EXHIBIT 99.1
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[OXY LOGO] NEWS RELEASE OCCIDENTAL PETROLEUM CORPORATION
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10889 Wilshire Boulevard, Los Angeles, California 90024 (310) 208-8800
For Immediate Release: July 22, 2003
OCCIDENTAL PETROLEUM ANNOUNCES SECOND QUARTER 2003 RESULTS
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LOS ANGELES -- Occidental Petroleum Corporation (NYSE: OXY) announced net
income for the second quarter 2003 of $374 million ($0.98 per share), compared
with $240 million ($0.64 per share) for the second quarter 2002.
In announcing the results, Dr. Ray R. Irani, chairman and chief executive
officer, said, "Core earnings of $374 million, or $0.98 per share, were 55
percent higher than the $241 million, or $0.64 per share, the company earned in
the second quarter of 2002. Higher oil and gas prices and record production of
544,000 barrels of oil equivalent per day resulted in a 51 percent increase in
oil and gas earnings over last year's second quarter. Core earnings of $807
million, or $2.12 per share, for the first half of this year were more than
double the $364 million, or $0.97 per share, the company earned in the
comparable period last year."
OIL AND GAS
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Oil and gas segment and core earnings were $637 million for the second
quarter 2003, compared with $421 million for the second quarter 2002. The
improvement in the second quarter 2003 earnings reflected approximately $200
million from higher worldwide crude oil and natural gas prices, increased sales
volumes and lower exploration expense. The second quarter 2003 also included $14
million in after-tax gains on asset sales; partially offset by higher operating
costs.
CHEMICALS
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Chemical segment and core earnings were $43 million for the second quarter
2003, compared with $34 million for the second quarter 2002. The second quarter
2003 results reflected higher sales prices for PVC, chlorine and caustic;
partially offset by higher energy and raw material costs and lower sales
volumes. The second quarter 2003 included a $9-million asset-writedown charge
and a $15 million severance charge.
OTHER
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Occidental adopted FASB Interpretation No.46, Consolidation of Variable
Interest Entities, during the second quarter 2003 and added $56 million to debt
as a result of consolidating its OxyMar joint venture. The
debt-to-capitalization ratio was 40 percent at June 30, 2003, the lowest level
in over 20 years.
SIX-MONTHS RESULTS
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For the first six months of 2003, net income was $699 million ($1.84 per
share), compared with $265 million ($0.71 per share) for the first six months of
2002.
Core earnings were $807 million for 2003 compared with $364 million for
2002. See the attached schedule for a reconciliation of net income to core
earnings.
-0-
Contacts: Lawrence P. Meriage (media)
310-443-6562
Kenneth J. Huffman (investors)
212-603-8183
For further analysis of Occidental's quarterly performance, please
visit the web site: www.oxy.com
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SUMMARY OF SEGMENT NET SALES AND EARNINGS
($ millions, except per-share amounts)
Second Quarter Six Months
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2003 2002 2003 2002
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SEGMENT NET SALES
Oil and gas $ 1,440 $ 1,165 $ 2,993 $ 2,123
Chemical 785 702 1,575 1,267
Other 41 -- 69 --
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Net sales $ 2,266 $ 1,867 $ 4,637 $ 3,390
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SEGMENT EARNINGS
Oil and gas $ 637 $ 421 $ 1,364 $ 727
Chemical 43 34 78 3
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680 455 1,442 730
UNALLOCATED CORPORATE ITEMS
Interest expense, net (a) (53) (66) (177) (122)
Income taxes (b) (167) (101) (345) (145)
Trust preferred distributions
& other (11) (12) (22) (23)
Other (c) (75) (35) (131) (76)
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INCOME FROM CONTINUING OPERATIONS 374 241 767 364
Discontinued operations, net -- (1) -- (4)
Cumulative effect of changes in
accounting principles, net (d) -- -- (68) (95)
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NET INCOME $ 374 $ 240 $ 699 $ 265
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BASIC EARNINGS PER COMMON SHARE
Income from continuing operations $ 0.98 $ 0.64 $ 2.02 $ 0.97
Discontinued operations, net -- -- -- (0.01)
Cumulative effect of changes in
accounting principles, net -- -- (0.18) (0.25)
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$ 0.98 $ 0.64 $ 1.84 $ 0.71
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DILUTED EARNINGS PER COMMON SHARE
Income from continuing operations $ 0.97 $ 0.63 $ 1.99 $ 0.96
Discontinued operations, net -- -- -- (0.01)
Cumulative effect of changes in
accounting principles, net -- -- (0.18) (0.25)
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$ 0.97 $ 0.63 $ 1.81 $ 0.70
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BASIC SHARES OUTSTANDING 382.6 375.5 380.9 375.1
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See footnotes on following page.
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(a) The six months 2003 amount includes a $61 million interest charge to repay
a $450-million 6.4-percent senior-notes issue that had ten years of
remaining life, but was subject to remarketing on April 1, 2003. The second
quarter and six-months 2002 amounts include $8 million and $22 million,
respectively, of interest income on notes receivable from the Occidental
Permian partners. The partnership exercised an option in May 2002 to redeem
the sellers' remaining partnership interests in exchange for the
outstanding balance on the notes.
(b) Excludes U.S. federal income tax charges and credits allocated to the
segments and foreign taxes. Oil and gas segment earnings include charges of
$8 million in the second quarter of 2003 and credits of $1 million in the
second quarter of 2002. Chemical segment earnings include $4 million of
credits in the second quarter of 2002.
Oil and gas segment earnings for the six months 2003 and 2002 include
charges of $7 million and credits of $1 million, respectively. Chemical
segment earnings included credits of $8 million for the six months 2002.
(c) Includes preferred distributions to the Occidental Permian partners. The
second quarter and six-months 2002 amounts include $5 million and $20
million, respectively. This is essentially offset by the interest income
from the Occidental Permian partners discussed in (a) above. The
partnership exercised an option in May 2002 to redeem the sellers'
remaining partnership interests in exchange for the outstanding balance on
the notes.
(d) Effective January 1, 2003, Occidental implemented SFAS No. 143 -
"Accounting for Asset Retirement Obligations." Adoption of this new
accounting standard resulted in a cumulative after-tax reduction in net
income of $50 million. Also effective January 1, 2003, Occidental
implemented the rescission of EITF 98-10, which precludes mark-to-market
accounting for all energy-trading contracts that are not derivatives and
fair-value accounting for inventories purchased from third parties.
Adoption of this accounting change resulted in a cumulative after-tax
reduction in net income of $18 million. Effective January 1, 2002,
Occidental implemented SFAS No. 142 - "Goodwill and Other Intangible
Assets." Adoption of this new accounting standard resulted in a cumulative
after-tax reduction in net income of $95 million.
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SUMMARY OF OPERATING STATISTICS
Second Quarter Six Months
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2003 2002 2003 2002
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NET OIL, GAS AND LIQUIDS
PRODUCTION PER DAY
United States
Crude Oil and Liquids (MBBL)
California 81 86 79 88
Permian 151 143 147 141
Horn Mountain 19 -- 16 --
Hugoton 3 3 4 3
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Total 254 232 246 232
Natural Gas (MMCF)
California 252 290 257 298
Hugoton 143 150 143 154
Permian 131 125 125 127
Horn Mountain 15 -- 10 --
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Total 541 565 535 579
Latin America
Crude Oil (MBBL)
Colombia 36 42 37 39
Ecuador 18 12 17 13
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Total 54 54 54 52
Middle East and
Other Eastern Hemisphere
Crude Oil (MBBL)
Oman 11 15 12 16
Pakistan 10 9 10 8
Qatar 51 43 49 43
Yemen 35 33 37 40
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Total 107 100 108 107
Natural Gas (MMCF)
Pakistan 77 50 76 50
BARRELS OF OIL EQUIVALENT (MBOE)
Subtotal consolidated subsidiaries 518 489 510 496
Other interests
Colombia-minority interest (5) (5) (4) (5)
Russia-Occidental net interest 30 28 30 27
Yemen-Occidental net interest 1 -- 2 --
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Total worldwide production 544 512 538 518
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CAPITAL EXPENDITURES (millions) $ 493 $ 303 $ 791 $ 557
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DEPRECIATION, DEPLETION AND
AMORTIZATION OF ASSETS (millions) $ 286 $ 253 $ 571 $ 514
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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:
Second Quarter
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($ millions) 2003 EPS 2002 EPS
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TOTAL REPORTED EARNINGS $ 374 $ 0.98 $ 240 $ 0.64
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Oil and Gas
Segment Earnings $ 637 $ 421
No significant items
affecting earnings -- --
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Segment Core Earnings 637 421
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Chemicals
Segment Earnings 43 34
No significant items
affecting earnings -- --
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Segment Core Earnings 43 34
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Corporate
Results (306) (215)
Less:
Discontinued operations, net* -- (1)
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TOTAL CORE EARNINGS $ 374 $ 0.98 $ 241 $ 0.64
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*These amounts are shown after tax.
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SIGNIFICANT TRANSACTIONS AND EVENTS AFFECTING EARNINGS (continued)
Six Months
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($ millions) 2003 EPS 2002 EPS
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TOTAL REPORTED EARNINGS $ 699 $ 1.84 $ 265 $ 0.71
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Oil and Gas
Segment Earnings $ 1,364 $ 727
No significant items
affecting earnings -- --
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Segment Core Earnings 1,364 727
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Chemicals
Segment Earnings 78 3
No significant items
affecting earnings -- --
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Segment Core Earnings 78 3
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Corporate
Results (743) (465)
Less:
Debt repayment charge (61) --
Tax effect of pre-tax charge 21 --
Discontinued operations, net* -- (4)
Changes in accounting
principles, net* (68) (95)
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TOTAL CORE EARNINGS $ 807 $ 2.12 $ 364 $ 0.97
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*These amounts are shown after tax.
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ITEMS AFFECTING COMPARABILITY OF CORE EARNINGS BETWEEN PERIODS
Second Quarter Six Months
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($ millions) 2003 2002 2003 2002
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PRE-TAX INCOME / (EXPENSE)
Oil and Gas
Gain on sale of GOM assets 1 $ 14 $ -- $ 14 $ --
Exploration asset write-offs -- (33) -- (33)
Chemicals
Reorganizations/severance (15) -- (15) (14)
Equistar equity results -- (4) -- (40)
Chlorine derivatives asset
impairment (9) -- (9) --
Corporate
Environmental remediation (13) -- (13) --
Equity earnings (15) -- (38) --
1 Net of tax.
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