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 28, 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 January 28, 2010, Occidental Petroleum Corporation released information regarding its results of operations for the three and twelve months ended December 31, 2009. 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 January 28, 2010, Occidental Petroleum Corporation announced net income of $938 million ($1.15 per diluted share) for the fourth quarter of 2009, compared with $443 million ($0.55 per diluted share) for the fourth quarter of 2008. Core results for the fourth quarter of 2009 were $1.1 billion ($1.30 per diluted share), compared with $957 million ($1.18 per diluted share) for the fourth quarter of 2008. Core results excluded after-tax charges of $120 million ($0.15 per diluted share) for 2009 and $514 million ($0.63 per diluted share) for 2008.
Net income for the twelve months of 2009 was $2.9 billion ($3.58 per diluted share), compared with $6.9 billion ($8.34 per diluted share) for the twelve months of 2008. Full year core results were $3.1 billion ($3.78 per diluted share) for 2009, compared with $7.3 billion ($8.94 per diluted share) for 2008.
QUARTERLY RESULTS
Oil and Gas
Oil and gas segment earnings were $1.6 billion for the fourth quarter of 2009, compared with $339 million for the same period in 2008. The fourth quarter of 2009 core results were $1.8 billion, excluding a pre-tax loss of $170 million related to impairment of assets. The 2008 core results were $1 billion, excluding pre-tax losses of $657 million relating to the impairment of assets and other items. The $800 million increase in the fourth quarter of 2009 core results was primarily due to higher crude oil prices and sales volumes and lower operating costs.
For the fourth quarter of 2009, daily oil and gas sales volumes averaged 650,000 barrels of oil equivalent (BOE), compared with 620,000 BOE per day in the fourth quarter of 2008, a year-over-year increase of nearly five percent. Volumes increased by 14 percent in the Middle East/North Africa, and two percent each in the United States and Latin America. The Middle East/North Africa increase included new production from the Bahrain start-up and increased production from the Mukhaizna field in Oman.
Oxy's realized price for worldwide crude oil was $69.39 per barrel for the fourth quarter of 2009, compared with $53.52 per barrel for the fourth quarter of 2008. Domestic realized gas prices dropped from $4.67 per MCF in the fourth quarter of 2008 to $4.37 per MCF for the fourth quarter of 2009.
1
Chemicals
Chemical segment earnings for the fourth quarter of 2009 were $33 million, compared with $127 million for the same period in 2008. The fourth quarter of 2008 core results were $217 million after excluding a $90 million pre-tax loss related to plant closure and impairments. The fourth quarter 2009 results reflect the continued weakness in most domestic markets, but in particular U.S. housing, durable goods and agricultural sectors.
Midstream, Marketing and Other
Midstream segment earnings were $81 million for the fourth quarter of 2009, compared with $170 million for the fourth quarter of 2008. Earnings for the fourth quarter of 2009 reflect lower margins in the marketing business in 2009, compared to 2008, partially offset by higher pipeline income from Dolphin and improved margins in the gas processing business.
TWELVE-MONTH RESULTS
Oil and Gas
Oil and gas segment earnings were $4.7 billion for the twelve months of 2009, compared with $10.7 billion for the same period of 2008. Oil and gas core results, after excluding impairments and rig termination costs, were $4.9 billion for the twelve months of 2009, compared to $11.3 billion for the twelve months of 2008. The $6.4 billion decrease in the 2009 core results reflected lower crude oil and natural gas prices, partially offset by increased oil and gas production and lower operating costs.
Daily oil and gas sales volumes for the year were 645,000 BOE per day for 2009, compared with 601,000 BOE per day for the 2008 period, a year-over-year increase of seven percent. Volumes increased 4 percent domestically, mainly in California and Midcontinent Gas, by 10 percent in Latin America, and 13 percent in the Middle East/North Africa. The increase in the Middle East/North Africa resulted from higher production in the Mukhaizna field in Oman and higher volumes resulting from lower year-over-year average oil prices affecting our production sharing contracts.
Oxy's realized price for worldwide crude oil was $55.97 per barrel for the twelve months of 2009, compared with $88.26 per barrel for the twelve months of 2008. Domestic realized gas prices decreased from $8.03 per MCF in the twelve months of 2008 to $3.46 per MCF in the twelve months of 2009.
Chemicals
Chemical segment earnings were $389 million for the twelve months of 2009 compared with $669 million for the twelve months of 2008. The 2008 core results were $759 million after excluding charges for plant closure and impairments. The decrease in 2009 results reflects lower volumes and prices for chlorine, caustic soda, polyvinyl chloride, and vinyl chloride monomer due to the economic slow down, partially offset by lower feedstock and energy costs.
Midstream, Marketing and Other
Midstream segment earnings were $235 million for the twelve months of 2009, compared with $520 million for the same period in 2008. The 2009 results reflect lower marketing income and lower margins in the gas processing business.
2
Forward-Looking Statements
Statements in this report that contain words such as "will," “should,” "expect," or "estimate," or otherwise relate to the future, are forward-looking and involve risks and uncertainties that could significantly affect expected results. Factors that could cause actual results to differ materially include, but are not limited to: global commodity price fluctuations and supply/demand considerations for oil, gas and chemicals; exploration risks, such as drilling of unsuccessful wells; not successfully completing (or any material delay in) any expansions, field development, capital projects, acquisitions, or dispositions; higher-than-expected costs; political risk; operational interruptions; and changes in tax rates. You should not place undue reliance on these forward-looking statements which speak only as of the date of this release. Unless legally required, Occidental does not undertake any obligation to update any forward-looking statements as a result of new information, future events or otherwise. U.S. investors are urged to consider carefully the disclosures in our Form 10-K, available through the following toll-free telephone number, 1-888-OXYPETE (1-888-699-7383) or on the Internet at http://www.oxy.com. You also can obtain a copy from the SEC by calling 1-800-SEC-0330.
3
| SUMMARY OF SEGMENT NET SALES AND EARNINGS | ||||||||||||||||
| Fourth Quarter | Twelve Months | |||||||||||||||
| ($ millions, except per-share amounts) | 2009 | 2008 | 2009 | 2008 | ||||||||||||
| SEGMENT NET SALES | ||||||||||||||||
| Oil and Gas | $ | 3,646 | $ | 2,746 | $ | 11,598 | $ | 18,187 | ||||||||
| Chemical | 780 | 1,005 | 3,225 | 5,112 | ||||||||||||
| Midstream, Marketing and Other | 253 | 394 | 1,016 | 1,598 | ||||||||||||
| Eliminations | (140 | ) | (124 | ) | (436 | ) | (680 | ) | ||||||||
| Net Sales | $ | 4,539 | $ | 4,021 | $ | 15,403 | $ | 24,217 | ||||||||
| SEGMENT EARNINGS | ||||||||||||||||
| Oil and Gas (a), (b) | $ | 1,643 | $ | 339 | $ | 4,735 | $ | 10,651 | ||||||||
| Chemical (c) | 33 | 127 | 389 | 669 | ||||||||||||
| Midstream, Marketing and Other | 81 | 170 | 235 | 520 | ||||||||||||
| 1,757 | 636 | 5,359 | 11,840 | |||||||||||||
| Unallocated Corporate Items | ||||||||||||||||
| Interest expense, net | (33 | ) | (16 | ) | (109 | ) | (26 | ) | ||||||||
| Income taxes | (673 | ) | (118 | ) | (1,918 | ) | (4,629 | ) | ||||||||
| Other (d) | (108 | ) | (54 | ) | (405 | ) | (346 | ) | ||||||||
| Income from Continuing Operations (a) | 943 | 448 | 2,927 | 6,839 | ||||||||||||
| Discontinued operations, net | (5 | ) | (5 | ) | (12 | ) | 18 | |||||||||
| NET INCOME (a) | $ | 938 | $ | 443 | $ | 2,915 | $ | 6,857 | ||||||||
| BASIC EARNINGS PER COMMON SHARE | ||||||||||||||||
| Income from continuing operations | $ | 1.16 | $ | 0.55 | $ | 3.60 | $ | 8.35 | ||||||||
| Discontinued operations, net | (0.01 | ) | - | (0.01 | ) | 0.02 | ||||||||||
| $ | 1.15 | $ | 0.55 | $ | 3.59 | $ | 8.37 | |||||||||
| DILUTED EARNINGS PER COMMON SHARE | ||||||||||||||||
| Income from continuing operations | $ | 1.16 | $ | 0.55 | $ | 3.59 | $ | 8.32 | ||||||||
| Discontinued operations, net | (0.01 | ) | - | (0.01 | ) | 0.02 | ||||||||||
| $ | 1.15 | $ | 0.55 | $ | 3.58 | $ | 8.34 | |||||||||
| AVERAGE BASIC COMMON SHARES OUTSTANDING | ||||||||||||||||
| BASIC | 811.8 | 810.3 | 811.3 | 817.6 | ||||||||||||
| DILUTED | 813.5 | 811.5 | 813.8 | 820.5 | ||||||||||||
(a) Net Income - Net income and income from continuing operations represent amounts attributable to Common Stock, after deducting non-controlling interest amounts of $16 million and $12 million for the fourth quarter and $51 million and $116 million for the twelve months ended December 31, 2009 and 2008, respectively. Oil and gas segment earnings are presented net of these non-controlling interest amounts. | ||||||||||||||||
(b) Oil and Gas - The fourth quarter and twelve months of 2009 include a pre-tax charge for asset impairment for $170 million. The twelve months of 2009 also includes $8 million for rig contract termination costs. The fourth quarter and 12 months 2008 include pre-tax charges of $599 million for asset impairments and $58 million for the termination of rig contracts. | ||||||||||||||||
(c) Chemical - The fourth quarter and 12 months of 2008 include a pre-tax charge of $90 million for plant closure and impairments costs. | ||||||||||||||||
(d) Unallocated Corporate Items - Other - The twelve months of 2009 includes non-core pre-tax charges of $40 million related to severance and $15 million for railcar leases. | ||||||||||||||||
4
| Attachment 2 | ||||||||||||||||
| SUMMARY OF CAPITAL EXPENDITURES AND DD&A EXPENSE | ||||||||||||||||
| Fourth Quarter | Twelve Months | |||||||||||||||
| ($ millions) | 2009 | 2008 | 2009 | 2008 | ||||||||||||
| CAPITAL EXPENDITURES | $ | 932 | $ | 1,594 | $ | 3,581 | $ | 4,664 | ||||||||
| DEPRECIATION, DEPLETION AND | ||||||||||||||||
| AMORTIZATION OF ASSETS | $ | 820 | $ | 753 | $ | 3,117 | $ | 2,710 | ||||||||
| ITEMS AFFECTING COMPARABILITY OF CORE EARNINGS BETWEEN PERIODS | ||||||||||||||||
| Fourth Quarter | Twelve Months | |||||||||||||||
| ($ millions) | 2009 | 2008 | 2009 | 2008 | ||||||||||||
| Foreign exchange gains * | $ | 8 | $ | 88 | $ | 36 | $ | 91 | ||||||||
| * Amounts shown after tax. | ||||||||||||||||
5
| Attachment 3 | ||||||||||||
| SUMMARY OF OPERATING STATISTICS - SALES | ||||||||||||
| Fourth Quarter | Twelve Months | |||||||||||
| 2009 | 2008 | 2009 | 2008 | |||||||||
| NET OIL, GAS AND LIQUIDS SALES PER DAY | ||||||||||||
| United States | ||||||||||||
| Crude Oil and Liquids (MBBL) | ||||||||||||
| California | 92 | 97 | 93 | 89 | ||||||||
| Permian | 168 | 167 | 168 | 168 | ||||||||
| Midcontinent Gas | 11 | 9 | 10 | 6 | ||||||||
| Total | 271 | 273 | 271 | 263 | ||||||||
| Natural Gas (MMCF) | ||||||||||||
| California | 282 | 221 | 250 | 235 | ||||||||
| Permian | 197 | 188 | 199 | 181 | ||||||||
| Midcontinent Gas | 166 | 187 | 186 | 171 | ||||||||
| Total | 645 | 596 | 635 | 587 | ||||||||
| Latin America | ||||||||||||
| Crude Oil (MBBL) | ||||||||||||
| Argentina | 37 | 32 | 37 | 32 | ||||||||
| Colombia | 36 | 39 | 39 | 37 | ||||||||
| Total | 73 | 71 | 76 | 69 | ||||||||
| Natural Gas (MMCF) | ||||||||||||
| Argentina | 30 | 24 | 30 | 21 | ||||||||
| Bolivia | 12 | 21 | 16 | 21 | ||||||||
| Total | 42 | 45 | 46 | 42 | ||||||||
| Middle East / North Africa | ||||||||||||
| Crude Oil and Liquids (MBBL) | ||||||||||||
| Oman | 43 | 27 | 39 | 23 | ||||||||
| Dolphin | 20 | 23 | 21 | 21 | ||||||||
| Qatar | 48 | 48 | 48 | 47 | ||||||||
| Yemen | 28 | 22 | 29 | 23 | ||||||||
| Libya | 9 | 10 | 7 | 15 | ||||||||
| Bahrain | 1 | - | - | - | ||||||||
| Total | 149 | 130 | 144 | 129 | ||||||||
| Natural Gas (MMCF) | ||||||||||||
| Oman | 19 | 23 | 22 | 24 | ||||||||
| Dolphin | 198 | 209 | 213 | 184 | ||||||||
| Bahrain | 40 | - | 10 | - | ||||||||
| Total | 257 | 232 | 245 | 208 | ||||||||
| Barrels of Oil Equivalent (MBOE) | 650 | 620 | 645 | 601 | ||||||||
6
| Attachment 4 | ||||||||||||
| SUMMARY OF OPERATING STATISTICS - PRODUCTION | ||||||||||||
| Fourth Quarter | Twelve Months | |||||||||||
| 2009 | 2008 | 2009 | 2008 | |||||||||
| NET OIL, GAS AND LIQUIDS PRODUCTION PER DAY | ||||||||||||
| United States | ||||||||||||
| Crude Oil and Liquids (MBBL) | 271 | 273 | 271 | 263 | ||||||||
| Natural Gas (MMCF) | 645 | 596 | 635 | 587 | ||||||||
| Latin America | ||||||||||||
| Crude Oil (MBBL) | ||||||||||||
| Argentina | 36 | 38 | 36 | 34 | ||||||||
| Colombia | 36 | 39 | 39 | 38 | ||||||||
| Total | 72 | 77 | 75 | 72 | ||||||||
| Natural Gas (MMCF) | 42 | 45 | 46 | 42 | ||||||||
| Middle East / North Africa | ||||||||||||
| Crude Oil and Liquids (MBBL) | ||||||||||||
| Oman | 45 | 28 | 39 | 23 | ||||||||
| Dolphin | 20 | 22 | 22 | 20 | ||||||||
| Qatar | 46 | 48 | 48 | 47 | ||||||||
| Yemen | 27 | 22 | 28 | 23 | ||||||||
| Libya | 5 | 8 | 6 | 15 | ||||||||
| Bahrain | 1 | - | - | - | ||||||||
| Total | 144 | 128 | 143 | 128 | ||||||||
| Natural Gas (MMCF) | 257 | 232 | 245 | 208 | ||||||||
| Barrels of Oil Equivalent (MBOE) | 644 | 623 | 643 | 603 | ||||||||
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. These events may recur, even across successive reporting periods. 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) | 2009 | Diluted EPS | 2008 | Diluted EPS | ||||||||||||
| TOTAL REPORTED EARNINGS | $ | 938 | $ | 1.15 | $ | 443 | $ | 0.55 | ||||||||
| Oil and Gas | ||||||||||||||||
| Segment Earnings | $ | 1,643 | $ | 339 | ||||||||||||
| Add: | ||||||||||||||||
| Asset impairments | 170 | 599 | ||||||||||||||
| Rig contract terminations | - | 58 | ||||||||||||||
| Segment Core Results | 1,813 | 996 | ||||||||||||||
| Chemicals | ||||||||||||||||
| Segment Earnings | 33 | 127 | ||||||||||||||
| Add: | ||||||||||||||||
| Plant closure and impairments | - | 90 | ||||||||||||||
| Segment Core Results | 33 | 217 | ||||||||||||||
| Midstream, Marketing and Other | ||||||||||||||||
| Segment Earnings | 81 | 170 | ||||||||||||||
| Add: | ||||||||||||||||
| No significant items affecting earnings | - | - | ||||||||||||||
| Segment Core Results | 81 | 170 | ||||||||||||||
| Total Segment Core Results | 1,927 | 1,383 | ||||||||||||||
| Corporate | ||||||||||||||||
| Corporate Results -- | ||||||||||||||||
| Non Segment * | (819 | ) | (193 | ) | ||||||||||||
| Add: | ||||||||||||||||
| Tax effect of pre-tax adjustments | (55 | ) | (238 | ) | ||||||||||||
| Discontinued operations, net ** | 5 | 5 | ||||||||||||||
| Corporate Core Results - Non Segment | (869 | ) | (426 | ) | ||||||||||||
| TOTAL CORE RESULTS | $ | 1,058 | $ | 1.30 | $ | 957 | $ | 1.18 | ||||||||
| * Interest expense, income taxes, G&A expense and other | ||||||||||||||||
| ** Amounts shown after tax. | ||||||||||||||||
8
| Attachment 6 | ||||||||||||||||
| SIGNIFICANT TRANSACTIONS AND EVENTS AFFECTING EARNINGS (continued) | ||||||||||||||||
| Twelve Months | ||||||||||||||||
| ($ millions, except per-share amounts) | 2009 | Diluted EPS | 2008 | Diluted EPS | ||||||||||||
| TOTAL REPORTED EARNINGS | $ | 2,915 | $ | 3.58 | $ | 6,857 | $ | 8.34 | ||||||||
| Oil and Gas | ||||||||||||||||
| Segment Earnings | $ | 4,735 | $ | 10,651 | ||||||||||||
| Add: | ||||||||||||||||
| Asset impairments | 170 | 599 | ||||||||||||||
| Rig contract terminations | 8 | 58 | ||||||||||||||
| Segment Core Results | 4,913 | 11,308 | ||||||||||||||
| Chemicals | ||||||||||||||||
| Segment Earnings | 389 | 669 | ||||||||||||||
| Add: | ||||||||||||||||
| Plant closure and impairments | - | 90 | ||||||||||||||
| Segment Core Results | 389 | 759 | ||||||||||||||
| Midstream, Marketing and Other | ||||||||||||||||
| Segment Earnings | 235 | 520 | ||||||||||||||
| Add: | ||||||||||||||||
| No significant items affecting earnings | - | - | ||||||||||||||
| Segment Core Results | 235 | 520 | ||||||||||||||
| Total Segment Core Results | 5,537 | 12,587 | ||||||||||||||
| Corporate | ||||||||||||||||
| Corporate Results -- | ||||||||||||||||
| Non Segment * | (2,444 | ) | (4,983 | ) | ||||||||||||
| Add: | ||||||||||||||||
| Railcar leases | 15 | - | ||||||||||||||
| Severance accruals | 40 | - | ||||||||||||||
| Tax effect of pre-tax adjustments | (77 | ) | (238 | ) | ||||||||||||
| Discontinued operations, net ** | 12 | (18 | ) | |||||||||||||
| Corporate Core Results - Non Segment | (2,454 | ) | (5,239 | ) | ||||||||||||
| TOTAL CORE RESULTS | $ | 3,083 | $ | 3.78 | $ | 7,348 | $ | 8.94 | ||||||||
| * Interest expense, income taxes, G&A expense and other | ||||||||||||||||
| ** Amounts shown after tax. | ||||||||||||||||
9
Section 9 - Financial Statements and Exhibits
Item 9.01. Financial Statements and Exhibits
(d) Exhibits
| 99.1 | Press release dated January 28, 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. |
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 28, 2010 | /s/ ROY PINECI | |
| Roy Pineci, Vice President, Controller | ||
| and Principal Accounting Officer | ||
11
EXHIBIT INDEX
| 99.1 | Press release dated January 28, 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. |