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UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 8-K
CURRENT REPORT
PURSUANT TO SECTION 13 OR 15(D) OF THE
SECURITIES EXCHANGE ACT OF 1934
DATE OF REPORT (DATE OF EARLIEST EVENT REPORTED) APRIL 26, 2005
OCCIDENTAL PETROLEUM CORPORATION
(Exact name of registrant as specified in its charter)
DELAWARE 1-9210 95-4035997
(State or other jurisdiction (Commission (I.R.S. Employer
of incorporation) File Number) Identification No.)
10889 WILSHIRE BOULEVARD
LOS ANGELES, CALIFORNIA 90024
(Address of principal executive offices) (ZIP code)
Registrant's telephone number, including area code:
(310) 208-8800
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Check the appropriate box below if the Form 8-K is intended to simultaneously
satisfy the filing obligation of the Registrant under any of the following
provisions (see General Instruction A.2. below):
[ ] Written communications pursuant to Rule 425 under the Securities Act (17
CFR 230.425)
[ ] Soliciting material pursuant to Rule 14a-12 under the Exchange Act (17
CFR 240.14a-12)
[ ] Pre-commencement communications pursuant to Rule 14d-2(b) under the
Exchange Act (17 CFR 240.14d-2(b))
[ ] Pre-commencement communications pursuant to Rule 13e-4(c) under the
Exchange Act (17 CFR 240.13e-4(c))
SECTION 2 - FINANCIAL INFORMATION
Item 2.02. Results of Operations and Financial Condition
---------- ---------------------------------------------
On April 26, 2005, Occidental Petroleum Corporation released information
regarding its results of operations for the fiscal period ended March 31, 2005.
The exhibits to this Form 8-K and the information set forth in this Item 2.02
are being furnished pursuant to Item 2.02, Results of Operations and Financial
Condition. The full text of the press release is attached to this report as
Exhibit 99.1. The full text of the speeches given by Dr. Ray R. Irani and
Stephen I. Chazen are attached to this report as Exhibit 99.2. Investor
Relations Supplemental Schedules are attached to this report as Exhibit 99.3.
SECTION 8 - OTHER EVENTS
Item 8.01. Other Events
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On April 26, 2005, Occidental Petroleum Corporation announced net income
for the first quarter 2005 of $846 million ($2.11 per share), compared with $487
million ($1.24 per share) for the first quarter 2004. Core earnings for the
first quarter 2005 were $866 million ($2.16 per share), compared with $476
million ($1.22 per share) for the same period in 2004.
Oil and Gas
-----------
Oil and gas segment earnings were a record $1.3 billion for the first
quarter 2005, which was 47 percent higher than the $915 million in earnings for
the first quarter 2004. The first quarter 2005 earnings reflected a $529 million
improvement from the impact of higher energy prices, partially offset by higher
operating expenses and increased DD&A rates.
For the quarter, oil and gas production averaged 565,000 barrels of oil
equivalent, which was essentially flat with the 568,000 equivalent barrels per
day produced in the first quarter 2004, and up slightly compared to the fourth
quarter 2004 rate of 558,000 equivalent barrels per day. Compared to a year ago,
production under the company's production sharing contracts in Oman, Qatar,
Yemen and Long Beach was negatively impacted by higher prices. The average price
for West Texas Intermediate crude oil in the first quarter 2005 was $49.84 per
barrel compared to $35.15 per barrel in the first quarter 2004. If prices had
remained at first quarter 2004 levels, production in the first quarter 2005
would have been more than 13,000 equivalent barrels per day higher.
Earlier this year, Occidental's executive management said that it expected
to exit 2005 with a production level of approximately 600,000 equivalent barrels
per day. That expectation is unchanged.
At the end of the first quarter, Occidental completed two acquisitions in
the Permian Basin. These acquisitions are expected to contribute 10,000
equivalent barrels per day to the 2005 production exit rate and keep the company
on track in meeting its year-end production target.
Chemicals
---------
Chemical segment earnings were $214 million for the first quarter 2005,
nearly four times higher than the $56 million earned in the first quarter 2004.
The improvement was due to higher margins in all major products resulting from
higher sales prices, partially offset by higher energy and feedstock costs.
Financial
---------
During the first quarter, $450 million of 7.65 percent senior notes were
redeemed with a related charge of $10 million to interest expense. At March 31,
Occidental's debt was $3.5 billion compared to $3.9 billion at the end of 2004.
After taking into account the $450 million in debt retirement costs and $300
million in acquisition costs, the company had cash and short-term investments of
$1.4 billion at the end of the quarter, which was approximately the same level
as the end of 2004. Stockholders' equity was $11.2 billion, up by nearly $700
million compared to year-end 2004.
Statements in this presentation that contain words such as "will," "expect" or
"estimate," or otherwise relate to the future, are forward-looking and involve
risks and uncertainties that could significantly affect expected results.
Factors that could cause results to differ materially include, but are not
limited to: exploration risks such as drilling of unsuccessful wells, global
commodity pricing fluctuations and supply/demand considerations for oil, gas and
chemicals; higher-than-expected costs; political risk; and not successfully
completing (or any material delay in) any expansion, capital expenditure,
acquisition, or disposition. Occidental disclaims any obligation to update any
forward-looking statements.
2
SUMMARY OF SEGMENT NET SALES AND EARNINGS
First Quarter
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(In millions, except per-share amounts) 2005 2004(c)
======================================== ======== ========
SEGMENT NET SALES
Oil and Gas $ 2,219 $ 1,693
Chemical 1,061 834
Other 23 30
-------- --------
Net sales $ 3,303 $ 2,557
======================================== ======== ========
SEGMENT EARNINGS
Oil and Gas $ 1,349 $ 915
Chemical 214 56
-------- --------
1,563 971
Unallocated Corporate Items
Interest expense, net (a) (61) (68)
Income taxes (b) (601) (363)
Other (51) (51)
-------- --------
Income from Continuing Operations 850 489
Discontinued operations, net (4) (2)
-------- --------
NET INCOME $ 846 $ 487
======== ========
BASIC EARNINGS PER COMMON SHARE
Income from continuing operations $ 2.12 $ 1.25
Discontinued operations, net (.01) (.01)
-------- --------
$ 2.11 $ 1.24
======== ========
DILUTED EARNINGS PER COMMON SHARE
Income from continuing operations $ 2.09 $ 1.24
Discontinued operations, net (.01) (.01)
-------- --------
$ 2.08 $ 1.23
======== ========
AVERAGE BASIC COMMON SHARES OUTSTANDING 400.4 391.5
======================================== ======== ========
See footnotes on following page.
3
(a) The first quarter 2005 includes a $10 million pre-tax interest charge to
redeem all the outstanding 7.65 percent senior notes, which were due in
February 2006. The first quarter 2004 includes an $11 million pre-tax
interest charge to redeem all the outstanding 8.16 percent Trust Preferred
Redeemable Securities.
(b) The first quarter 2005 includes a $10 million charge, net, related to a
state income tax issue. The first quarter 2004 includes a $20 million
credit related to the settlement of an issue with the Internal Revenue
Service.
(c) As of January 1, 2005, Occidental revised its reporting of segment earnings
to show segment earnings before income taxes. All domestic and foreign
income tax expense is now reflected under Unallocated Corporate Items in
the income taxes line. This reporting change has been retrospectively
applied to prior period results.
SUMMARY OF CAPITAL EXPENDITURES AND DD&A EXPENSE
First Quarter
---------------------
($ millions) 2005 2004
=================================== ======== ========
CAPITAL EXPENDITURES $ 536 $ 343
======== ========
DEPRECIATION, DEPLETION AND
AMORTIZATION OF ASSETS $ 344 $ 324
=================================== ======== ========
4
SUMMARY OF OPERATING STATISTICS
First Quarter
---------------------
2005 2004
=================================== ======== ========
NET OIL, GAS AND LIQUIDS
PRODUCTION PER DAY
United States
Crude oil and liquids (MBBL)
California 77 77
Permian 148 153
Horn Mountain 18 25
Hugoton 4 3
-------- --------
Total 247 258
Natural Gas (MMCF)
California 241 243
Hugoton 129 127
Permian 146 140
Horn Mountain 12 17
-------- --------
Total 528 527
Latin America
Crude oil (MBBL)
Colombia 32 36
Ecuador 42 43
-------- --------
Total 74 79
Middle East
Crude oil (MBBL)
Oman 23 14
Qatar 43 42
Yemen 35 39
-------- --------
Total 101 95
Natural Gas (MMCF)
Oman 56 11
Other Eastern Hemisphere
Crude oil (MBBL)
Pakistan 5 9
Natural Gas (MMCF)
Pakistan 78 75
BARRELS OF OIL EQUIVALENT (MBOE)
--------------------------------
Subtotal consolidated subsidiaries 537 543
Colombia-minority interest (4) (4)
Russia-Occidental net interest 30 28
Yemen-Occidental net interest 2 1
-------- --------
TOTAL WORLDWIDE PRODUCTION 565 568
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5
SIGNIFICANT TRANSACTIONS AND EVENTS AFFECTING EARNINGS
Occidental's results of operations often include the effects of significant
transactions and events affecting earnings that vary widely and unpredictably in
nature, timing and amount. Therefore, management uses a measure called "core
earnings," which excludes those items. This non-GAAP measure is not meant to
disassociate those items from management's performance, but rather is meant to
provide useful information to investors interested in comparing Occidental's
earnings performance between periods. Reported earnings are considered
representative of management's performance over the long term. Core earnings is
not considered to be an alternative to operating income in accordance with
generally accepted accounting principles.
The following table sets forth the core earnings and significant items affecting
earnings for each operating segment and corporate:
First Quarter
($ millions, except -----------------------------------------------
per-share amounts) 2005 EPS 2004 EPS
=================================== ======== ======== ======== ========
TOTAL REPORTED EARNINGS $ 846 $ 2.11 $ 487 $ 1.24
======== ======== ======== ========
OIL AND GAS
Segment Earnings $ 1,349 $ 915
Less:
None -- --
-------- --------
Segment Core Earnings $ 1,349 $ 915
-------- --------
CHEMICALS
Segment Earnings $ 214 $ 56
Less:
None -- --
-------- --------
Segment Core Earnings $ 214 $ 56
-------- --------
CORPORATE
Results $ (717) $ (484)
Less:
Trust preferred
redemption charge -- (11)
7.65% debt redemption charge (10) --
Settlement of tax issues -- 20
State tax charge (10) --
Tax effect of pre-tax
adjustments 4 4
Discontinued operations, net* (4) (2)
-------- --------
Corporate Core Results $ (697) $ (495)
-------- --------
TOTAL CORE EARNINGS $ 866 $ 2.16 $ 476 $ 1.22
=================================== ======== ======== ======== ========
* These amounts are shown after-tax.
6
ITEMS AFFECTING COMPARABILITY OF CORE EARNINGS BETWEEN PERIODS
The item(s) below are included in core earnings but are shown in this table
because they affect the comparability of core earnings between periods.
First Quarter
---------------------
($ millions) 2005 2004
=================================== ======== ========
PRE-TAX
INCOME / (EXPENSE)
Corporate
Environmental remediation (9) --
7
SIGNATURE
Pursuant to the requirements of the Securities Exchange Act of 1934, the
Registrant has duly caused this report to be signed on its behalf by the
undersigned hereunto duly authorized.
OCCIDENTAL PETROLEUM CORPORATION
(Registrant)
DATE: April 26, 2005 S. P. Dominick, Jr.
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S. P. Dominick, Jr., Vice President and Controller
(Chief Accounting and Duly Authorized Officer)
EXHIBIT INDEX
99.1 Press release dated April 26, 2005.
99.2 Full text of speeches given by Dr. Ray R. Irani and Stephen I.
Chazen
99.3 Investor Relations Supplemental Schedules