Summary
Occidental Petroleum Corporation (OXY) reported its fourth quarter and full-year 2012 financial results on January 31, 2013. The company announced a significant after-tax charge of $1.1 billion ($1.41 per diluted share) in the fourth quarter, primarily due to the impairment of gas assets in the Midcontinent. This charge substantially impacted reported net income, bringing it down to $336 million ($0.42 per diluted share) for the fourth quarter of 2012, a sharp decline from $1.6 billion ($2.01 per diluted share) in the prior year's quarter. Despite the impairment charge, Occidental's "core income," which excludes such items, remained robust. Fourth-quarter core income was $1.5 billion ($1.83 per diluted share), slightly down from $1.6 billion ($2.02 per diluted share) in the fourth quarter of 2011. For the full year 2012, core income was $5.8 billion ($7.09 per diluted share), compared to $6.8 billion ($8.39 per diluted share) in 2011. The company also saw increased oil and gas production volumes, driven by domestic operations, although lower commodity prices and higher depreciation, depletion, and amortization (DD&A) rates impacted segment earnings.
Key Highlights
- 1Significant $1.1 billion after-tax charge in Q4 2012 related to impairment of Midcontinent gas assets impacted reported net income.
- 2Reported Q4 2012 net income of $336 million ($0.42/share) versus $1.6 billion ($2.01/share) in Q4 2011.
- 3Core income (non-GAAP) for Q4 2012 was $1.5 billion ($1.83/share), a slight decrease from $1.6 billion ($2.02/share) in Q4 2011.
- 4Full-year 2012 core income was $5.8 billion ($7.09/share), down from $6.8 billion ($8.39/share) in 2011.
- 5Oil and gas production volumes increased in Q4 2012 (779,000 BOE/day) and full-year 2012 (766,000 BOE/day) compared to the prior year periods, driven by domestic growth.
- 6Lower commodity prices (crude oil, NGLs, and natural gas) negatively affected oil and gas segment earnings for both the quarter and the full year.
- 7Chemical segment earnings saw an increase in Q4 2012 due to higher export volumes and lower ethylene costs, but full-year chemical earnings declined due to weaker economic conditions and competitive pressures.