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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) APRIL 23, 2004
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
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Item 5. Other Events
Occidental Petroleum Corporation announced on April 23, 2004, net income
for the first quarter 2004 of $487 million ($1.24 per share), compared with $325
million ($0.86 per share) for the first quarter 2003. The 2003 income included
net after-tax charges of $108 million for changes in accounting principles and a
debt-remarketing fee.
Oil and Gas
-----------
Oil and gas segment earnings were $750 million for the first quarter 2004,
compared with $727 million for the first quarter 2003. The improvement in the
first quarter 2004 earnings reflected the impact of higher energy prices and
increased crude oil volumes. This was partially offset by higher exploration
expense, operating expense -- particularly energy-related production taxes and
other costs -- and increased DD&A rates, due to accelerated drilling in Colombia
and Yemen and a facility expansion project in Qatar. Daily production increased
to 568,000 barrels of oil equivalent (BOE) for the first quarter 2004 from
532,000 BOE for the first quarter 2003.
Chemicals
---------
Chemical segment earnings were $50 million for the first quarter 2004,
compared with $35 million for the first quarter 2003. The improvement was due
primarily to higher margins and volumes in vinyls, which were partially offset
by higher ethylene costs and also by lower caustic soda margins.
Statements in this presentation that contain words such as "will" or "expect",
or otherwise relate to the future, 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, and supply/demand considerations, for oil, gas
and chemicals; higher-than-expected costs; and not successfully completing (or
any material delay in) any expansion, capital expenditure, acquisition, or
disposition. Occidental disclaims any obligation to update any forward-looking
statements.
1
SUMMARY OF SEGMENT NET SALES AND EARNINGS
First Quarter
-------------------
(In millions, except per-share amounts) 2004 2003
========================================== ======= =======
SEGMENT NET SALES
Oil and gas $ 1,693 $ 1,553
Chemical 857 790
Other 30 28
------- -------
Net sales $ 2,580 $ 2,371
========================================== ======= =======
SEGMENT EARNINGS
Oil and gas $ 750 $ 727
Chemical 50 35
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800 762
UNALLOCATED CORPORATE ITEMS
Interest expense, net (a)
Debt, net (54) (124)
Trust preferred distributions & other (14) (11)
Income taxes (b) (190) (178)
Other (55) (56)
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INCOME FROM CONTINUING OPERATIONS 487 393
Cumulative effect of changes in
accounting principles, net -- (68)
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NET INCOME $ 487 $ 325
======= =======
BASIC EARNINGS PER COMMON SHARE
Income from continuing operations $ 1.24 $ 1.04
Cumulative effect of changes in
accounting principles, net -- (0.18)
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$ 1.24 $ 0.86
======= =======
DILUTED EARNINGS PER COMMON SHARE
Income from continuing operations $ 1.23 $ 1.03
Cumulative effect of changes in
accounting principles, net -- (0.18)
------- -------
$ 1.23 $ 0.85
======= =======
AVERAGE BASIC COMMON SHARES OUTSTANDING 391.5 379.1
========================================== ======= =======
See footnotes on following page.
2
(a) The first quarter 2004 includes an $11 million pre-tax interest charge to
redeem all the outstanding 8.16 percent Trust Preferred Redeemable
Securities on January 20, 2004. The first quarter 2003 includes a $61
million pre-tax interest charge to repay a $450 million 6.4 percent senior
notes issue that had ten years of remaining life, but was subject to
re-marketing on April 1, 2003.
(b) The first quarter 2004 includes a $20 million credit related to the
settlement of an issue with the Internal Revenue Service.
3
SUMMARY OF OPERATING STATISTICS
First Quarter
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2004 2003
========================================== ======= =======
NET OIL, GAS AND LIQUIDS
PRODUCTION PER DAY
United States
Crude oil and liquids (MBBL)
California 77 78
Permian 153 144
Horn Mountain 25 15
Hugoton 3 4
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Total 258 241
Natural Gas (MMCF)
California 243 262
Hugoton 127 144
Permian 140 117
Horn Mountain 17 5
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Total 527 528
Latin America
Crude oil (MBBL)
Colombia 36 37
Ecuador 43 16
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Total 79 53
Middle East
Crude oil (MBBL)
Oman 14 13
Qatar 42 47
Yemen 39 39
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Total 95 99
Natural Gas (MMCF)
Oman 11 --
Other Eastern Hemisphere
Crude oil (MBBL)
Pakistan 9 10
Natural Gas (MMCF)
Pakistan 75 75
BARRELS OF OIL EQUIVALENT (MBOE)
--------------------------------
Subtotal consolidated subsidiaries 543 504
Colombia-minority interest (4) (4)
Russia-Occidental net interest 28 30
Yemen-Occidental net interest 1 2
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TOTAL WORLDWIDE PRODUCTION 568 532
======= =======
CAPITAL EXPENDITURES (millions) $ 343 $ 298
======= =======
DEPRECIATION, DEPLETION AND
AMORTIZATION OF ASSETS (millions) $ 325 $ 285
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4
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:
First Quarter
($ millions, except -------------------------------------------
per-share amounts) 2004 EPS 2003 EPS
================================ ======= ======= ======= =======
TOTAL REPORTED EARNINGS $ 487 $ 1.24 $ 325 $ 0.86
======= ======= ======= =======
OIL AND GAS
Segment Earnings $ 750 $ 727
Less:
None -- --
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Segment Core Earnings $ 750 $ 727
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CHEMICALS
Segment Earnings $ 50 $ 35
Less:
None -- --
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Segment Core Earnings $ 50 $ 35
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CORPORATE
Results $ (313) $ (437)
Less:
Trust preferred
redemption charge (11) --
IRS settlement 20 --
6.4% senior note remarket fee -- (61)
Tax effect of pre-tax
adjustments 4 21
Changes in accounting
principles, net* -- (68)
------- -------
TOTAL CORE EARNINGS $ 474 $ 1.21 $ 433 $ 1.14
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* These amounts are shown after tax.
5
ITEMS AFFECTING COMPARABILITY OF CORE EARNINGS BETWEEN PERIODS
First Quarter
-------------------
($ millions) 2004 2003
========================================== ======= =======
PRE-TAX
INCOME / (EXPENSE)
CORPORATE
Equity earnings (3) (21)
6
Item 9. Regulation FD Disclosure and Item 12. Results of Operations and
Financial Condition
On April 23, 2004, Occidental Petroleum Corporation released information
regarding its results of operations for the fiscal period ended March 31, 2004.
This Form 8-K is being furnished to report information pursuant to Item 9,
Regulation FD Disclosure and Item 12, Results of Operations and Financial
Condition. The full text of the speeches given by Dr. Ray R. Irani and Stephen
I. Chazen is attached to this report as Exhibit 99.1. Investor Relations
Supplemental Schedules are attached to this report as Exhibit 99.2.
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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: April 23, 2004 S. P. Dominick, Jr.
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S. P. Dominick, Jr., Vice President and Controller
(Chief Accounting and Duly Authorized Officer)
EXHIBIT INDEX
99.1 Full text of speeches given by Stephen I. Chazen and Dr. Ray R. Irani
99.2 Investor Relations Supplemental Schedules