form8k-20110126.htm
 
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 26, 2011

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 26, 2011, Occidental Petroleum Corporation released information regarding its results of operations for the three and twelve months ended December 31, 2010.  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.  The information in this Item 2.02 and Exhibits 99.1 through 99.5, inclusive, shall not be deemed “filed” for purposes of Section 18 of the Securities Exchange Act of 1934, as amended, nor shall it be deemed incorporated by reference in any filing under the Securities Act of 1933, as amended, except as shall be expressly set forth by specific reference in such filing.
 
 
Section 8 – Other Events
 
Item 8.01.  Other Events
 
On January 26, 2011, Occidental Petroleum Corporation announced net income of $1.2 billion ($1.49 per diluted share) for the fourth quarter of 2010, compared with $938 million ($1.15 per diluted share) for the fourth quarter of 2009. Core income for the fourth quarter of 2010 was $1.3 billion ($1.58 per diluted share), compared with $1.1 billion ($1.35 per diluted share) for the fourth quarter of 2009.

Net income for the twelve months of 2010 was $4.5 billion ($5.56 per diluted share), compared with $2.9 billion ($3.58 per diluted share) for 2009. Full year 2010 core results were $4.7 billion ($5.72 per diluted share), compared with $3.2 billion ($3.92 per diluted share) for 2009.

QUARTERLY RESULTS

Oil and Gas

Oil and gas segment earnings were $1.7 billion for the fourth quarter of 2010 and included $275 million of domestic asset impairments. After excluding these asset impairments, oil and gas core results of $1.9 billion for the fourth quarter of 2010 were slightly higher than 2009. The fourth quarter of 2010 results reflect higher crude oil prices, partially offset by higher operating costs and DD&A rates.

For the fourth quarter of 2010, daily oil and gas production volumes, including Argentina, averaged 753,000 barrels of oil equivalent (BOE), compared with 717,000 BOE in the fourth quarter of 2009. Volumes increased 5 percent, primarily in the Middle East/North Africa, with a smaller increase coming from Domestic gas production. The Middle East/North Africa increase included new production from the Bahrain start-up and increased production from the Mukhaizna field in Oman. Production was negatively impacted in the Middle East/North Africa, Long Beach and Colombia resulting from higher year-over-year average oil prices affecting production sharing and similar contracts by 13,000 BOE per day. Daily sales volumes from continuing operations were 699,000 BOE in the fourth quarter of 2010 compared to 680,000 BOE in the fourth quarter of 2009.

 
1
 
 
 
Oxy's realized price for worldwide crude oil was $79.96 per barrel for the fourth quarter of 2010, compared with $71.74 per barrel for the fourth quarter of 2009. Domestic realized gas prices dropped from $4.37 per MCF in the fourth quarter of 2009 to $4.13 per MCF for the fourth quarter of 2010.

Chemicals

Chemical segment earnings for the fourth quarter 2010 were $111 million, compared with $33 million for the same period in 2009. The fourth quarter of 2010 results reflect improved margins and volumes across all products.

Midstream, Marketing and Other

Midstream segment earnings were $202 million for the fourth quarter of 2010, compared with $81 million for the fourth quarter of 2009. Earnings for the fourth quarter of 2010 reflect higher margins in the trading and marketing businesses.

TWELVE-MONTH RESULTS

Oil and Gas

Oil and gas segment earnings were $7.2 billion for the twelve months of 2010, compared with $5.1 billion for the same period of 2009. Oil and gas core results, after excluding asset impairments and rig termination costs, were $7.4 billion for the twelve months of 2010, compared with $5.1 billion for the same period of 2009. The $2.3 billion increase in the 2010 results reflected higher crude oil and natural gas prices and higher volumes, partially offset by higher operating costs and DD&A rates.

Daily oil and gas production volumes for the twelve months, including Argentina,  were 748,000 BOE for 2010, compared with 712,000 BOE for the 2009 period, an increase of 5 percent. Volume increases in the Middle East/North Africa, resulting from the new production in Bahrain and higher production in the Mukhaizna field in Oman, and gas production from the domestic assets were partially offset by a decline in Colombia. Production was negatively impacted in the Middle East/North Africa, Long Beach and Colombia resulting from higher year-over-year average oil prices affecting production sharing and similar contracts by 16,000 BOE per day. Daily sales volumes, from continuing operations, were 701,000 BOE in the twelve months of 2010, compared with 672,000 BOE for 2009.

Oxy's realized price for worldwide crude oil was $75.16 per barrel for the twelve months of 2010, compared with $57.31 per barrel for the twelve months of 2009. Domestic realized gas prices increased from $3.46 per MCF in the twelve months of 2009 to $4.53 per MCF in the twelve months of 2010.

Chemicals

Chemical segment earnings were $438 million for the twelve months of 2010, compared with $389 million for the same period in 2009. The 2010 twelve-month results reflect improved market conditions, particularly for exports, driven by favorable feedstock costs in North America versus Europe and Asia.  Vinyls exports for 2010 were 125% higher compared to 2009.

Midstream, Marketing and Other

Midstream segment earnings were $472 million for the twelve months of 2010, compared with $235 million for the same period in 2009. The 2010 results reflect higher margins in the marketing and trading businesses.
 
 
2
 
 
 
Forward-Looking Statements

Portions of this press release contain forward-looking statements and involve risks and uncertainties that could materially affect expected results of operations, liquidity, cash flows and business prospects.  Factors that could cause results to differ materially include, but are not limited to: global commodity pricing fluctuations; supply and demand considerations for Occidental’s products; not successfully completing, or any material delay of, any development of new fields, expansion projects, capital expenditures, efficiency-improvement projects, acquisitions or dispositions; potential failure to achieve expected production from existing and future oil and gas development projects or acquisitions; exploration risks such as drilling unsuccessful wells; any general economic recession or slowdown domestically or internationally; higher-than-expected costs; potential liability for remedial actions under existing or future environmental regulations and litigation; potential liability resulting from pending or future litigation; general domestic and international political conditions; potential disruption or interruption of Occidental’s production or manufacturing or damage to facilities due to accidents, chemical releases, labor unrest, weather, natural disasters, political events or insurgent activity; failure of risk management; changes in laws or regulations; or changes in tax rates.  Words such as “estimate”, “project”, “predict”, “will”, “would”, “should”, “could”, “may”, “might”, “anticipate”, “plan”, “intend”, “believe”, “expect” or similar expressions that convey the uncertainty of future events or outcomes generally indicate forward-looking statements.  You should not place undue reliance on these forward-looking statements, which speak only as of the date of this press 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.  Material risks that may affect Occidental’s results of operations and financial position appear in Part 1, Item 1A “Risk Factors” of the 2009 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
 
 
 
Attachment 1
                                 
SUMMARY OF SEGMENT NET SALES AND EARNINGS
                                 
   
Fourth Quarter
 
Twelve Months
($ millions, except per-share amounts)
 
2010
 
2009
 
2010
 
2009
SEGMENT NET SALES
                               
Oil and Gas
 
$
3,759
   
$
3,489
   
$
14,276
   
$
11,009
 
Chemical
   
996
     
780
     
4,016
     
3,225
 
Midstream, Marketing and Other
   
478
     
253
     
1,471
     
1,016
 
Eliminations
   
(170
)
   
(140
)
   
(718
)
   
(436
)
                                 
Net Sales
 
$
5,063
   
$
4,382
   
$
19,045
   
$
14,814
 
                                 
SEGMENT EARNINGS
                               
Oil and Gas (a), (b)
 
$
1,666
   
$
1,869
   
$
7,151
   
$
5,097
 
Chemical
   
111
     
33
     
438
     
389
 
Midstream, Marketing and Other
   
202
     
81
     
472
     
235
 
     
1,979
     
1,983
     
8,061
     
5,721
 
                                 
Unallocated Corporate Items
                               
Interest expense, net
   
(20
)
   
(31
)
   
(93
)
   
(102
)
Income taxes (c)
   
(618
)
   
(743
)
   
(2,995
)
   
(2,063
)
Other (d)
   
(149
)
   
(107
)
   
(404
)
   
(405
)
                                 
Income from Continuing Operations (a)
   
1,192
     
1,102
     
4,569
     
3,151
 
Discontinued operations, net
   
20
     
(164
)
   
(39
)
   
(236
)
                                 
NET INCOME (a)
 
$
1,212
   
$
938
   
$
4,530
   
$
2,915
 
                                 
BASIC EARNINGS PER COMMON SHARE
                               
Income from continuing operations
 
$
1.47
   
$
1.35
   
$
5.62
   
$
3.88
 
Discontinued operations, net
   
0.02
     
(0.20
)
   
(0.05
)
   
(0.29
)
   
$
1.49
   
$
1.15
   
$
5.57
   
$
3.59
 
                                 
DILUTED EARNINGS PER COMMON SHARE
                               
Income from continuing operations
 
$
1.47
   
$
1.35
   
$
5.61
   
$
3.87
 
Discontinued operations, net
   
0.02
     
(0.20
)
   
(0.05
)
   
(0.29
)
   
$
1.49
   
$
1.15
   
$
5.56
   
$
3.58
 
AVERAGE BASIC COMMON SHARES OUTSTANDING
                               
BASIC
   
812.6
     
811.8
     
812.5
     
811.3
 
DILUTED
   
813.7
     
813.5
     
813.8
     
813.8
 
                                 
(a) Net Income - Net income and income from continuing operations represent amounts attributable to Common Stock, after deducting non-controlling interest of $14 million for the fourth quarter of 2010 and $16 million for the fourth quarter of 2009 and $72 million and $51 million for the twelve months of 2010 and 2009, 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 2010 include pre-tax charges for asset impairments for $275 million.  The twelve months of 2009 include a pretax charge of $8 million for rig contract terminations.
 
(c) Unallocated Corporate Items - Taxes - The fourth quarter and twelve months of 2010 include an $80 million benefit related to foreign tax credit carry-forwards.
 
(d) Unallocated Corporate Items - Other - The twelve months of 2009 includes pre-tax charges of $40 million for severance and  $15 million for railcar leases.
 
 
4
 
 
 
Attachment 2
                                 
SUMMARY OF CAPITAL EXPENDITURES AND DD&A EXPENSE
                                 
   
Fourth Quarter
 
Twelve Months
($ millions)
 
2010
 
2009
 
2010
 
2009
CAPITAL EXPENDITURES
 
$
1,360
   
$
840
   
$
3,940
   
$
3,245
 
                                 
DEPRECIATION, DEPLETION AND
                               
AMORTIZATION OF ASSETS
 
$
799
   
$
703
   
$
3,153
   
$
2,687
 
 
 
5
 
 

Attachment 3
 
SUMMARY OF OPERATING STATISTICS - SALES
                         
   
Fourth Quarter
 
Twelve Months
   
2010
 
2009
 
2010
 
2009
NET OIL, GAS AND LIQUIDS SALES PER DAY
                       
United States
                       
Crude Oil and Liquids (MBBL)
                       
California
 
90
   
92
   
92
   
93
 
Permian
 
163
   
164
   
161
   
164
 
Midcontinent Gas
 
19
   
15
   
18
   
14
 
Total
 
272
   
271
   
271
   
271
 
                         
Natural Gas (MMCF)
                       
California
 
259
   
282
   
280
   
250
 
Permian
 
154
   
122
   
133
   
125
 
Midcontinent Gas
 
286
   
241
   
264
   
260
 
Total
 
699
   
645
   
677
   
635
 
                         
Latin America
                       
Crude Oil  (MBBL)
                       
Colombia
 
31
   
36
   
32
   
39
 
                         
Natural Gas (MMCF)
                       
Bolivia
 
18
   
12
   
16
   
16
 
                         
Middle East / North Africa
                       
Crude Oil and Liquids (MBBL)
                       
Bahrain
 
3
   
1
   
3
   
-
 
Dolphin
 
23
   
26
   
24
   
25
 
Libya
 
12
   
15
   
13
   
12
 
Oman
 
63
   
54
   
61
   
50
 
Qatar
 
74
   
80
   
76
   
79
 
Yemen
 
27
   
32
   
30
   
35
 
Total
 
202
   
208
   
207
   
201
 
                         
Natural Gas (MMCF)
                       
Bahrain
 
170
   
40
   
169
   
10
 
Dolphin
 
232
   
256
   
236
   
257
 
Oman
 
47
   
42
   
48
   
49
 
Total
 
449
   
338
   
453
   
316
 
                         
Continuing operations
                       
Barrels of Oil Equivalent (MBOE)
 
699
   
680
   
701
   
672
 
                         
Discontinued operations
                       
Crude Oil  (MBBL)
 
46
   
37
   
37
   
37
 
Natural Gas (MMCF)
 
36
   
30
   
34
   
30
 
                         
                         
                         
Total  Sales - MBOE
 
751
   
722
   
744
   
714
 
 
 
6
 
 

Attachment 4
                         
SUMMARY OF OPERATING STATISTICS - PRODUCTION
                         
   
Fourth Quarter
 
Twelve Months
   
2010
   
2009
   
2010
   
2009
 
NET OIL, GAS AND LIQUIDS PRODUCTION
                       
PER DAY
                       
United States
                       
Crude Oil and Liquids (MBBL)
 
272
   
271
   
271
   
271
 
Natural Gas (MMCF)
 
699
   
645
   
677
   
635
 
                         
Latin America
                       
Crude Oil (MBBL)
                       
Colombia
 
30
   
36
   
32
   
39
 
                         
Natural Gas (MMCF)
 
18
   
12
   
16
   
16
 
                         
Middle East / North Africa
                       
Crude Oil and Liquids (MBBL)
                       
Bahrain
 
3
   
1
   
3
   
-
 
Dolphin
 
23
   
26
   
24
   
26
 
Iraq
 
11
   
-
   
3
   
-
 
Libya
 
12
   
11
   
13
   
11
 
Oman
 
67
   
56
   
62
   
50
 
Qatar
 
75
   
78
   
76
   
79
 
Yemen
 
27
   
31
   
31
   
34
 
Total
 
218
   
203
   
212
   
200
 
                         
Natural Gas (MMCF)
 
449
   
338
   
453
   
316
 
                         
Continuing operations
                       
Barrels of Oil Equivalent (MBOE)
 
714
   
676
   
706
   
671
 
                         
Discontinued operations
                       
Crude Oil  (MBBL)
 
33
   
36
   
36
   
36
 
Natural Gas (MMCF)
 
36
   
30
   
34
   
30
 
                         
                         
                         
Total Worldwide Production - MBOE
 
753
   
717
   
748
   
712
 
 
 
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. 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)
 
2010
 
Diluted
EPS
 
2009
 
Diluted
EPS
TOTAL REPORTED EARNINGS
 
$
1,212
   
$
1.49
   
$
938
   
$
1.15
 
                                 
Oil and Gas
                               
Segment Earnings
 
$
1,666
           
$
1,869
         
Add:
                               
Asset impairments
   
275
             
-
         
                                 
Segment Core Results
   
1,941
             
1,869
         
                                 
Chemicals
                               
Segment Earnings
   
111
             
33
         
Add:
                               
No significant items affecting earnings
   
-
             
-
         
                                 
Segment Core Results
   
111
             
33
         
                                 
Midstream, Marketing and Other
                               
Segment Earnings
   
202
             
81
         
Add:
                               
No significant items affecting earnings
   
-
             
-
         
                                 
Segment Core Results
   
202
             
81
         
                                 
Total Segment Core Results
   
2,254
             
1,983
         
                                 
Corporate
                               
Corporate Results --
                               
Non Segment *
   
(767
)
           
(1,045
)
       
Add:
                               
Benefit from foreign tax credit carry-forwards
   
(80
)
           
-
         
Tax effect of pre-tax adjustments
   
(100
)
           
-
         
Discontinued operations, net **
   
(20
)
           
164
         
                                 
Corporate Core Results - Non Segment
   
(967
)
           
(881
)
       
                                 
TOTAL CORE RESULTS
 
$
1,287
   
$
1.58
   
$
1,102
   
$
1.35
 
                                 
 *  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)
 
2010
 
Diluted
EPS
 
2009
 
Diluted
EPS
TOTAL REPORTED EARNINGS
 
$
4,530
   
$
5.56
   
$
2,915
   
$
3.58
 
                                 
Oil and Gas
                               
Segment Earnings
 
$
7,151
           
$
5,097
         
Add:
                               
Asset impairments
   
275
             
-
         
Rig terminations
   
-
             
8
         
                                 
Segment Core Results
   
7,426
             
5,105
         
                                 
Chemicals
                               
Segment Earnings
   
438
             
389
         
Add:
                               
No significant items affecting earnings
   
-
             
-
         
                                 
Segment Core Results
   
438
             
389
         
                                 
Midstream, Marketing and Other
                               
Segment Earnings
   
472
             
235
         
Add:
                               
No significant items affecting earnings
   
-
             
-
         
                                 
Segment Core Results
   
472
             
235
         
                                 
Total Segment Core Results
   
8,336
             
5,729
         
                                 
Corporate
                               
Corporate Results --
                               
Non Segment *
   
(3,531
)
           
(2,806
)
       
Add:
                               
Severance accruals
   
-
             
40
         
Railcar leases
   
-
             
15
         
Benefit from foreign tax credit carry-forwards
   
(80
)
           
-
         
Tax effect of pre-tax adjustments
   
(100
)
           
(22
)
       
Discontinued operations, net **
   
39
             
236
         
                                 
Corporate Core Results - Non Segment
   
(3,672
)
           
(2,537
)
       
                                 
TOTAL CORE RESULTS
 
$
4,664
   
$
5.72
   
$
3,192
   
$
3.92
 
                                 
 *  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 26, 2011.
     
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 26, 2011
/s/ ROY PINECI
 
 
Roy Pineci, Vice President, Controller
 
 
and Principal Accounting Officer
 
 
 
 
11
 
 

EXHIBIT INDEX
 
 
99.1
 
Press release dated January 26, 2011.
     
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.