported its second quarter and six-month results for 2012, indicating a decline in net income and segment earnings compared to the same periods in 2011. For the second quarter, net income was $1.3 billion ($1.64 per diluted share), down from $1.8 billion ($2.23 per diluted share) in the prior year. This decrease was primarily driven by lower commodity prices, increased operating costs, and higher depreciation, depletion, and amortization (DD&A) rates across its Oil and Gas segment, despite an increase in production volumes. The company's Chemicals and Midstream segments also experienced reduced earnings. The Chemicals segment saw lower earnings due to decreased volumes and prices for caustic soda and vinyl chloride monomer (VCM). The Midstream segment's performance was impacted by lower margins in marketing, trading, and gas processing. Despite these challenges, OXY demonstrated growth in its domestic oil and gas production volumes, which partially offset the negative impacts from lower pricing and higher costs.
Key Highlights
- 1Net income for Q2 2012 was $1.3 billion ($1.64/share), a decrease from $1.8 billion ($2.23/share) in Q2 2011.
- 2Oil and Gas segment earnings decreased to $2.0 billion in Q2 2012 from $2.6 billion in Q2 2011, attributed to lower commodity prices and higher operating costs, partially offset by increased volumes.
- 3Total daily oil and gas production volumes increased to 766,000 BOE in Q2 2012 from 715,000 BOE in Q2 2011, driven by domestic and Middle East/North Africa production growth.
- 4Chemical segment earnings declined to $194 million in Q2 2012 from $253 million in Q2 2011, due to lower volumes and prices for caustic soda and VCM.
- 5Midstream, Marketing and Other segment earnings fell to $77 million in Q2 2012 from $187 million in Q2 2011, reflecting reduced margins in marketing, trading, and gas processing.
- 6Capital expenditures significantly increased to $2.713 billion in Q2 2012 from $1.633 billion in Q2 2011, indicating substantial investment in the business.
- 7For the six months ended June 30, 2012, core net income was $2.9 billion ($3.56/share), down from $3.4 billion ($4.19/share) in the prior year period.