form8k-20130131.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) January 31, 2013

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 January 31, 2013, Occidental Petroleum Corporation released information regarding its results of operations for the three and twelve months ended December 31, 2012.  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 Cynthia L. Walker and Stephen 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.  The information in this Item 2.02 and Exhibits 99.1 through 99.5, inclusive, shall not be deemed “filed” for purposes of Section 18 of the Securities Exchange Act of 1934, as amended, nor shall it be deemed incorporated by reference in any filing under the Securities Act of 1933, as amended, except as shall be expressly set forth by specific reference in such filing.
 

Section 8 – Other Events

Item 8.01.  Other Events
 
On January 31, 2013, Occidental Petroleum Corporation announced core income of $1.5 billion ($1.83 per diluted share) for the fourth quarter of 2012, compared with $1.6 billion ($2.02 per diluted share) for the fourth quarter of 2011.  In the fourth quarter of 2012, we recorded after-tax charges of $1.1 billion or $1.41 per diluted share, almost all of which was related to the impairment of gas assets in the Midcontinent.  Net income for the fourth quarter of 2012 after this charge was $336 million ($0.42 per diluted share), compared with $1.6 billion ($2.01 per diluted share) for the same period of 2011.

Core income was $5.8 billion ($7.09 per diluted share) for the year 2012, compared with $6.8 billion ($8.39 per diluted share) for 2011.  Net income for the twelve months of 2012 was $4.6 billion ($5.67 per diluted share), compared with $6.8 billion ($8.32 per diluted share) for 2011.

QUARTERLY RESULTS

Oil and Gas

Oil and gas core earnings were $2.3 billion for the fourth quarter of 2012, compared with $2.5 billion for the fourth quarter of 2011.  Lower 2012 earnings resulted from lower year-over-year prices across all products in the fourth quarter of 2012 and higher DD&A rates, partially offset by higher liquids volumes.  After including the fourth quarter 2012 charges, which will be discussed in more detail on the earnings call, segment earnings were $522 million.

For the fourth quarter of 2012, daily oil and gas production volumes averaged 779,000 barrels of oil equivalent (BOE), compared with 748,000 BOE in the fourth quarter of 2011.

The fourth quarter 2012 production increase resulted from higher volumes of 26,000 BOE per day from domestic operations and 5,000 BOE per day from international production.  The international increase included higher production in Iraq, Bahrain and Libya, partially offset by lower volumes from Dolphin, resulting from the full cost recovery of pre-startup capital, and in Yemen due to the Masila field contract expiration.
 
1
 
 
 
 
Daily sales volumes increased from 749,000 BOE in the fourth quarter of 2011 to 784,000 BOE in the fourth quarter of 2012.

Oxy’s realized price for worldwide crude oil was $96.19 per barrel for the fourth quarter of 2012, compared with $99.62 per barrel for the fourth quarter of 2011.  The fourth quarter of 2012 realized oil price represents 109 percent of the average WTI and 87 percent of the average Brent price. Worldwide NGL prices were $45.08 per barrel in the fourth quarter of 2012, compared with $55.25 per barrel in the fourth quarter of 2011.  Domestic gas prices decreased 14 percent from $3.59 per MCF in the fourth quarter of 2011 to $3.09 per MCF for the fourth quarter of 2012.

Fourth quarter 2012 realized prices were higher than third quarter 2012 prices for worldwide NGLs and domestic natural gas but were slightly lower for worldwide crude oil.  On a sequential quarterly basis, prices increased 11 percent for NGLs and 25 percent for domestic natural gas and decreased less than 1 percent for worldwide crude oil.

Chemical

Chemical segment earnings for the fourth quarter of 2012 were $180 million, compared with $144 million in the fourth quarter of 2011.  The increase was primarily the result of higher export volumes for caustic soda and vinyl chloride monomer and lower ethylene costs.

Midstream, Marketing and Other

Midstream segment earnings were $75 million for the fourth quarter of 2012, compared with $70 million for the fourth quarter of 2011.

TWELVE-MONTH RESULTS

Oil and Gas

Oil and gas core earnings were $8.8 billion for the twelve months of 2012, compared with $10.3 billion for the same period of 2011.  The decrease in 2012 reflected lower NGL and natural gas prices, higher operating costs, exploration expense and DD&A rates, partially offset by higher oil prices and domestic volumes.  Segment earnings, after including the fourth quarter charges, were $7.1 billion for 2012, compared with $10.2 billion for 2011.

Oil and gas production volumes for the twelve months were 766,000 BOE per day for 2012, compared with 733,000 BOE per day for the same period in 2011.  Year-over-year, Oxy's domestic production increased by 9 percent, while total company production increased by 5 percent.  Dolphin's full cost recovery of pre-startup capital, which reduced production, was the only operation where production sharing and similar contracts had an appreciable effect.

The twelve-month 2012 production increase resulted from 37,000 BOE per day in higher domestic volumes, partially offset by lower volumes in the Middle East/North Africa and Latin America.

Daily sales volumes were 764,000 BOE in the twelve months of 2012, compared with 731,000 BOE for the same period in 2011.

Oxy's realized prices improved for crude oil but declined for natural gas and NGLs on a year-over-year basis.  Worldwide crude oil prices were $99.87 per barrel for the twelve months of 2012, compared with $97.92 per barrel for the twelve months of 2011.  Worldwide NGL prices were $45.18 per
 
2
 
 
 
 
barrel for the year 2012, compared with $55.53 per barrel for the year 2011.  Domestic gas prices declined 35 percent, from $4.06 per MCF in the twelve months of 2011 to $2.62 per MCF in the twelve months of 2012.

Chemical

Chemical segment earnings were $720 million for the twelve months of 2012, compared with $861 million for the same period in 2011.  The reduction was primarily a result of lower margins due to weaker economic conditions in Europe and Asia, and increased competitive activity from these regions.  The calcium chloride and potassium hydroxide businesses were also negatively impacted by an extremely mild winter and drought conditions in the United States.

Midstream, Marketing and Other

Midstream segment earnings were $439 million for the twelve months of 2012, compared with $448 million for the same period in 2011.

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; general domestic political and regulatory approval conditions; higher-than-expected costs; international political conditions; not successfully 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 or acquisitions; exploration risks such as drilling unsuccessful wells; any changes in general economic conditions domestically or internationally; the ability to attract trained engineers; potential liability for remedial actions under existing or future environmental regulations and litigation; potential liability resulting from pending or future litigation; 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 law or regulations; or changes in tax rates. Words such as "estimate", "project", "predict", "will", "would", "should", "could", "may", "might", "anticipate", "plan", "intend", "believe", "expect", "aim", "goal", "target", "objective", "likely" 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 2011 Form 10-K.
 
3
 
 
 
 
 
Attachment 1
                                 
SUMMARY OF SEGMENT NET SALES AND EARNINGS
                                 
   
Fourth Quarter
  
Twelve Months
($ millions, except per-share amounts)
  
2012
  
2011
  
2012
  
2011
SEGMENT NET SALES
                                
Oil and Gas
  
$
4,874
    
$
4,784
    
$
18,906
    
$
18,419
  
Chemical
    
1,141
      
1,094
      
4,580
      
4,815
  
Midstream, Marketing and Other
    
355
      
338
      
1,399
      
1,447
  
Eliminations
    
(199
)
    
(182
)
    
(713
)
    
(742
)
                                 
Net Sales
  
$
6,171
    
$
6,034
    
$
24,172
    
$
23,939
  
                                 
SEGMENT EARNINGS
                                
Oil and Gas  (a)
  
$
522
    
$
2,537
    
$
7,095
    
$
10,241
  
Chemical
    
180
      
144
      
720
      
861
  
Midstream, Marketing and Other
    
75
      
70
      
439
      
448
  
     
777
      
2,751
      
8,254
      
11,550
  
                                 
Unallocated Corporate Items
                                
Interest expense, net (b)
    
(30
)
    
(25
)
    
(117
)
    
(284
)
Income taxes (c)
    
(249
)
    
(949
)
    
(3,118
)
    
(4,201
)
Other
    
(134
)
    
(136
)
    
(384
)
    
(425
)
                                 
Income from Continuing Operations
    
364
      
1,641
      
4,635
      
6,640
  
Discontinued operations, net (d)
    
(28
)
    
(7
)
    
(37
)
    
131
  
                                 
NET INCOME
  
$
336
    
$
1,634
    
$
4,598
    
$
6,771
  
                                 
BASIC EARNINGS PER COMMON SHARE
                                
Income from continuing operations
  
$
0.45
    
$
2.02
    
$
5.72
    
$
8.16
  
Discontinued operations, net
    
(0.03
)
    
(0.01
)
    
(0.05
)
    
0.16
  
   
$
0.42
    
$
2.01
    
$
5.67
    
$
8.32
  
                                 
DILUTED EARNINGS PER COMMON SHARE
                                
Income from continuing operations
  
$
0.45
    
$
2.02
    
$
5.71
    
$
8.16
  
Discontinued operations, net
    
(0.03
)
    
(0.01
)
    
(0.04
)
    
0.16
  
   
$
0.42
    
$
2.01
    
$
5.67
    
$
8.32
  
AVERAGE COMMON SHARES OUTSTANDING
                                
BASIC
    
807.1
      
810.7
      
809.3
      
812.1
  
DILUTED
    
807.7
      
811.5
      
810.0
      
812.9
  
                                 
(a) Oil and Gas - The fourth quarter and twelve months of 2012 include pre-tax charges of $1.7 billion related to the impairment of domestic gas assets and related items.  The twelve months of 2011 include pre-tax charges of $35 million related to exploration write-offs in Libya and $29 million related to Colombia net worth tax.   Also, included in the twelve months of 2011 results is a pre-tax gain for sale of an interest in a Colombia pipeline of $22 million.
(b) Unallocated Corporate Items - Interest Expense, net - The twelve months of 2011 include a pre-tax charge of  $163 million related to the premium on debt extinguishment.
(c) Unallocated Corporate Items - Taxes - The twelve months of 2011 include a net $21 million charge for out-of-period state income taxes.
(d) Discontinued Operations, net - The twelve months of 2011 include a $144 million after-tax gain from the sale of the Argentine operations.
 
4
 
 
 
 
 
Attachment 2
                                 
SUMMARY OF CAPITAL EXPENDITURES AND DD&A EXPENSE
                                 
   
Fourth Quarter
  
Twelve Months
($ millions)
  
2012
  
2011
  
2012
  
2011
CAPITAL EXPENDITURES
  
$
2,510
    
$
2,549
    
$
10,226
    
$
7,518
  
                                 
DEPRECIATION, DEPLETION AND
                                
AMORTIZATION OF ASSETS
  
$
1,191
    
$
938
    
$
4,511
    
$
3,591
  
 
5
 
 
 
 
 
Attachment 3
                                 
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.
                                 
   
Fourth Quarter
($ millions, except per-share amounts)
  
2012
  
Diluted
EPS
  
2011
  
Diluted
EPS
TOTAL REPORTED EARNINGS
  
$
336
    
$
0.42
    
$
1,634
    
$
2.01
  
                                 
Oil and Gas
                                
Segment Earnings
  
$
522
            
$
2,537
          
Add:
                                
Asset impairments and related items
    
1,731
              
-
          
                                 
Segment Core Results
    
2,253
              
2,537
          
                                 
Chemicals
                                
Segment Earnings
    
180
              
144
          
Add:
                                
No significant items affecting earnings
    
-
              
-
          
                                 
Segment Core Results
    
180
              
144
          
                                 
Midstream, Marketing and Other
                                
Segment Earnings
    
75
              
70
          
Add:
                                
No significant items affecting earnings
    
-
              
-
          
                                 
Segment Core Results
    
75
              
70
          
                                 
Total Segment Core Results
    
2,508
              
2,751
          
                                 
Corporate
                                
Corporate Results --
                                
Non Segment *
    
(441
)
            
(1,117
)
        
Add:
                                
Litigation reserves
    
20
              
-
          
Tax effect of pre-tax adjustments
    
(636
)
            
-
          
Discontinued operations, net **
    
28
              
7
          
                                 
Corporate Core Results - Non Segment
    
(1,029
)
            
(1,110
)
        
                                 
TOTAL CORE RESULTS
  
$
1,479
    
$
1.83
    
$
1,641
    
$
2.02
  
                                 
 *  Interest expense, income taxes, G&A expense and other.
** Amounts shown after tax.
 
6
 
 
 
 
 
Attachment 4
                                 
SIGNIFICANT TRANSACTIONS AND EVENTS AFFECTING EARNINGS (continued)
                                 
   
Twelve Months
($ millions, except per-share amounts)
  
2012
  
Diluted
EPS
  
2011
  
Diluted
EPS
TOTAL REPORTED EARNINGS
  
$
4,598
    
$
5.67
    
$
6,771
    
$
8.32
  
                                 
Oil and Gas
                                
Segment Earnings
  
$
7,095
            
$
10,241
          
Add:
                                
Asset impairments and related items
    
1,731
              
-
          
Libya exploration write-off
    
-
              
35
          
Gain on sale of Colombia pipeline interest
    
-
              
(22
)
        
Foreign tax
    
-
              
29
          
                                 
Segment Core Results
    
8,826
              
10,283
          
                                 
Chemicals
                                
Segment Earnings
    
720
              
861
          
Add:
                                
No significant items affecting earnings
    
-
              
-
          
                                 
Segment Core Results
    
720
              
861
          
                                 
Midstream, Marketing and Other
                                
Segment Earnings
    
439
              
448
          
Add:
                                
No significant items affecting earnings
    
-
              
-
          
                                 
Segment Core Results
    
439
              
448
          
                                 
Total Segment Core Results
    
9,985
              
11,592
          
                                 
Corporate
                                
Corporate Results --
                                
Non Segment *
    
(3,656
)
            
(4,779
)
        
Add:
                                
Litigation reserves
    
20
              
-
          
Premium on debt extinguishments
    
-
              
163
          
State income tax charge
    
-
              
33
          
Tax effect of pre-tax adjustments
    
(636
)
            
(50
)
        
Discontinued operations, net **
    
37
              
(131
)
        
                                 
Corporate Core Results - Non Segment
    
(4,235
)
            
(4,764
)
        
                                 
TOTAL CORE RESULTS
  
$
5,750
    
$
7.09
    
$
6,828
    
$
8.39
  
                                 
 *  Interest expense, income taxes, G&A expense and other
** Amounts shown after tax.
 
7
 
 
 
 
 
Attachment 5
                                 
SUMMARY OF OPERATING STATISTICS - PRODUCTION
                                 
   
Fourth Quarter
  
Twelve Months
   
2012
  
2011
  
2012
  
2011
NET OIL, GAS AND LIQUIDS PRODUCTION PER DAY
                                
United States
                                
Crude Oil (MBBL)
                                
California
    
92
      
84
      
88
      
80
  
Permian
    
146
      
137
      
142
      
134
  
Midcontinent and Other
    
27
      
19
      
25
      
16
  
Total
    
265
      
240
      
255
      
230
  
                                 
NGL (MBBL)
                                
California
    
21
      
15
      
17
      
15
  
Permian
    
40
      
37
      
39
      
38
  
Midcontinent and Other
    
16
      
18
      
17
      
16
  
Total
    
77
      
70
      
73
      
69
  
                                 
Natural Gas (MMCF)
                                
California
    
242
      
276
      
256
      
260
  
Permian
    
162
      
167
      
155
      
157
  
Midcontinent and Other
    
396
      
390
      
410
      
365
  
Total
    
800
      
833
      
821
      
782
  
                                 
Latin America
                                
Crude Oil  (MBBL) - Colombia
    
30
      
28
      
29
      
29
  
                                 
Natural Gas (MMCF) - Bolivia
    
12
      
14
      
13
      
15
  
                                 
Middle East / North Africa
                                
Crude Oil (MBBL)
                                
Bahrain
    
4
      
5
      
4
      
4
  
Dolphin
    
7
      
9
      
8
      
9
  
Oman
    
74
      
67
      
67
      
67
  
Qatar
    
71
      
76
      
71
      
73
  
Other
    
36
      
33
      
36
      
38
  
Total
    
192
      
190
      
186
      
191
  
                                 
NGL (MBBL)
                                
Dolphin
    
7
      
9
      
8
      
10
  
Other
    
-
      
-
      
1
      
-
  
Total
    
7
      
9
      
9
      
10
  
                                 
Natural Gas (MMCF)
                                
Bahrain
    
242
      
180
      
232
      
173
  
Dolphin
    
138
      
181
      
163
      
199
  
Oman
    
56
      
58
      
57
      
54
  
Total
    
436
      
419
      
452
      
426
  
                                 
                                 
Barrels of Oil Equivalent (MBOE)
    
779
      
748
      
766
      
733
  
 
8
 
 
 
 
 
Attachment 6
                                 
SUMMARY OF OPERATING STATISTICS - SALES
                                 
   
Fourth Quarter
  
Twelve Months
   
2012
  
2011
  
2012
  
2011
NET OIL, GAS AND LIQUIDS SALES PER DAY
                                
                                 
United States
                                
Crude Oil (MBBL)
    
265
      
240
      
255
      
230
  
NGL (MBBL)
    
77
      
70
      
73
      
69
  
Natural Gas (MMCF)
    
800
      
833
      
819
      
782
  
                                 
Latin America
                                
Crude Oil  (MBBL) - Colombia
    
30
      
32
      
28
      
29
  
                                 
Natural Gas (MMCF) - Bolivia
    
12
      
14
      
13
      
15
  
                                 
Middle East / North Africa
                                
Crude Oil (MBBL)
                                
Bahrain
    
4
      
5
      
4
      
4
  
Dolphin
    
7
      
9
      
8
      
9
  
Oman
    
70
      
66
      
66
      
69
  
Qatar
    
75
      
75
      
71
      
73
  
Other
    
39
      
31
      
36
      
34
  
Total
    
195
      
186
      
185
      
189
  
                                 
NGL (MBBL)
                                
Dolphin
    
7
      
10
      
8
      
10
  
Other
    
2
      
-
      
1
      
-
  
Total
    
9
      
10
      
9
      
10
  
                                 
Natural Gas (MMCF)
    
436
      
419
      
452
      
426
  
                                 
                                 
Barrels of Oil Equivalent (MBOE)
    
784
      
749
      
764
      
731
  
 
9
 
 
 
 
Section 9 - Financial Statements and Exhibits

Item 9.01.  Financial Statements and Exhibits

(d)
  
Exhibits
     
99.1
  
Press release dated January 13, 2013.
     
99.2
  
Full text of speeches given by Cynthia L. Walker and Stephen Chazen.
     
99.3
  
Investor Relations Supplemental Schedules.
     
99.4
  
Earnings Conference Call Slides.
     
99.5
  
Forward-Looking Statements Disclosure for Earnings Release Presentation Materials.
 
10
 
 
 
 
 
 
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:  January 31, 2013
/s/ ROY PINECI
  
 
Roy Pineci, Vice President, Controller
  
 
and Principal Accounting Officer
  
 
 
 
 
 

EXHIBIT INDEX

(d)
  
Exhibits
     
99.1
  
Press release dated January 31, 2013.
     
99.2
  
Full text of speeches given by Cynthia L. Walker and Stephen Chazen.
     
99.3
  
Investor Relations Supplemental Schedules.
     
99.4
  
Earnings Conference Call Slides.
     
99.5
  
Forward-Looking Statements Disclosure for Earnings Release Presentation Materials.