What is the difference between reported net income and core income, and why did OXY emphasize core income?

Occidental Petroleum uses 'core results' as a non-GAAP measure to exclude significant, unpredictable transactions and events from its reported earnings. This aims to provide investors with a clearer view of ongoing operational performance and comparability between periods. In Q4 2013, reported net income was significantly boosted by a gain from an asset sale, while core income reflects the underlying operational performance, which was impacted by impairments and other factors.

What factors contributed to the decline in Oil and Gas segment core earnings in Q4 2013 compared to Q4 2012?

The decline in Oil and Gas segment core earnings for Q4 2013 compared to the prior year was primarily due to lower international results, specifically in the Middle East/North Africa region, stemming from reduced liquids sales volumes and higher DD&A rates. Additionally, domestic production was affected by severe weather and plant turnarounds, impacting volumes.

How did the company's cost management perform in 2013, particularly in the Oil and Gas segment?

Cost management showed significant improvement in 2013. For the Oil and Gas segment, company-wide operating costs per barrel decreased to $13.76 for the full year 2013, down from $14.99 in 2012. Domestic operating costs also saw a substantial reduction, falling to $14.43 per barrel from $17.43 per barrel.

What was the impact of the Plains All American Pipeline investment sale on Occidental's financial results?

The sale of a portion of Occidental's investment in the General Partner of Plains All American Pipeline, L.P. resulted in a significant after-tax gain of $665 million ($0.83 per diluted share) in the fourth quarter of 2013. This gain contributed substantially to the reported net income for the quarter but was excluded from the calculation of core income.

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

Summary

Occidental Petroleum Corporation (OXY) reported its fourth quarter and full-year 2013 results on January 30, 2014. For the full year, reported net income was $5.9 billion ($7.32 per diluted share), a notable increase from $4.6 billion ($5.67 per diluted share) in 2012. Core income for the full year 2013 was $5.6 billion ($6.95 per diluted share), slightly down from $5.8 billion ($7.09 per diluted share) in 2012, reflecting a shift in the nature of earnings. The company highlighted significant one-time events impacting comparability, including gains from asset sales and substantial impairment charges. Operationally, the Oil and Gas segment saw core earnings decrease slightly year-over-year, impacted by lower international performance and higher DD&A rates, though domestic operations showed strength with improved realized prices and volumes. The Chemical segment experienced lower earnings due to increased costs and pricing pressures. Conversely, the Midstream, Marketing and Other segment reported strong core earnings growth, driven by pipeline and marketing businesses, partially boosted by the sale of a portion of an investment in Plains All American Pipeline, L.P. Investors should note the company's strategic use of "core results" to provide a clearer picture of ongoing operational performance.

Key Highlights

1Full-year 2013 net income rose to $5.9 billion ($7.32/share) from $4.6 billion ($5.67/share) in 2012.
2Full-year 2013 core income was $5.6 billion ($6.95/share), a slight decrease from $5.8 billion ($7.09/share) in 2012.
3Fourth quarter 2013 included a significant after-tax gain of $665 million ($0.83/share) from the sale of a portion of an investment in Plains All American Pipeline, L.P.
4Fourth quarter 2013 also included an after-tax charge of $395 million ($0.49/share) related to the impairment of certain non-producing domestic oil and gas acreage.
5Oil and Gas segment operating costs saw a significant decrease in 2013, with company-wide costs dropping to $13.76 per barrel from $14.99 per barrel in 2012.
6Domestic oil and gas production increased slightly in 2013, while international production saw a decrease.
7The Midstream, Marketing and Other segment showed robust core earnings growth, benefiting from improved pipeline and marketing performance.

OCCIDENTAL PETROLEUM CORP /DE/ 8-K Report, Financial Results (Jan 30, 2014)

Summary

Key Highlights

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