Summary
Occidental Petroleum Corporation (OXY) filed an 8-K on October 25, 2012, reporting its third quarter and nine-month results for 2012. The company reported income from continuing operations of $1.4 billion ($1.70 per diluted share) for the third quarter of 2012, a decrease from $1.8 billion ($2.18 per diluted share) in the same period of 2011. This decline was primarily driven by lower earnings in the Oil and Gas and Chemicals segments. Despite a slight increase in total oil and gas production volumes, the Oil and Gas segment's earnings decreased due to lower product prices (particularly for NGLs and natural gas) and higher operating costs. The Chemicals segment also saw a reduction in earnings, attributable to lower prices across most product lines, especially PVC and VCM. The Midstream segment, however, showed improved earnings driven by higher margins in marketing and trading businesses. For the nine-month period, the trend of lower earnings continued compared to 2011, with income from continuing operations at $4.3 billion ($5.26 per diluted share) versus $5.0 billion ($6.14 per diluted share) in the prior year.
Key Highlights
- 1Third quarter 2012 income from continuing operations was $1.4 billion ($1.70 per diluted share), down from $1.8 billion ($2.18 per diluted share) in Q3 2011.
- 2Oil and Gas segment earnings decreased to $2.0 billion in Q3 2012 from $2.6 billion in Q3 2011, due to lower commodity prices and higher costs, partially offset by increased oil volumes.
- 3Total oil and gas production volumes increased to 766,000 BOE per day in Q3 2012 from 739,000 BOE per day in Q3 2011, driven by higher domestic production.
- 4Chemical segment earnings declined to $162 million in Q3 2012 from $245 million in Q3 2011, primarily due to lower product prices, especially in PVC and VCM.
- 5Midstream segment earnings significantly increased to $156 million in Q3 2012 from $77 million in Q3 2011, driven by improved marketing and trading margins.
- 6For the first nine months of 2012, income from continuing operations was $4.3 billion ($5.26 per diluted share), down from $5.0 billion ($6.14 per diluted share) in the same period of 2011.
- 7Capital expenditures increased significantly to $2.6 billion in Q3 2012 from $2.0 billion in Q3 2011, and to $7.7 billion for the nine months of 2012 from $5.0 billion for the same period in 2011.