Third Quarter 2007 Earnings - 4Q07 Outlook
Difficulty of predicting interim period tax rates is due to:
Interim period rates are based on projected total year income and taxes;
Oxy’s tax rate is sensitive to changes in oil and gas prices and foreign
expensed exploration;
Changes in oil prices have an inverse effect on income tax rates;
Rising oil prices increases the proportion of US income which has lower
income tax rates than our international operations;
Oxy generally records no tax benefit on foreign expensed exploration
until the project is completely abandoned.
We expect 4Q07 foreign exploration expense, which is
not currently tax deductible, to be ~ $70 mm.
The 4Q07 worldwide tax rate before this exploration
expense is expected to be ~ 45%.
We expect our combined worldwide 4Q07 tax rate,
including exploration expense, to be ~ 46%.
Third Quarter 2007 Earnings
See the investor relations supplemental schedules for the reconciliation of non-
GAAP items. Statements in this presentation that contain words such as "will",
"expect" or "estimate", or otherwise relate to the future, are forward-looking and
involve risks and uncertainties that could materially affect expected
results. Factors that could cause results to differ materially include, but are not
limited to: exploration risks, such as drilling of unsuccessful wells; global
commodity pricing fluctuations and supply/demand considerations for oil, gas
and chemicals; higher-than-expected costs; political risk; and not successfully
completing (or any material delay in) any expansion, capital expenditure,
acquisition, or disposition. You should not place undue reliance on these
forward-looking statements which speak only as of the date of this presentation.
Unless legally required, Occidental disclaims any obligation to update any
forward-looking statements as a result of new information, future events or
otherwise. U.S. investors are urged to consider carefully the disclosure in our
Form 10-K, available through the following toll-free telephone number, 1-888-
OXYPETE (1-888-699-7383) or on the Internet at http://www.oxy.com. You also
can obtain a copy from the SEC by calling 1-800-SEC-0330.
18
Occidental Petroleum Corporation | | | | | |
Return on Capital Employed (% ) | | | | | |
($ Millions) | | | Nine | | |
| | | Months | | Annualized |
Reconciliation to Generally Accepted Accounting Principles (GAAP) | | 2006 | 2007 | | 2007 |
GAAP measure - earnings applicable to common shareholders | | 4,191 | 3,948 | | |
Interest expense | | 131 | 186 | | |
Tax effect of interest expense | | (46) | (65) | | |
Earnings before tax-effected interest expense | | 4,276 | 4,069 | | |
GAAP stockholders' equity | | 19,252 | 21,901 | | |
DEBT | | | | | |
GAAP debt | | | | | |
Debt, including current maturities | | 2,790 | 1,904 | | |
Non-GAAP debt | | | | | |
Capital lease obligation | | 25 | 25 | | |
Subsidiary preferred stock | | 75 | 75 | | |
Total debt | | 2,890 | 2,004 | | |
Total capital employed | | 22,142 | 23,905 | | |
Return on Capital Employed (%) | | 21.2 | 17.7 | | 23.6 |
