================================================================================
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 24, 2005
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 24, 2005, Occidental Petroleum Corporation released information
regarding its results of operations for the fiscal period ended December 31,
2004. 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.
SECTION 8 - OTHER EVENTS
Item 8.01. Other Events
---------- ------------
On January 24, 2005, Occidental Petroleum Corporation announced net income
for the fourth quarter 2004 of $665 million ($1.67 per share), compared with
$382 million ($0.99 per share) for the fourth quarter 2003. On January 5, 2005,
Occidental issued a press release announcing that the comparability of fourth
quarter 2004 earnings to prior quarters would be affected by a number of charges
and a tax credit. These items have resulted in net charges totaling
approximately $69 million ($0.17 per share). Record earnings of $2.491 billion
($6.30 per share) for the twelve months of 2004 were 58 percent higher than the
$1.527 billion ($3.98 per share) the company earned in 2003.
Oil and Gas
-----------
Oil and gas segment earnings were $977 million for the fourth quarter 2004,
compared with $640 million for the fourth quarter 2003, an increase of 53
percent. The improvement in the fourth quarter 2004 earnings reflected higher
worldwide crude oil and natural gas prices, partially offset by higher
exploration expenses and higher operating costs. Oil and gas earnings of $3.544
billion for the twelve months were the highest in the company's history and were
33 percent higher than the $2.664 billion of 2003.
Chemicals
---------
Chemical segment earnings were $130 million for the fourth quarter 2004
compared with $72 million for the fourth quarter 2003, an increase of 81
percent. The improvement in the fourth quarter 2004 was due to higher sales
prices in all major products, partially offset by higher ethylene and energy
costs. The fourth quarter 2004 also included the previously announced $12
million charge to write-off certain production facilities. Chemical earnings of
$412 million for the twelve months 2004 were 87 percent higher than the $220
million of 2003.
Earnings from an equity investment are based on a preliminary estimate of
their earnings.
See the attached schedules for a reconciliation of net income to core
earnings for the fourth quarter and twelve months.
Statements in this release that contain words such as "will", "expect" or
"estimate", or otherwise relate to the future, are forward-looking and involve
risks and uncertainties that could significantly affect expected results.
Factors that could cause results to differ materially include, but are not
limited to: global commodity pricing fluctuations and supply/demand
considerations for oil, gas and chemicals; higher-than-expected costs; political
risk; and not successfully completing (or any material delay in) any expansion,
capital expenditure, acquisition, or disposition. Occidental disclaims any
obligation to update any forward-looking statements.
2
SUMMARY OF SEGMENT NET SALES AND EARNINGS
Fourth Quarter Twelve Months
($ millions, except --------------------- ---------------------
per-share amounts) 2004 2003 2004 2003
=================================== ======== ======== ======== ========
SEGMENT NET SALES
Oil and gas $ 2,073 $ 1,530 $ 7,582 $ 6,003
Chemical 985 790 3,675 3,092
Other 24 30 111 145
-------- -------- -------- --------
Net sales $ 3,082 $ 2,350 $ 11,368 $ 9,240
=================================== ======== ======== ======== ========
SEGMENT EARNINGS
Oil and gas $ 977 $ 640 $ 3,544 $ 2,664
Chemical 130 72 412 220
-------- -------- -------- --------
1,107 712 3,956 2,884
UNALLOCATED CORPORATE ITEMS
Interest expense, net (a)--
debt and trust preferred
distributions (53) (63) (240) (333)
Income taxes (b) (218) (157) (895) (666)
Other (139) (109) (292) (284)
-------- -------- -------- --------
Income from continuing operations 697 383 2,529 1,601
Discontinued operations, net (c) (32) (1) (38) (6)
Cumulative effect of changes in
accounting principles, net -- -- -- (68)
-------- -------- -------- --------
NET INCOME $ 665 $ 382 $ 2,491 $ 1,527
======== ======== ======== ========
BASIC EARNINGS PER COMMON SHARE
Income from continuing
operations $ 1.75 $ 0.99 $ 6.40 $ 4.17
Discontinued operations, net (0.08) -- (0.10) (0.01)
Cumulative effect of changes in
accounting principles, net -- -- -- (0.18)
-------- -------- -------- --------
$ 1.67 $ 0.99 $ 6.30 $ 3.98
======== ======== ======== ========
DILUTED EARNINGS PER COMMON SHARE
Income from continuing
operations $ 1.72 $ 0.97 $ 6.31 $ 4.12
Discontinued operations, net (0.08) -- (0.10) (0.01)
Cumulative effect of changes in
accounting principles, net -- -- -- (0.18)
-------- -------- -------- --------
$ 1.64 $ 0.97 $ 6.21 $ 3.93
======== ======== ======== ========
AVERAGE BASIC COMMON SHARES
OUTSTANDING 399.1 387.7 395.6 383.9
=================================== ======== ======== ======== ========
See footnotes on following page.
3
(a) The fourth quarter 2004 includes a $1 million pre-tax interest charge to
purchase in the open market and retire $32 million of Occidental's senior
notes. The twelve months 2004 also includes $16 million pre-tax interest
charges to redeem or repurchase various debt issues during the year. The
twelve months 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 twelve months 2004 includes a $27 million credit related to a fourth
quarter settlement and a $20 million credit related to a first quarter
settlement of issues with the Internal Revenue Service. The twelve months
2004 also reflected a lower U.S. income tax rate resulting from the
crediting of foreign income taxes.
(c) The fourth quarter 2004 includes a $32 million, net of tax, charge reported
as discontinued operations to reflect Occidental's decision to exit the
specialty vinyls resins chemical business. Details of the charge are as
follows:
Fourth Twelve
Quarter Months
---------- ----------
Pre-tax charge $ (51) $ (61)
Tax benefit 19 23
---------- ----------
$ (32) $ (38)
========== ==========
SUMMARY OF CAPITAL EXPENDITURES AND DD&A EXPENSE
Fourth Quarter Twelve Months
--------------------- ---------------------
($ millions) 2004 2003 2004 2003
=================================== ======== ======== ======== ========
CAPITAL EXPENDITURES $ 573 $ 449 $ 1,843 $ 1,600
======== ======== ======== ========
DEPRECIATION, DEPLETION
AND AMORTIZATION
OF ASSETS $ 333 $ 311 $ 1,303 $ 1,175
=================================== ======== ======== ======== ========
4
SUMMARY OF OPERATING STATISTICS
Fourth Quarter Twelve Months
--------------------- ---------------------
2004 2003 2004 2003
=================================== ======== ======== ======== ========
NET OIL, GAS AND LIQUIDS
PRODUCTION PER DAY
United States
Crude oil and liquids (MBBL)
California 81 82 78 81
Permian 152 152 154 150
Horn Mountain 13 25 19 21
Hugoton 3 4 3 4
-------- -------- -------- --------
Total 249 263 254 256
Natural Gas (MMCF)
California 242 246 237 252
Hugoton 125 130 127 138
Permian 125 133 130 129
Horn Mountain 7 16 13 13
-------- -------- -------- --------
Total 499 525 507 532
Latin America
Crude oil (MBBL)
Colombia 37 44 37 37
Ecuador 44 39 46 25
-------- -------- -------- --------
Total 81 83 83 62
Middle East
Crude oil (MBBL)
Oman 13 12 13 12
Qatar 48 40 45 45
Yemen 30 33 32 35
-------- -------- -------- --------
Total 91 85 90 92
Natural Gas (MMCF)
Oman 66 -- 55 --
Other Eastern Hemisphere
Crude oil (MBBL)
Pakistan 6 9 7 9
Natural Gas (MMCF)
Pakistan 79 72 75 74
BARRELS OF OIL EQUIVALENT (MBOE)
Subtotal consolidated subsidiaries 534 540 540 520
Other Interests
Colombia-minority interest (5) (7) (4) (5)
Russia-Occidental net interest 27 30 29 30
Yemen-Occidental net interest 2 2 1 2
-------- -------- -------- --------
TOTAL WORLDWIDE PRODUCTION (MBOE) 558 565 566 547
=================================== ======== ======== ======== ========
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. 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:
Fourth Quarter
($ millions, except -----------------------------------------------
per-share amounts) 2004 EPS 2003 EPS
=================================== ======== ======== ======== ========
TOTAL REPORTED EARNINGS $ 665 $ 1.67 $ 382 $ 0.99
======== ======== ======== ========
OIL AND GAS
Segment Earnings $ 977 $ 640
No significant items
affecting earnings -- --
-------- --------
Segment Core Earnings 977 640
-------- --------
CHEMICALS
Segment Earnings 130 72
No significant items
affecting earnings -- --
-------- --------
Segment Core Earnings 130 72
-------- --------
CORPORATE
Results (442) (330)
Less:
IRS settlements 27 --
Discontinued operations, net* (32) (1)
-------- --------
TOTAL CORE EARNINGS $ 670 $ 1.68 $ 383 $ 0.99
=================================== ======== ======== ======== ========
* These amounts are shown after-tax.
6
SIGNIFICANT TRANSACTIONS AND EVENTS AFFECTING EARNINGS (CONTINUED)
Twelve Months
($ millions, except -----------------------------------------------
per-share amounts) 2004 EPS 2003 EPS
=================================== ======== ======== ======== ========
TOTAL REPORTED EARNINGS $ 2,491 $ 6.30 $ 1,527 $ 3.98
======== ======== ======== ========
OIL AND GAS
Segment Earnings $ 3,544 $ 2,664
No significant items
affecting earnings -- --
-------- --------
Segment Core Earnings 3,544 2,664
-------- --------
CHEMICALS
Segment Earnings 412 220
No significant items
affecting earnings -- --
-------- --------
Segment Core Earnings 412 220
-------- --------
CORPORATE
Results (1,465) (1,357)
Less:
6.4% senior note remarket fee -- (61)
Trust preferred redemption
charge (11) --
IRS settlements 47 --
Tax effect of pre-tax adjustments 4 21
Discontinued operations, net* (38) (6)
Changes in accounting
principles, net* -- (68)
-------- --------
TOTAL CORE EARNINGS $ 2,489 $ 6.29 $ 1,641 $ 4.27
=================================== ======== ======== ======== ========
* These amounts are shown after-tax.
7
ITEMS AFFECTING COMPARABILITY OF CORE EARNINGS BETWEEN PERIODS
Fourth Quarter Twelve Months
--------------------- ---------------------
($ millions) 2004 2003 2004 2003
=================================== ======== ======== ======== ========
PRE-TAX
INCOME / (EXPENSE)
OIL AND GAS
Insurance and litigation
reserves $ (6) $ -- $ (6) $ --
Property tax refund -- 38 -- 38
Gain on sale of GOM assets (a) -- -- -- 14
CHEMICALS
Production process write-off (12) -- (12) --
Insurance reserves (2) -- (2) --
Reorganizations/severance -- -- -- (15)
Chlorine derivatives asset
impairment -- -- -- (9)
CORPORATE
Environmental remediation (59) (50) (59) (63)
Equity earnings 9 (16) 22 (58)
Insurance and litigation
reserves (31) -- (31) --
Interest expense - early debt
extinguishments - 2004/
consolidation of variable
interest entity - 2003 (1) -- (6) 6
(a) Net of tax.
8
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 24, 2005 S. P. Dominick, Jr.
--------------------------------------------------
S. P. Dominick, Jr., Vice President and Controller
(Chief Accounting and Duly Authorized Officer)
EXHIBIT INDEX
99.1 Press release dated January 24, 2005.
99.2 Full text of speeches given by Dr. Ray R. Irani and Stephen I.
Chazen
99.3 Investor Relations Supplemental Schedules