form8k-20101019.htm
 
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) October 19, 2010

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

 
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 October 19, 2010, Occidental Petroleum Corporation released information regarding its results of operations for the three and nine months ended September 30, 2010.  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.  Earnings Conference Call Slides are attached to this report as Exhibit 99.4.  Forward-Looking Statements Disclosure for Earnings Release Presentation Materials is attached to this report as Exhibit 99.5.
 
 
Section 8 – Other Events
 
Item 8.01.  Other Events
 
On October 19, 2010, Occidental Petroleum Corporation (NYSE:OXY) announced income from continuing operations for the third quarter of 2010 of $1.2 billion ($1.47 per diluted share), compared with $929 million ($1.14 per diluted share) for the third quarter of 2009. Net income was $1.2 billion ($1.46 per diluted share) for the third quarter of 2010, compared with $927 million ($1.14 per diluted share) for the third quarter of 2009.
 
QUARTERLY RESULTS
 
Oil and Gas
 
Oil and gas segment earnings were $1.7 billion for the third quarter of 2010, compared with $1.5 billion for the same period in 2009. The increase in the third quarter of 2010 results was due to higher crude oil and natural gas prices and higher volumes, partially offset by higher operating costs and DD&A rates.
 
For the third quarter of 2010, daily oil and gas production volumes averaged 751,000 barrels of oil equivalent (BOE), compared with 705,000 BOE in the third quarter of 2009. Volumes increased 6.5 percent, primarily in the Middle East/North Africa, with smaller increases in Argentina and the United States. The Middle East/North Africa increase included new production from the Bahrain start-up and increased production from the Mukhaizna field in Oman. Daily sales volumes were 749,000 BOE in the third quarter of 2010, compared to 702,000 BOE in the third quarter of 2009.
 
Oxy's realized price for worldwide crude oil was $70.71 per barrel for the third quarter of 2010, compared with $62.79 per barrel for the third quarter of 2009. Domestic realized gas prices rose from $3.04 per MCF in the third quarter of 2009 to $4.20 per MCF for the third quarter of 2010.
 
Chemicals
 
Chemical segment earnings for the third quarter 2010 were $189 million, compared with $72 million for the same period in 2009. The third quarter of 2010 results reflect improved margins and volumes across chlor-alkali and vinyl products. Export volumes also increased by 22 percent compared to 2009.

 
1
 
 
 
Midstream, Marketing and Other
 
Midstream segment earnings were $163 million for the third quarter of 2010, compared with $77 million for the third quarter of 2009. Earnings for the third quarter of 2010 reflect higher margins in the trading and marketing businesses and higher pipeline income.
 
NINE-MONTH RESULTS
 
Year-to-date 2010 income from continuing operations was $3.3 billion ($4.09 per diluted share), compared with $2.0 billion ($2.44 per diluted share) for 2009. Net income for the first nine months of 2010 was $3.3 billion ($4.07 per diluted share), compared with $2.0 billion ($2.43 per diluted share) for the same period in 2009.
 
Oil and Gas
 
Oil and gas segment earnings were $5.4 billion for the nine months of 2010, compared with $3.1 billion for the same period of 2009. The $2.3 billion increase in the 2010 results reflected higher crude oil and natural gas prices and higher volumes, partially offset by higher operating costs and DD&A rates.
 
Daily oil and gas production volumes for the nine months were 746,000 BOE for 2010, compared with 711,000 BOE for the 2009 period, an increase of nearly 5 percent. Volumes increased in the Middle East/North Africa, resulting from the new production in Bahrain and higher production in the Mukhaizna field in Oman, and domestically in California.  Production was negatively impacted in the Middle East/North Africa, Long Beach and Colombia resulting from higher year-over-year average oil prices affecting production sharing and similar contracts by 21,000 BOE per day. Daily sales volumes were 741,000 BOE in the first nine months of 2010, compared with 711,000 BOE for 2009.
 
Oxy's realized price for worldwide crude oil was $71.57 per barrel for the nine months of 2010, compared with $51.44 per barrel for the nine months of 2009. Domestic realized gas prices increased from $3.15 per MCF in the nine months of 2009 to $4.67 per MCF in the nine months of 2010.
 
Chemicals
 
Chemical segment earnings were $327 million for the nine months of 2010, compared with $356 million for the same period in 2009. The 2010 nine-month results reflect improving market conditions, with global markets outpacing domestic markets in the recovery resulting in 16 percent higher export volumes compared to 2009.
 
Midstream, Marketing and Other
 
Midstream segment earnings were $270 million for the nine months of 2010, compared with $154 million for the same period in 2009. The 2010 results reflect higher margins in the gas processing business and increased earnings in the pipeline and power generation businesses.
 
Forward-Looking Statements
 
Portions of this report contain forward-looking statements and involve risks and uncertainties that could materially affect expected results of operations, liquidity, cash flows and business prospects. Factors that could cause results to differ materially include, but are not limited to: global commodity pricing fluctuations; supply and demand considerations for Occidental’s products; not successfully

 
2
 
 

completing, or any material delay of, any development of new fields, expansion projects, capital expenditures, efficiency-improvement projects, acquisitions or dispositions; potential failure to achieve expected production from existing and future oil and gas development projects; exploration risks such as drilling unsuccessful wells; any general economic recession or slowdown domestically or internationally; higher-than-expected costs; potential liability for remedial actions under existing or future environmental regulations and litigation; potential liability resulting from pending or future litigation; general domestic and international political conditions; potential disruption or interruption of Occidental’s production or manufacturing or damage to facilities due to accidents, chemical releases, labor unrest, weather, natural disasters, political events or insurgent activity; failure of risk management; changes in laws or regulations; or changes in tax rates.  Words such as “estimate”, “project”, “predict”, “will”, “would”, “should”, “could”, “may”, “might”, “anticipate”, “plan”, “intend”, “believe”, “expect” or similar expressions that convey the uncertainty of future events or outcomes generally indicate forward-looking statements. You should not place undue reliance on these forward-looking statements, which speak only as of the date of this report. Unless legally required, Occidental does not undertake any obligation to update any forward-looking statements, as a result of new information, future events or otherwise. Material risks that may affect Occidental’s results of operations and financial position appear in Part 1, Item 1A “Risk Factors” of the 2009 Form 10-K, available through the following toll-free telephone number, 1-888-OXYPETE (1-888-699-7383) or on the Internet at http://www.oxy.com.  You also can obtain a copy from the SEC by calling 1-800-SEC-0330.

 
3
 
 
 
                         
Attachment 1
                                 
SUMMARY OF SEGMENT NET SALES AND EARNINGS
                                 
   
Third Quarter
  
Nine Months
($ millions, except per-share amounts)
  
2010
  
2009
  
2010
  
2009
SEGMENT NET SALES
                                
Oil and Gas
  
$
3,641
    
$
3,089
    
$
10,963
    
$
7,952
  
Chemical
    
1,051
      
842
      
3,020
      
2,445
  
Midstream, Marketing and Other
    
388
      
285
      
993
      
763
  
Eliminations
    
(184
)
    
(112
)
    
(548
)
    
(296
)
                                 
Net Sales
  
$
4,896
    
$
4,104
    
$
14,428
    
$
10,864
  
                                 
SEGMENT EARNINGS
                                
Oil and Gas (a)
  
$
1,745
    
$
1,464
    
$
5,417
    
$
3,092
  
Chemical
    
189
      
72
      
327
      
356
  
Midstream, Marketing and Other
    
163
      
77
      
270
      
154
  
     
2,097
      
1,613
      
6,014
      
3,602
  
                                 
Unallocated Corporate Items
                                
Interest expense, net
    
(19
)
    
(33
)
    
(77
)
    
(76
)
Income taxes
    
(816
)
    
(549
)
    
(2,345
)
    
(1,245
)
Other (b)
    
(66
)
    
(102
)
    
(256
)
    
(297
)
                                 
Income from Continuing Operations (a)
    
1,196
      
929
      
3,336
      
1,984
  
Discontinued operations, net
    
(5
)
    
(2
)
    
(18
)
    
(7
)
                                 
NET INCOME (a)
  
$
1,191
    
$
927
    
$
3,318
    
$
1,977
  
                                 
BASIC EARNINGS PER COMMON SHARE
                                
Income from continuing operations
  
$
1.47
    
$
1.14
    
$
4.10
    
$
2.44
  
Discontinued operations, net
    
(0.01
)
    
-
      
(0.02
)
    
(0.01
)
   
$
1.46
    
$
1.14
    
$
4.08
    
$
2.43
  
                                 
DILUTED EARNINGS PER COMMON SHARE
                                
Income from continuing operations
  
$
1.47
    
$
1.14
    
$
4.09
    
$
2.44
  
Discontinued operations, net
    
(0.01
)
    
-
      
(0.02
)
    
(0.01
)
   
$
1.46
    
$
1.14
    
$
4.07
    
$
2.43
  
AVERAGE BASIC COMMON SHARES OUTSTANDING
                                
BASIC
    
812.7
      
811.8
      
812.4
      
811.1
  
DILUTED
    
813.9
      
814.4
      
813.8
      
813.9
  
                                 
(a) Net Income - Net income and income from continuing operations represent amounts attributable to Common Stock, after deducting non-controlling interest of $21 million for the third quarter of 2010, $14 million for the third quarter of 2009 and $57 million and $35 million for the first nine months of 2010 and 2009, respectively.  Oil and gas segment earnings are presented net of these non-controlling interest amounts.
 
(b) Unallocated Corporate Items - Other - The first nine months of 2009 includes pre-tax charges of $40 million for severance and $15 million for railcar leases.
 
 
4
 
 
 
                           
Attachment 2
                                 
SUMMARY OF CAPITAL EXPENDITURES AND DD&A EXPENSE
                                 
   
Third Quarter
  
Nine Months
($ millions)
  
2010
  
2009
  
2010
  
2009
CAPITAL EXPENDITURES
  
$
1,100
    
$
746
    
$
2,816
    
$
2,649
  
                                 
DEPRECIATION, DEPLETION AND
                                
AMORTIZATION OF ASSETS
  
$
858
    
$
769
    
$
2,608
    
$
2,297
  
                                 
                                 
                                 
                                 
ITEMS AFFECTING COMPARABILITY OF CORE EARNINGS BETWEEN PERIODS
                                 
Income / (Expense)
  
Third Quarter
  
Nine Months
($ millions)
  
2010
  
2009
  
2010
  
2009
                                 
Foreign exchange gains and (losses) *
  
$
2
    
$
(3
)
  
$
1
    
$
28
  
                                 
* Amounts shown after tax.
                                
 
 
5
 
 

                   
Attachment 3
                                 
SUMMARY OF OPERATING STATISTICS - SALES
                                 
   
Third Quarter
  
Nine Months
   
2010
  
2009
  
2010
  
2009
NET OIL, GAS AND LIQUIDS SALES PER DAY
                                
United States
                                
Crude Oil and Liquids (MBBL)
                                
California
    
92
      
92
      
92
      
93
  
Permian
    
160
      
162
      
160
      
164
  
Midcontinent Gas
    
18
      
15
      
18
      
14
  
Total
    
270
      
269
      
270
      
271
  
                                 
Natural Gas (MMCF)
                                
California
    
276
      
269
      
288
      
240
  
Permian
    
122
      
133
      
126
      
127
  
Midcontinent Gas
    
258
      
251
      
257
      
265
  
Total
    
656
      
653
      
671
      
632
  
                                 
Latin America
                                
Crude Oil  (MBBL)
                                
Argentina
    
30
      
30
      
34
      
37
  
Colombia
    
36
      
39
      
32
      
40
  
Total
    
66
      
69
      
66
      
77
  
                                 
Natural Gas (MMCF)
                                
Argentina
    
35
      
27
      
33
      
30
  
Bolivia
    
19
      
18
      
15
      
17
  
Total
    
54
      
45
      
48
      
47
  
                                 
Middle East / North Africa
                                
Crude Oil and Liquids (MBBL)
                                
Bahrain
    
3
      
-
      
3
      
-
  
Dolphin
    
25
      
26
      
24
      
26
  
Libya
    
12
      
9
      
13
      
10
  
Oman
    
66
      
50
      
60
      
48
  
Qatar
    
79
      
77
      
77
      
78
  
Yemen
    
30
      
34
      
32
      
36
  
Total
    
215
      
196
      
209
      
198
  
                                 
Natural Gas (MMCF)
                                
Bahrain
    
181
      
-
      
169
      
-
  
Dolphin
    
250
      
258
      
238
      
258
  
Oman
    
47
      
48
      
49
      
50
  
Total
    
478
      
306
      
456
      
308
  
                                 
Barrels of Oil Equivalent (MBOE)
                                
                                 
Total  Sales - MBOE
    
749
      
702
      
741
      
711
  
 
 
6
 
 

                         
Attachment 4
                                 
SUMMARY OF OPERATING STATISTICS - PRODUCTION
                                 
   
Third Quarter
  
Nine Months
   
2010
  
2009
  
2010
  
2009
NET OIL, GAS AND LIQUIDS PRODUCTION
                                
PER DAY
                                
United States
                                
Crude Oil and Liquids (MBBL)
    
270
      
269
      
270
      
271
  
Natural Gas (MMCF)
    
656
      
653
      
671
      
632
  
                                 
Latin America
                                
Crude Oil (MBBL)
                                
Argentina
    
39
      
31
      
37
      
36
  
Colombia
    
33
      
38
      
33
      
40
  
Total
    
72
      
69
      
70
      
76
  
                                 
Natural Gas (MMCF)
    
54
      
45
      
48
      
47
  
                                 
Middle East / North Africa
                                
Crude Oil and Liquids (MBBL)
                                
Bahrain
    
3
      
-
      
3
      
-
  
Dolphin
    
25
      
26
      
24
      
26
  
Libya
    
12
      
10
      
14
      
11
  
Oman
    
63
      
51
      
60
      
48
  
Qatar
    
78
      
79
      
77
      
79
  
Yemen
    
30
      
34
      
32
      
36
  
Total
    
211
      
200
      
210
      
200
  
                                 
Natural Gas (MMCF)
    
478
      
306
      
456
      
308
  
                                 
Barrels of Oil Equivalent (MBOE)
                                
                                 
Total Worldwide Production - MBOE
    
751
      
705
      
746
      
711
  
 
 
7
 
 

                         
Attachment 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 results," 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 results is not considered to be an alternative to operating income in accordance with generally accepted accounting principles.
                                 
   
Third Quarter
($ millions, except per-share amounts)
  
2010
  
Diluted
EPS
  
2009
  
Diluted
EPS
TOTAL REPORTED EARNINGS
  
$
1,191
    
$
1.46
    
$
927
    
$
1.14
  
                                 
Oil and Gas
                                
Segment Earnings
  
$
1,745
            
$
1,464
          
Add:
                                
No significant items affecting earnings
    
-
              
-
          
                                 
Segment Core Results
    
1,745
              
1,464
          
                                 
Chemicals
                                
Segment Earnings
    
189
              
72
          
Add:
                                
No significant items affecting earnings
    
-
              
-
          
                                 
Segment Core Results
    
189
              
72
          
                                 
Midstream, Marketing and Other
                                
Segment Earnings
    
163
              
77
          
Add:
                                
No significant items affecting earnings
    
-
              
-
          
                                 
Segment Core Results
    
163
              
77
          
                                 
Total Segment Core Results
    
2,097
              
1,613
          
                                 
Corporate
                                
Corporate Results --
                                
Non Segment *
    
(906
)
            
(686
)
        
Add:
                                
Discontinued operations, net **
    
5
              
2
          
                                 
Corporate Core Results - Non Segment
    
(901
)
            
(684
)
        
                                 
TOTAL CORE RESULTS
  
$
1,196
    
$
1.47
    
$
929
    
$
1.14
  
                                 
  * Interest expense, income taxes, G&A expense and other.
** Amounts shown after tax.
                                
 
 
8
 
 

                         
Attachment 6
                                 
SIGNIFICANT TRANSACTIONS AND EVENTS AFFECTING EARNINGS (continued)
                                 
   
Nine Months
($ millions, except per-share amounts)
  
2010
  
Diluted
EPS
  
2009
  
Diluted
EPS
TOTAL REPORTED EARNINGS
  
$
3,318
    
$
4.07
    
$
1,977
    
$
2.43
  
                                 
Oil and Gas
                                
Segment Earnings
  
$
5,417
            
$
3,092
          
Add:
                                
Rig Terminations
    
-
              
8
          
                                 
Segment Core Results
    
5,417
              
3,100
          
                                 
Chemicals
                                
Segment Earnings
    
327
              
356
          
Add:
                                
No significant items affecting earnings
    
-
              
-
          
                                 
Segment Core Results
    
327
              
356
          
                                 
Midstream, Marketing and Other
                                
Segment Earnings
    
270
              
154
          
Add:
                                
No significant items affecting earnings
    
-
              
-
          
                                 
Segment Core Results
    
270
              
154
          
                                 
Total Segment Core Results
    
6,014
              
3,610
          
                                 
Corporate
                                
Corporate Results --
                                
Non Segment *
    
(2,696
)
            
(1,625
)
        
Add:
                                
Severance accruals
    
-
              
40
          
Railcar leases
    
-
              
15
          
Tax effect of pre-tax adjustments
    
-
              
(22
)
        
Discontinued operations, net **
    
18
              
7
          
                                 
Corporate Core Results - Non Segment
    
(2,678
)
            
(1,585
)
        
                                 
TOTAL CORE RESULTS
  
$
3,336
    
$
4.09
    
$
2,025
    
$
2.48
  
                                 
  * Interest expense, income taxes, G&A expense and other.
** Amounts shown after tax.
                                
                                 
 
 
9
 
 

Occidental Petroleum Corporation
Free Cash Flow
Reconciliation to Generally Accepted Accounting Principles (GAAP)
($ Millions)
 
Nine Months
 
2010
Consolidated Statement of Cash Flows
    
Cash flow from operating activities
6,607
  
Cash flow from investing activities
(4,574
)
Cash flow from financing activities
(1,154
)
Change in cash
879
  
     
     
Free Cash Flow
    
Cash flow from operating activities
6,607
  
Capital spending
(2,814
)
Cash dividends paid
(848
)
Equity method investment dividends
133
  
Free cash flow
3,078
  

 
10
 
 
 
Section 9 - Financial Statements and Exhibits
 
Item 9.01.
Financial Statements and Exhibits
     
(d)
  
Exhibits
     
99.1
  
Press release dated October 19, 2010.
     
99.2
  
Full text of speeches given by Dr. Ray R. Irani and Stephen I. Chazen.
     
99.3
  
Investor Relations Supplemental Schedules.
     
99.4
  
Earnings Conference Call Slides.
     
99.5
  
Forward-Looking Statements Disclosure for Earnings Release Presentation Materials.
 
 
 
11
 
 

 
 
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:  October 19, 2010
/s/ ROY PINECI
  
 
Roy Pineci, Vice President, Controller
  
 
and Principal Accounting Officer
  
 
 
 
12
 
 

EXHIBIT INDEX
 
 
99.1
  
Press release dated October 19, 2010.
     
99.2
  
Full text of speeches given by Dr. Ray R. Irani and Stephen I. Chazen.
     
99.3
  
Investor Relations Supplemental Schedules.
     
99.4
  
Earnings Conference Call Slides.
     
99.5
  
Forward-Looking Statements Disclosure for Earnings Release Presentation Materials.