================================================================================
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, 2002
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
================================================================================
Item 5. Other Events and Regulation FD Disclosure
------ -----------------------------------------
SALE OF EQUITY INTEREST IN EQUISTAR
Occidental Petroleum Corporation said on January 31, 2002, that it has
agreed in principle to sell its 29.5 percent equity interest in Equistar to
Lyondell Chemical Company. Occidental will become the owner of approximately 21
percent of Lyondell.
Occidental will receive 30 to 34 million shares of Lyondell common stock,
depending on the price of Lyondell stock at the closing. Occidental also will
obtain warrants to purchase an additional 5 million shares at $25 per share, and
a payment equal to 7.38 percent of Equistar's cash distribution for 2002 and
2003 of up to a total of $35 million to be paid in cash or stock.
Dr. Ray R. Irani, chairman and chief executive officer of Occidental, said,
"These transactions reduce the volatility of our earnings while preserving the
economic upside when the petrochemicals industry recovers and is consistent with
our strategy of focusing on our oil and gas business. We look forward to
continued success in our relationship with Lyondell."
Lyondell is a global manufacturer and marketer of intermediate and
performance chemicals. Lyondell is the world's largest producer of propylene
oxide and third largest producer of styrene monomer. In addition, Lyondell holds
an interest of approximately 59 percent in a US oil refinery with a refining
capacity of approximately 268,000 barrels of crude oil per day. Through its
ownership in Equistar, Lyondell also is North America's second largest producer
of ethylene and propylene and the world's third largest manufacturer of
polyethylene.
These transactions, which are expected to close in the second quarter 2002,
are subject to regulatory, Lyondell shareholder and other approvals. Millennium
Chemicals will have the right to participate in the acquisition of Occidental's
portion of Equistar on a ratable basis.
As a result of these transactions, Occidental will record an after-tax loss
of approximately $240 million in the fourth quarter 2001. The Equistar interest
being sold is valued at $440 million. Occidental also will record a fourth
quarter pre-tax environmental charge of $60 million.
Note: This press release contains forward-looking statements regarding the
nature and expected results of Occidental's transaction with Lyondell. Actual
results are subject to future events and uncertainties - including, among
others, altering or not completing the transaction - which could materially
impact performance.
FOURTH QUARTER 2001 EARNINGS AND RESULTS OF OPERATIONS
Occidental Petroleum Corporation announced earnings before special items
for the fourth quarter 2001 were $35 million ($0.09 per share), compared with
$349 million ($0.94 per share) for the same period a year ago. Results for the
fourth quarter of 2001 were a loss of $247 million ($0.66 per share), compared
with income of $333 million ($0.90 per share) for the same period of 2000. Sales
for the fourth quarter of 2001 were $2.4 billion, compared with $3.9 billion for
the same period in 2000.
For the year 2001, earnings before special items were $1.328 billion ($3.57
per share), compared with $1.326 billion ($3.60 per share) for 2000.
Occidental's net income for 2001 was $1.2 billion ($3.10
1
per share), compared with $1.6 billion ($4.26 per share) for 2000. Sales
increased to $14.0 billion for 2001 from $13.6 billion for 2000.
In announcing the results, Dr. Ray R. Irani, chairman and chief executive
officer, said, "Net income for 2001 was the second highest in Occidental's
history, with earnings per share before special items nearly matching our record
setting 2000 performance. Oil and gas operating earnings were the highest in our
history. We replaced 138-percent of our worldwide oil and gas production at a
cost of $4.54 per barrel of oil equivalent. We also appreciably strengthened our
balance sheet by reducing our total debt to its lowest level in 15 years,
increasing our equity by 18-percent and thereby bringing our
debt-to-capitalization ratio down to 46-percent."
The fourth quarter 2001 included a $240 million after-tax charge,
reflecting the effect of the agreement in principle to sell Occidental's
interest in Equistar, a $60 million pre-tax charge for environmental remediation
expenses, an $11 million pre-tax charge to idle a chemical facility in Texas,
and a $5 million extraordinary loss resulting from early debt extinguishments.
Also included in the fourth quarter 2001 was a $14 million benefit resulting
from lower effective state tax rates. The fourth quarter 2000 included net
after-tax charges of $16 million.
Oil and Gas
-----------
Oil and gas segment earnings before special items were $166 million for the
fourth quarter 2001, compared with $763 million for the same period in 2000.
Lower prices for worldwide crude oil and domestic natural gas accounted for
approximately $500 million of the decline in earnings.
Oil and gas segment earnings for the fourth quarter of 2001 were also $166
million, compared with $770 million for 2000.
Chemicals
---------
Chemical segment results before special items were a loss of $4 million for
the fourth quarter 2001, compared with a loss of $51 million for the fourth
quarter 2000. The improvement in results reflects lower feedstock and energy
costs, partially offset by lower sales prices for chlorine, EDC and PVC.
Chemical segment results for the fourth quarter 2001 were a loss of $413
million and included a $412 million pre-tax charge reflecting the effect of the
agreement in principle to sell Occidental's interest in Equistar and an $11
million charge to idle a chlor-alkali chemical facility in Deer Park, Texas,
partially offset by a $14 million benefit resulting from lower effective state
tax rates. Fourth quarter 2000 chemical results were a loss of $55 million and
included net charges of $17 million mainly related to the write-down or
disposition of various assets, partially offset by a $13 million after-tax gain
related to the sale of a business.
Forward-looking statements and estimates regarding exploration and production
activities, oil, gas and commodity chemical prices and their related earnings
effects, and cost reductions, as well as pro-forma estimates in this release are
based on assumptions concerning market, competitive, regulatory, environmental,
operational and other conditions. Actual results could differ materially as a
result of factors discussed in Occidental's Annual Report on Form 10-K.
2
SUMMARY OF SEGMENT NET SALES AND EARNINGS
(Millions, except per-share amounts)
Fourth Quarter Twelve Months
------------------ ------------------
Periods Ended December 31 2001 2000 2001 2000
================================= ======= ======= ======= =======
SEGMENT NET SALES
Oil and gas $ 1,796 $ 3,145 $10,893 $ 9,779
Chemical 584 797 3,092 3,795
------- ------- ------- -------
Net sales $ 2,380 $ 3,942 $13,985 $13,574
================================= ======= ======= ======= =======
SEGMENT EARNINGS (LOSS)
Oil and gas $ 166 $ 770 $ 2,845 $ 2,417
Chemical (413) (55) (394) 169
------- ------- ------- -------
(247) 715 2,451 2,586
UNALLOCATED CORPORATE ITEMS
Interest expense, net (a) (56) (80) (263) (380)
Income taxes (b) 187 (193) (366) (861)
Trust preferred distributions
& other (13) (17) (56) (67)
Other (c) (113) (92) (580) 291
------- ------- ------- -------
INCOME BEFORE EXTRAORDINARY ITEMS
AND EFFECT OF CHANGES IN
ACCOUNTING PRINCIPLES (242) 333 1,186 1,569
Extraordinary items, net (5) -- (8) 1
Cumulative effect of changes
in accounting principles, net -- -- (24) --
------- ------- ------- -------
NET INCOME (LOSS) (247) 333 1,154 1,570
Effect of repurchase of Trust
Preferred Securities -- -- -- 1
------- ------- ------- -------
EARNINGS APPLICABLE TO COMMON
STOCK $ (247) $ 333 $ 1,154 $ 1,571
======= ======= ======= =======
BASIC EARNINGS PER COMMON SHARE
Income (loss) before extraordinary
items and effect of changes
in accounting principles $ (0.65) $ 0.90 $ 3.18 $ 4.26
Extraordinary loss, net (0.01) -- (0.02) --
Cumulative effect of changes
in accounting principles, net -- -- (0.06) --
------- ------- ------- -------
$ (0.66) $ 0.90 $ 3.10 $ 4.26
======= ======= ======= =======
DILUTED EARNINGS PER COMMON SHARE
Income (loss) before extraordinary
items and effect of changes
in accounting principles $ (0.65) $ 0.90 $ 3.17 $ 4.26
Extraordinary loss, net (0.01) -- (0.02) --
Cumulative effect of changes
in accounting principles, net -- -- (0.06) --
------- ------- ------- -------
$ (0.66) $ 0.90 $ 3.09 $ 4.26
======= ======= ======= =======
AVERAGE BASIC COMMON SHARES
OUTSTANDING 373.8 369.8 372.4 369.0
================================= ======= ======= ======= =======
See footnotes on following page.
3
(a) The fourth quarter and twelve months year-to-date 2001 includes $17 million
and $102 million, respectively, interest income on notes receivable from
Altura partners. The fourth quarter and twelve months year-to-date 2000
includes $38 million and $106 million, respectively.
(b) The fourth quarter 2001 includes a $172 million tax credit reflecting the
effect of the agreement in principle to sell Occidental's interest in
Equistar. Includes an offset for charges and credits in lieu of U.S.
federal income taxes allocated to the divisions. Oil and gas divisional
earnings have been impacted by credits of $1 million and $7 million in the
fourth quarter of 2001 and 2000, respectively. The oil and gas fourth
quarter of 2000 amount included a $7 million credit for the sale of an
office building. Chemical divisional earnings have been impacted by a
credit of $4 million in the fourth quarter of 2001 and a charge of $5
million in the fourth quarter of 2000. The Chemical fourth quarter of 2000
amount included a $21 million charge related to the sale of the Durez
business and a $12 million credit for the shutdown and liquidation of a
chemical operation in Thailand.
(c) The fourth quarter and twelve months year-to-date 2001 includes
environmental remediation charges of $60 million and $109 million,
respectively. The twelve months 2001 includes a $272 million net-of-tax
loss related to the sale of Occidental's residual interest in Occidental
Texas Pipeline Company. The fourth quarter and twelve months year-to-date
2001 includes preferred distributions to the Occidental Permian partners of
$17 million and $104 million, respectively. The fourth quarter and twelve
months year-to-date 2000 includes $39 million and $107 million,
respectively. This is essentially offset by the interest income discussed
in (a) above. The fourth quarter 2000 includes a $17 million litigation
settlement.
4
SUMMARY OF OPERATING STATISTICS
Fourth Quarter Twelve Months
------------------ ------------------
Periods Ended December 31 2001 2000 2001 2000
================================= ======= ======= ======= =======
NET OIL, GAS AND LIQUIDS
PRODUCTION PER DAY
United States
Crude oil and liquids (MBBL)
California 82 75 76 70
Permian 137 136 137 101
US Other -- -- -- 1
------- ------- ------- -------
Total 219 211 213 172
Natural Gas (MMCF)
California 297 316 303 306
Hugoton 153 166 159 168
Permian 150 162 148 119
US Other -- -- -- 66
------- ------- ------- -------
Total 600 644 610 659
Latin America
Crude oil & condensate (MBBL)
Colombia 17 27 18 32
Ecuador 13 12 13 17
------- ------- ------- -------
Total 30 39 31 49
Eastern Hemisphere
Crude oil and condensate (MBBL)
Oman 14 9 12 9
Pakistan 7 5 7 6
Qatar 43 48 43 49
Russia 28 27 27 26
Yemen 32 31 33 32
------- ------- ------- -------
Total 124 120 122 122
Natural Gas (MMCF)
Pakistan 51 49 50 49
Barrels of Oil Equivalent (MBOE) 482 485 476 461
CAPITAL EXPENDITURES (millions) $ 436 $ 344 $ 1,401 $ 952
======= ======= ======= =======
DEPRECIATION, DEPLETION AND
AMORTIZATION OF ASSETS (millions) $ 245 $ 214 $ 971 $ 901
================================= ======= ======= ======= =======
5
Item 9. Regulation FD Disclosure
------ ------------------------
Text of Speech by Stephen I. Chazen, Chief Financial Officer and
----------------------------------------------------------------
Executive Vice President - Corporate Development
------------------------------------------------
Occidental Petroleum Corporation
STEPHEN CHAZEN
Chief Financial Officer and
Executive Vice President - Corporate Development
- Conference Call -
Fourth Quarter 2001 Earnings Announcement
February 4, 2002
Los Angeles, California
Good morning, and thank you for joining us.
If you haven't received a copy of the press release announcing our fourth
quarter earnings along with the Investor Relations Supplemental Schedules,
you'll find them on our website oxy.com or through the SEC's EDGAR system.
Income before special items for our fourth quarter last year was $35
million, or $0.09 per share - compared to the $349 million, or $0.94 per share,
we earned in the fourth quarter of 2000. The change was due to the following
factors:
o The average price for West Texas Intermediate declined from $31.86 per
barrel to $20.43 - a drop of 36-percent.
o Our US natural gas price realizations fell by half - from $4.91 per
thousand cubic feet to $2.44.
o Chemical earnings before special items improved from negative $51 million
to negative $4 million.
o Interest expense decreased from $136 million to $86 million - for a decline
of 37-percent.
Special items reduced earnings by $282 million, or $0.75 per share. The
most significant special items involved a $240 million after-tax charge
resulting from the Equistar sale and a $60 million pre-tax charge for
environmental remediation.
For the year, our net income was $1.2 billion, or $3.10 per share. Before
special items the earnings were $1.3 billion, or $3.57 per share - just 3-cents
below our record high in 2000. Cash flow from operations in 2001 was $2.6
billion.
The results for the year were driven by the following items compared to
2000:
o Oil and gas production increased by 3-percent - from 461,000 to
476,000 BOE.
o Oil prices declined by 14-percent - from an average WTI price of
$30.20 to $25.97.
6
o US natural gas price realizations increased by 75-percent - from $3.66
to $6.40 per MCF.
o And, finally, chemical earnings before special items for the year were
$41 million compared to $293 million in 2000.
In addition to the Equistar transaction, the most significant special items
in 2001 were the sale of our interest in the Tangguh LNG project in Indonesia
and the entity that leased a Texas pipeline to Oxy's former MidCon subsidiary
that together accounted for after-tax proceeds of $750 million.
Oil and gas segment earnings before special items for the quarter were $166
million compared with $528 million in the third quarter and $763 million in the
2000 fourth quarter. Exploration expense declined in the fourth quarter compared
to the third quarter by approximately $37 million - from $91 million to $54
million.
The most significant change in the oil and gas results from the third to
the fourth quarter in 2001 was the decline in oil and natural gas prices that
accounted for $333 million of the decline. In addition, oil and gas production
declined from 493,000 BOE in the third quarter to 482,000 BOE in the fourth
quarter due to pipeline outages in Colombia. As we discussed in our third
quarter conference call, the California gas premium, which averaged
approximately $2.70 per MCF above NYMEX during the third quarter, disappeared by
the start of the fourth quarter.
Our sensitivity to changes in oil and gas prices is the same as prior
quarters. A $1.00 per million BTUs swing in NYMEX gas prices impacts quarterly
oil and gas segment earnings by $ 62 million while a $1.00 per barrel change in
oil prices has a quarterly impact of $28 million.
In the first quarter of 2002 we would expect production to be flat with the
fourth quarter of 2001.
Downward pressure on chemical markets and prices continues. The fourth and
first quarters are typically sluggish quarters for the commodity chemicals
business. Demand and margins remain poor, making it probable that results for
the current quarter will be below the fourth quarter.
For the fourth quarter, chemical results before special items were a loss
of $4 million. Our core chemical operations actually had earnings of $16 million
for the quarter that was more than offset by $20 million from our share of
Equistar losses. For the total year, our chemical business had earnings before
special items of $115 million that was reduced by $74 million from our share of
Equistar losses - and resulted in earnings of $41 million. Since the Equistar
transactions will not close until the second quarter, the depressed state of the
petrochemicals business will continue to negatively impact our results.
During the fourth quarter we reduced total debt by $127 million to just
under $4.9 billion. This is nearly $1.5 billion below our year-end 2000 total -
giving us a debt to capitalization ratio of 46-percent compared to 57-percent at
the end of 2000.
We also took advantage of attractive interest rates in December to
refinance and extend the remaining $700 million of Altura debt. The Altura debt
was $2.4 billion in April 2000 - and $1.9 billion at year-end 2000.
7
Interest expense, including distributions on trust preferred securities,
was $86 million. As a result of our debt reduction, interest expense and trust
preferred distributions, have been lowered from $554 million in 2000 and $423
million in 2001 to what we estimate will be approximately $345 million this
year.
Capital spending of approximately $1.4 billion for the year 2001 was
47-percent higher than our 2000 expenditures of $952 million. Oil and gas spent
$1.2 billion and chemicals $120 million. We expect 2002 capital spending to be
at or below $1.1 billion - with oil and gas accounting for about $1 billion.
FASB issued SFAS No. 142, "Goodwill and Other Intangible Assets" in June of
last year. SFAS No. 142 changes the accounting and reporting requirements for
acquired goodwill and intangible assets. At the end of 2001 the balance sheet
included approximately $100 million of goodwill that is related to the chemical
operations. We have not completed the review of the impact of SFAS No. 142.
Now I'd like to turn the conference call over to Dr. Ray Irani, Chairman
and CEO.
Text of Speech by Dr. Ray R. Irani, Chairman and Chief Executive Officer
------------------------------------------------------------------------
Occidental Petroleum Corporation
DR. RAY R. IRANI
Chairman and Chief Executive Officer
- Conference Call -
Fourth Quarter 2001 Earnings Announcement
February 4, 2002
Los Angeles, California
Thank you, Steve.
I'd like to begin by highlighting our most significant achievements in
2001. Net income of $1.2 billion was the second highest in Occidental's history
and nearly matched our record performance of 2000.
Oil and gas delivered the highest operating income in the history of the
company as we led our competitors in profitability per barrel for the third
straight year. We increased oil and gas production by 3 percent, and we replaced
138 percent of our production. Our finding and development cost of $4.54 per BOE
is expected to place us in the top third of the industry.
We sold our interest in the Tangguh LNG project in Indonesia for an
outstanding price.
Our debt reached its lowest level since 1985, and both Standard and Poor's
and Moody's raised our debt ratings.
We were selected by the government of Saudi Arabia to participate in the
Kingdom's historic natural gas initiative following a competitive bidding
process. We also were among the five
8
companies selected to compete for the 2 billion cubic feet per day Dolphin gas
project in the United Arab Emirates. In addition, we made progress in pursuing
other projects in the Middle East.
All these items are on the plus side as we look back across 2001.
On the negative side, chemicals had another difficult year in coping with
depressed markets and low commodity chemical prices. Our strategy for chemicals
is to harvest cash to invest in oil and gas growth opportunities. Despite 2001
being a very difficult year for chemicals from an earnings standpoint, the
business generated over $185 million in free cash flow.
We also took an important step to reduce the volatility of our future
earnings by selling our interest in the Equistar petrochemicals partnership. For
those of you who may have missed our announcement last week, we are selling our
29.5 percent interest in Equistar to Lyondell Chemical Company and we will
become owners of 21 percent of Lyondell - whose base business includes
intermediate and performance chemicals as well as refining interests. Owning an
interest in Lyondell gives us exposure to businesses outside of petrochemicals.
At the same time, it allows us to retain the significant upside of a recovery in
petrochemicals. During the last up cycle, Lyondell's stock was more than three
times its current price.
As we look ahead this year, the fourth quarter results clearly reflect the
general downturn in energy prices and the continued depressed state of commodity
chemical markets and prices. An upturn in energy prices will depend in part on
the success of OPEC's strategy of cutting back production. However, a rebound in
energy and chemical prices ultimately depends on the recovery of the global
economy. The commodity chemicals business is especially sensitive to
fluctuations in the global economy. Conditions in the commodity chemicals market
are the worst I've seen in the last 15 years. We are unlikely to see meaningful
improvement until the pressures exerted by the recession ease and the economy
swings in the recovery mode.
The steps we've taken to strengthen our balance sheet and reduce our
earnings volatility have significantly improved our capacity to withstand
depressed energy and chemical prices in a weak economy. Our balance sheet is the
strongest it's been in nearly two decades. We expect our interest expense this
year to be approximately $345 million - based on our total debt at the end of
2001. That's a savings of $209 million from the $554 million in interest we paid
in 2000, and equates to an annual improvement of 36-cents a share in our bottom
line. In addition, our dividend of one dollar per share offers the highest yield
among the 20 largest oil companies.
On the operations side, the Horn Mountain development project is moving
ahead on schedule and under budget. We expect first production in November - and
peak production in 2003 of 21,000 BOE per day net to Occidental. The ongoing
development of the 150-million barrel Eden-Yuturi oil field in Ecuador is on
schedule. Startup is scheduled to coincide with the 2003 commissioning of the
new OCP pipeline now under construction. This project will add incremental net
production to Occidental of 30,000 barrels per day. We also are beginning work
on a second phase of our EOR project in the North Dome field in Qatar. That
project has the potential to add incremental net production of 25,000 barrels
per day, but the pace of the work depends on how Qatar allocates its OPEC quota
allowance.
We are planning to reduce our capital budget by approximately 20-percent
below last year's level, consistent with our expectations of continuing soft
prices. A portion of that reduction will be offset by lower costs from service
providers and suppliers so that our activity level will be similar to
9
last year's. Our actual spending level could vary, depending on the actual price
environment and the opportunities that become available.
Thank you - and we're now ready to answer questions.
--------------------------------------------------------------------------------
Portions of this presentation are forward-looking and involve risks
and uncertainties that could significantly affect expected results.
Factors that could cause results to differ materially include, but are
not limited to: global commodity pricing fluctuations for oil, natural
gas and chemicals; competitive pricing pressures; higher than expected
costs including feedstock; the supply/demand considerations for
Occidental's products; any general economic recession domestically or
internationally; and not successfully completing any expansion,
capital expenditure or acquisition. The United States Securities and
Exchange Commission (SEC) permits oil and natural gas companies, in
their filings with the SEC, to disclose only proved reserves
demonstrated by actual production or conclusive formation tests to be
economically producible under existing economic and operating
conditions. We use certain terms in this presentation, such as
probable, possible and recoverable reserves, that the SEC's guidelines
strictly prohibit us from using in filings with the SEC. 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.
--------------------------------------------------------------------------------
10
Supplemental Investor Information
---------------------------------
Investor Relations Supplemental Schedules
[OXY LOGO]
OCCIDENTAL PETROLEUM
2001 Fourth Quarter
Net Income (Loss)
($ millions)
EARNINGS
REPORTED BEFORE
INCOME ADJUSTMENTS SPECIAL ITEMS
-------- ----------- -------------
Oil & Gas $ 166 $ -- $ 166
Chemical (413) 412 Equistar (4)
(14) State tax - rate change
11 Idling of Deer Park plant
Corporate
Interest - Permian Non-recourse debt (5) (5)
Interest (68) (68)
Trust Pfd Distributions & Other (13) (13)
Other (96) 60 Environmental remediation (36)
Taxes 187 (192) Tax effect of adjustments (5)
-------- ----------- -------------
Income before extraordinary loss (242) 277 35
Extraordinary loss (5) 5 Early debt retirement --
-------- ----------- -------------
NET INCOME $ (247) $ 282 $ 35
======== =========== =============
BASIC EARNINGS PER SHARE $ (0.66) $ 0.09
======== =============
11
Investor Relations Supplemental Schedules
[OXY LOGO]
OCCIDENTAL PETROLEUM
2000 Fourth Quarter
Net Income (Loss)
($ millions)
EARNINGS
REPORTED BEFORE
INCOME ADJUSTMENTS SPECIAL ITEMS
-------- ----------- -------------
Oil & Gas $ 770 $ (7) Office building sale $ 763
Chemical (55) (13) Durez sale (51)
17 Net other charges
including write-downs
Corporate
Interest - Permian Non-recourse debt (39) (39)
Interest (79) (79)
Trust Pfd Distributions & Other (18) (18)
Other (53) 17 Litigation settlement (36)
Taxes (193) 2 Tax effect of adjustments (191)
-------- ----------- -------------
NET INCOME $ 333 $ 16 $ 349
======== =========== =============
BASIC EARNINGS PER SHARE $ 0.90 $ 0.94
======== =============
12
Investor Relations Supplemental Schedules
[OXY LOGO]
OCCIDENTAL PETROLEUM
Total Year 2001
Net Income (Loss)
($ millions)
EARNINGS
REPORTED BEFORE
INCOME ADJUSTMENTS SPECIAL ITEMS
-------- ----------- -------------
Oil & Gas $ 2,845 $ (399) Indonesia - Tangguh LNG $ 2,439
(7) Asset sale
Chemical (394) 412 Equistar 41
26 Severance and plant shut down costs
(14) State tax - rate change
11 Idling of Deer Park plant
Corporate
Interest - Permian Non-recourse debt (74) (74)
Interest - all others (291) (291)
Trust Pfd Distributions & Other (58) (58)
Other (476) 272 Occidental Texas Pipeline (101)
109 Environmental remediation
(6) OIL insurance dividend
Taxes (366) (70) State tax reserve reversal (628)
(192) Tax effect of adjustments
-------- ----------- -------------
Income before extraordinary loss 1,186 142 1,328
and cumulative effect of changes in
accounting principles
Extraordinary loss, net (8) 8 Early debt retirements --
Cumulative effect of changes in (24) 24 Derivative & hedge accounting --
accounting principles
-------- ----------- -------------
NET INCOME $ 1,154 $ 174 $ 1,328
======== =========== =============
BASIC EARNINGS PER SHARE
Income before extraordinary loss $ 3.18 $ 3.57
and cumulative effect of changes in
accounting principles
Extraordinary loss, net (0.02) --
Cumulative effect of changes in (0.06) --
accounting principles
-------- -------------
NET INCOME $ 3.10 $ 3.57
======== =============
13
Investor Relations Supplemental Schedules
[OXY LOGO]
OCCIDENTAL PETROLEUM
Total Year 2000
Net Income (Loss)
($ millions)
EARNINGS
REPORTED BEFORE
INCOME ADJUSTMENTS SPECIAL ITEMS
-------- ----------- -------------
Oil & Gas $ 2,417 $ (39) Gulf of Mexico - VPP $ 2,404
(41) TransCanada buyout
14 Sale of office building
53 Asset writedowns
Chemical 169 120 Specialty write-down 293
(13) Durez sale
17 Net other charges
including write-downs
Corporate
Interest - Permian Non-recourse debt (119) (119)
Interest - all others (367) (367)
Trust Pfd Distributions & Other (68) (68)
Other 398 (493) CanOxy gain (89)
17 Litigation settlement
(11) OIL insurance dividend
Taxes (861) 133 Tax effect of adjustments (728)
-------- ----------- -------------
Income before extraordinary gain 1,569 (243) 1,326
Extraordinary gain 1 (1) Early debt retirement --
-------- ----------- -------------
NET INCOME $ 1,570 $ (244) $ 1,326
======== =========== =============
BASIC EARNINGS PER SHARE $ 4.26 $ 3.60
======== =============
14
Investor Relations Supplemental Schedules
[OXY LOGO]
OCCIDENTAL PETROLEUM
2001 Fourth Quarter Net Income (Loss)
Reported Income Comparison
FOURTH THIRD
QUARTER QUARTER
2001 2001 B/(W)
-------- -------- --------
Oil & Gas $ 166 $ 927 $ (761)
Chemical (413) 40 (453)
Corporate
Interest - Permian Non-recourse debt (5) (13) 8
Interest - all others (68) (71) 3
Trust Pfd Distributions & Other (13) (14) 1
Other (96) (296) 200
Taxes 187 (129) 316
-------- -------- --------
Income Before Extraordinay Gain (242) 444 (686)
Extraordinary Loss (5) -- (5)
-------- -------- --------
Net Income $ (247) $ 444 $ (691)
======== ======== ========
Basic Earnings Per Share $ (0.66) $ 1.19 $ (1.85)
======== ======== ========
Effective Tax Rate 42% -5% -47%
======== ======== ========
================================================================================
OCCIDENTAL PETROLEUM
2001 Fourth Quarter Net Income (Loss)
Income Before Special Items Comparison
FOURTH THIRD
QUARTER QUARTER
2001 2001 B/(W)
-------- -------- --------
Oil & Gas $ 166 $ 528 $ (362)
Chemical (4) 40 (44)
Corporate
Interest - Permian non-recourse debt (5) (13) 8
Interest - all others (68) (71) 3
Trust Pfd Distributions & Other (13) (14) 1
Other (36) (24) (12)
Taxes (5) (129) 124
-------- -------- --------
Net Income $ 35 $ 317 $ (282)
======== ======== ========
Basic Earnings Per Share $ 0.09 $ 0.85 $ (0.76)
======== ======== ========
Effective Tax Rate 0% 28% 28%
======== ======== ========
15
Investor Relations Supplemental Schedules
[OXY LOGO]
OCCIDENTAL PETROLEUM
Oil & Gas
Segment Earnings Before Special Items Variance Analysis
($ millions)
2001 4th Quarter $ 166
2001 3rd Quarter 528
--------
$ (362)
========
Price Variance $ (333)
Volume Variance (8)
Exploration Expense Variance 37
All Other (58)
--------
TOTAL VARIANCE $ (362)
========
================================================================================
OCCIDENTAL PETROLEUM
Chemical
Segment Earnings Before Special Items Variance Analysis
($ millions)
2001 4th Quarter $ (4)
2001 3rd Quarter 40
--------
$ (44)
========
Sales Price $ (50)
Sales Volume/Mix 5
Operations/Manufacturing 1
All Other 0
--------
TOTAL VARIANCE $ (44)
========
16
Investor Relations Supplemental Schedules
[OXY LOGO]
OCCIDENTAL PETROLEUM
2001 Fourth Quarter Net Income (Loss)
Reported Income Comparison
FOURTH FOURTH
QUARTER QUARTER
2001 2000 B/(W)
-------- -------- --------
Oil & Gas $ 166 $ 770 $ (604)
Chemical (413) (55) (358)
Corporate
Interest - Permian Non-recourse debt (5) (39) 34
Interest - all others (68) (79) 11
Trust Pfd Distributions & Other (13) (18) 5
Other (96) (53) (43)
Taxes 187 (193) 380
-------- -------- --------
Income Before Extraordinay Gain (242) 333 (575)
Extraordinary Loss (5) -- (5)
-------- -------- --------
Net Income $ (247) $ 333 $ (580)
======== ======== ========
Basic Earnings Per Share $ (0.66) $ 0.90 $ (1.56)
======== ======== ========
Effective Tax Rate 42% 36% -6%
======== ======== ========
================================================================================
OCCIDENTAL PETROLEUM
2001 Fourth Quarter Net Income (Loss)
Income Before Special Items Comparison
FOURTH FOURTH
QUARTER QUARTER
2001 2000 B/(W)
-------- -------- --------
Oil & Gas $ 166 $ 763 $ (597)
Chemical (4) (51) 47
Corporate
Interest - Permian non-recourse debt (5) (39) 34
Interest - all others (68) (79) 11
Trust Pfd Distributions & Other (13) (18) 5
Other (36) (36) --
Taxes (5) (191) 186
-------- -------- --------
Net Income $ 35 $ 349 $ (314)
======== ======== ========
Basic Earnings Per Share $ 0.09 $ 0.94 $ (0.85)
======== ======== ========
Effective Tax Rate 0% 35% 35%
======== ======== ========
17
Investor Relations Supplemental Schedules
[OXY LOGO]
OCCIDENTAL PETROLEUM
Oil & Gas
Segment Earnings Before Special Items Variance Analysis
($ millions)
2001 4th Quarter $ 166
2000 4th Quarter 763
--------
$ (597)
========
Price Variance $ (502)
Volume Variance (5)
Exploration Expense Variance (23)
All Other (67)
--------
TOTAL VARIANCE $ (597)
========
================================================================================
OCCIDENTAL PETROLEUM
Chemical
Segment Earnings Before Special Items Variance Analysis
($ millions)
2001 4th Quarter $ (4)
2000 4th Quarter (51)
--------
$ 47
========
Sales Price $ (75)
Sales Volume/Mix 8
Operations/Manufacturing 88 *
All Other 26 **
--------
TOTAL VARIANCE $ 47
========
* Lower energy and lower feedstock costs.
** Includes higher equity earnings.
18
Investor Relations Supplemental Schedules
[OXY LOGO]
OCCIDENTAL PETROLEUM
SUMMARY OF OPERATING STATISTICS
-------------------------------
FOURTH QUARTER TWELVE MONTHS
--------------- ---------------
2001 2000 2001 2000
------ ------ ------ ------
NET PRODUCTION PER DAY:
UNITED STATES
CRUDE OIL AND LIQUIDS (MBL)
California 82 75 76 70
Permian 137 136 137 101
US Other -- -- -- 1
------ ------ ------ ------
TOTAL 219 211 213 172
NATURAL GAS (MMCF)
California 297 316 303 306
Hugoton 153 166 159 168
Permian 150 162 148 119
US Other -- -- -- 66
------ ------ ------ ------
TOTAL 600 644 610 659
LATIN AMERICA
Crude oil (MBL)
Colombia 17 27 18 32
Ecuador 13 12 13 17
------ ------ ------ ------
TOTAL 30 39 31 49
EASTERN HEMISPHERE
CRUDE OIL (MBL)
Oman 14 9 12 9
Pakistan 7 5 7 6
Qatar 43 48 43 49
Russia 28 27 27 26
Yemen 32 31 33 32
------ ------ ------ ------
TOTAL 124 120 122 122
NATURAL GAS (MMCF)
Pakistan 51 49 50 49
BARRELS OF OIL EQUIVALENT (MBOE) 482 485 476 461
-------------------------------- ------ ------ ------ ------
19
Investor Relations Supplemental Schedules
[OXY LOGO]
SUMMARY OF OPERATING STATISTICS
-------------------------------
FOURTH QUARTER TWELVE MONTHS
--------------- ---------------
2001 2000 2001 2000
------ ------ ------ ------
OIL & GAS:
---------
PRICES
UNITED STATES
Crude Oil ($/BBL) 16.79 27.72 21.74 26.66
Natural gas ($/MCF) 2.44 4.91 6.40 3.66
LATIN AMERICA
Crude oil ($/BBL) 15.36 25.53 19.95 26.01
EASTERN HEMISPHERE
Crude oil ($/BBL) 17.43 26.32 21.32 25.14
Natural Gas ($/MCF) 2.16 2.56 2.29 1.99
FOURTH QUARTER TWELVE MONTHS
--------------- ---------------
2001 2000 2001 2000
------ ------ ------ ------
EXPLORATION EXPENSE
Domestic $ 21 $ 17 $ 58 $ 63
Latin America 5 8 77 22
Eastern Hemisphere 28 5 49 9
------ ------ ------ ------
TOTAL $ 54 $ 30 $ 184 $ 94
====== ====== ====== ======
20
Investor Relations Supplemental Schedules
[OXY LOGO]
OCCIDENTAL PETROLEUM
CHEMICALS
Volume (M Tons)
FOURTH QUARTER TWELVE MONTHS
--------------- ---------------
MAJOR PRODUCTS 2001 2000 2001 2000
------ ------ ------ ------
Chlorine 636 683 2,847 2,977
Caustic 678 698 2,857 3,168
Ethylene Dichloride 151 305 735 979
PVC Resins 386 408 1,858 1,758
CHEMICALS
Prices (Index)
FOURTH QUARTER TWELVE MONTHS
--------------- ---------------
MAJOR PRODUCTS 2001 2000 2001 2000
------ ------ ------ ------
Chlorine 0.61 1.50 0.74 1.58
Caustic 1.18 0.81 1.33 0.69
Ethylene Dichloride 0.44 0.91 0.61 1.37
PVC Resins 0.52 0.82 0.68 0.95
CHLORINE
--------
OXYCHEM COMMENTARY
------------------
o Demand for chlorine declined further in the 4th quarter as economic
conditions weakened and customers reduced inventories prior to the end of
the year. This does, however, provide some opportunity for a quick recovery
in 2002 once economic conditions improve.
o Prices for chlorine continued to decline through most of the 4th quarter as
producers sought to lock up volume commitments for 2002. No significant
improvement is anticipated until the second half of 2002, when demand is
expected to increase as the economy recovers.
21
Investor Relations Supplemental Schedules
[OXY LOGO]
o Operating rates are expected to improve in 2002 as demand improves due to
the lack of new capacity additions and the recent idling of Oxy Vinyls'
Deer Park chlor-alkali plant. The Deer Park plant represents approximately
3% of U.S. operating capacity.
INFLUENCING FACTORS:
-------------------
Chlorine demand improvement depends on the recovery of the economy, particularly
the health of the vinyls market segment. With limited new production capacity,
higher demand will tighten the market and create pressure for higher pricing.
CAUSTIC
-------
OXYCHEM COMMENTARY
------------------
o Continued economic weakness in the U.S. and abroad resulted in reduced
demand and operating rates in the 4th quarter.
o Market prices continued to weaken in the 4th quarter. Spot prices declined
by approximately $50 per ton (25%) between early October and Late December
2001.
o Increased caustic soda imports from non-traditional sources such as the Far
East and the Middle East continue to impact the market.
INFLUENCING FACTORS:
-------------------
Caustic soda demand is closely related to economic activity in the manufacturing
sector. Economic weakness is expected to continue in the 1st quarter of 2002
with a further softening of prices likely. Demand recovery is anticipated to
begin in the 2nd half, when the economy is expected to rebound. However, it is
possible that chlorine demand will recover more quickly than caustic soda, which
would negatively influence the supply/ demand fundamentals for caustic soda due
to its co-product nature.
EDC
---
OXYCHEM COMMENTARY
------------------
o Demand for EDC remains weak throughout Asia due to low demand from VCM and
PVC. However, purchasers have been reducing inventories so the
supply/demand balance in that region has stabilized.
o EDC prices are gradually increasing as a result of the balanced
supply/demand picture. A recovery in PVC demand and pricing is required to
sustain this improvement.
INFLUENCING FACTORS:
--------------------
An improvement in the demand and pricing for PVC in Asia will need to
materialize before EDC demand and volume improves.
22
Investor Relations Supplemental Schedules
[OXY LOGO]
PVC/VCM
-------
OXYCHEM COMMENTARY
------------------
o Oxy Vinyls' operating rates were reduced in the 4th quarter to balance
inventories.
o PVC resin demand declined in the 4th quarter. Many PVC converters took long
outages due to lack of business resulting in extended shutdowns by the
resin producers. Resin inventories remain at low levels, which will allow
operating rates to improve quickly once demand recovers.
o Domestic PVC resin prices continued their decline through the 4th quarter
due to weak demand and over-supply.
o U.S. export PVC resin prices into Asia decreased in the 4th quarter.
o VCM domestic demand declined in the 4th quarter as demand for PVC continued
to fall.
o Export VCM prices dropped during the quarter.
INFLUENCING FACTORS:
-------------------
Oversupply and economic uncertainty will moderate expected price improvements
through the 1st quarter.
23
Investor Relations Supplemental Schedules
[OXY LOGO]
SUMMARY OF OPERATING STATISTICS
-------------------------------
FOURTH QUARTER TWELVE MONTHS
--------------- ---------------
MAJOR PRODUCTS 2001 2000 2001 2000
------ ------ ------ ------
CAPITAL EXPENDITURES ($MM)
Oil & Gas
California $ 80 $ 69 $ 318 $ 201
Permian 94 74 289 162
Other - U.S. 46 24 160 94
Latin America 50 26 111 85
Eastern Hemisphere 101 79 345 249
Chemicals 51 71 120 155
Corporate 14 1 58 6
------ ------ ------ ------
TOTAL $ 436 $ 344 $1,401 $ 952
====== ====== ====== ======
DEPRECIATION, DEPLETION &
AMORTIZATION OF ASSETS ($MM)
Oil & Gas
Domestic $ 144 $ 112 $ 540 $ 452
Latin America 6 5 24 35
Eastern Hemisphere 47 42 186 183
Chemicals 46 45 190 190
Corporate 2 10 31 41
------ ------ ------ ------
TOTAL $ 245 $ 214 $ 971 $ 901
====== ====== ====== ======
24
Investor Relations Supplemental Schedules
[OXY LOGO]
OCCIDENTAL PETROLEUM
CORPORATE
($ millions)
31-Dec-01 31-Dec-00
--------- ---------
CAPITALIZATION
Oxy Long-Term Debt (including current maturities) $ 4,065 $ 3,541
Permian Non-Recourse Debt -- 1,900
Gas Sales Obligation (current and non-current) 282 411
Trust Preferred Securities 463 473
Others 80 31
--------- ---------
TOTAL DEBT $ 4,890 $ 6,356
========= =========
EQUITY $ 5,634 $ 4,774
========= =========
Total Debt To Total Capitalization 46% 57%
========= =========
TOTAL DEBT
[the following is a tabular representation of graphical materials]
$ Millions
Pro-Forma
12/31/97 12/31/98 12/31/99 Post Altura 12/31/00 12/31/01
----------- ----------- ----------- ----------- ----------- -----------
Oxy Public Debt 4,965 5,402 4,401 5,766 3,544 4,119
Other Recourse Debt 1,361 776 1,047 1,009 912 771
Permian Non-recourse Debt -- -- -- 2,400 1,900 --
----------- ----------- ----------- ----------- ----------- -----------
Total 6,326 6,178 5,448 9,175 6,356 4,890
25
Investor Relations Supplemental Schedules
[OXY LOGO]
INTEREST & PREFERRED DIVIDENDS
[the following is a tabular representation of graphical materials]
$ Millions
1995 1996 1997 1998 1999 2000 2001 2002E
-------- -------- -------- -------- -------- -------- -------- --------
Oxy Public Debt 540 451 407 451 468 367 291 297
Preferred Dividends 93 93 88 17 7 -- -- --
Permian Non-recourse Debt -- -- -- -- -- 119 74 --
Capital Trust Preferred 31 29 35 20 62 68 58 48
-------- -------- -------- -------- -------- -------- -------- --------
Total 664 573 530 488 537 554 423 345
26
Investor Relations Supplemental Schedules
[OXY LOGO]
Portions of this presentation are forward-looking and involve risks and
uncertainties that could significantly affect expected results. Factors
that could cause results to differ materially include, but are not limited
to: global commodity pricing fluctuations; competitive pricing pressures;
higher than expected costs including feedstock; the supply/demand
considerations for Occidental's products; any general economic recession
domestically or internationally; and not successfully completing any
expansion, capital expenditure or acquisition.
27
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: February 1, 2002 S. P. Dominick, Jr.
--------------------------------------------------
S. P. Dominick, Jr., Vice President and Controller
(Chief Accounting and Duly Authorized Officer)