form8k-20120726.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) July 26, 2012

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 July 26, 2012, Occidental Petroleum Corporation released information regarding its results of operations for the three and six months ended June 30, 2012.  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 James M. Lienert and Stephen 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 July 26, 2012, Occidental Petroleum Corporation announced net income of $1.3 billion ($1.64 per diluted share) for the second quarter of 2012, compared with the second quarter of 2011 net income of $1.8 billion ($2.23 per diluted share).

Oil and Gas

Oil and gas segment earnings were $2.0 billion for the second quarter of 2012, compared with $2.6 billion for the second quarter of 2011.  Lower oil and gas prices, higher operating costs and higher DD&A rates in the second quarter of 2012 were partially offset by higher volumes.

For the second quarter of 2012, daily oil and gas production volumes averaged 766,000 barrels of oil equivalent (BOE), compared with 715,000 BOE in the second quarter of 2011.

The second quarter 2012 production increase resulted from 38,000 BOE per day higher domestic volumes and a 13,000 BOE per day increase in the Middle East/North Africa.

Daily sales volumes increased from 705,000 BOE in the second quarter of 2011 to 759,000 BOE in the second quarter of 2012.

Oxy’s realized price for worldwide crude oil was $99.34 per barrel for the second quarter of 2012, compared with $103.12 per barrel for the second quarter of 2011. The second quarter of 2012 realized oil price represents 106 percent of the average WTI and 91 percent of the average Brent price for the quarter. Worldwide NGL prices were $42.06 per barrel in the second quarter of 2012, compared with $57.67 per barrel in the second quarter of 2011. Domestic gas prices decreased 51 percent from $4.27 per MCF in the second quarter of 2011 to $2.09 per MCF for the second quarter of 2012.

Second quarter 2012 realized prices were also lower than first quarter 2012 prices for all our products.  On a sequential quarterly basis, price decreases were 8 percent for worldwide crude oil, 20 percent for worldwide NGLs and 26 percent for domestic natural gas.
 
1
 
 
 
 
Chemicals

Chemical segment earnings for the second quarter of 2012 were $194 million, compared with $253 million in the second quarter of 2011.  The year-over-year decrease was the result of lower domestic and export caustic volumes, lower vinyl chloride monomer (VCM) export demand, and lower polyvinyl chloride and VCM export prices, partially offset by lower natural gas and ethylene costs.

Midstream, Marketing and Other

Midstream segment earnings were $77 million for the second quarter of 2012, compared with $187 million for the second quarter of 2011. The results predominantly reflect lower margins in the marketing and trading businesses and the gas processing businesses, partially offset by higher income in the pipeline businesses.

SIX-MONTH RESULTS

Year-to-date 2012 core income was $2.9 billion ($3.56 per diluted share), compared with $3.4 billion ($4.19 per diluted share) for the same period in 2011.  Net income for the first six months of 2012 was $2.9 billion ($3.55 per diluted share), compared with $3.4 billion ($4.13 per diluted share) for the same period in 2011.

Oil and Gas

Oil and gas segment earnings were $4.5 billion for the six months of 2012, compared with $5.1 billion for the same period of 2011.  The $600 million decrease in the 2012 results reflected lower NGL and natural gas prices, higher operating costs and higher DD&A rates, partially offset by higher oil prices and increased volumes.

Oil and gas production volumes for the six months were 760,000 BOE per day for 2012, compared with 723,000 BOE per day for the 2011 period.  Year-over-year, our domestic production increased by 11 percent, while total production increased by 5 percent.  Higher year-over-year average oil prices and other factors affecting our production-sharing and similar contracts lowered our Middle East/North Africa and Long Beach production by 7,000 BOE per day.

The six-month 2012 daily production volume increase resulted from 44,000 BOE higher domestic volumes, partially offset by lower volumes of 2,000 BOE in the Middle East/North Africa and 5,000 BOE in Latin America.

Daily sales volumes were 752,000 BOE in the first six months of 2012, compared with 717,000 BOE for 2011.

Oxy's realized prices improved for crude oil but declined for natural gas and NGLs on a year-over-year basis.  Worldwide crude oil prices were $103.63 per barrel for the six months of 2012, compared with $97.38 per barrel for the six months of 2011.  Worldwide NGL prices were $47.52 per barrel for the six months of 2012, compared with $55.38 per barrel in the six months of 2011.  Domestic gas prices declined 42 percent, from $4.24 per MCF in the six months of 2011 to $2.46 per MCF in the six months of 2012.

2
 
 
 
 
Chemicals

Chemical segment earnings were $378 million for the six months of 2012, compared with $472 million for the same period in 2011.  The 2012 six-month reduction was primarily a result of lower export volumes and prices due to the weakening economic conditions in Europe and Asia, partially offset by lower energy costs.

Midstream, Marketing and Other

Midstream segment earnings were $208 million for the six months of 2012, compared with $301 million for the same period in 2011.  The 2012 results reflect lower results in the marketing and trading business, the gas processing business and the power generation business, partially offset by improved results in the pipeline businesses.

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; general domestic political and regulatory approval conditions; international political conditions; 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; 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; 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 law or regulations; or changes in tax rates. Words such as "estimate", "project", "predict", "will", "would", "should", "could", "may", "might", "anticipate", "plan", "intend", "believe", "expect", "aim", "goal", "target", "objective", "likely" 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 report. 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 2011 Form 10-K.
 
3
 
 
 
 
 
Attachment 1
                                 
SUMMARY OF SEGMENT NET SALES AND EARNINGS
                                 
   
Second Quarter
 
Six Months
($ millions, except per-share amounts)
 
2012
 
2011
 
2012
 
2011
SEGMENT NET SALES
                               
Oil and Gas
 
$
4,495
   
$
4,591
   
$
9,397
   
$
8,958
 
Chemical
   
1,172
     
1,325
     
2,320
     
2,490
 
Midstream, Marketing and Other
   
262
     
441
     
655
     
853
 
Eliminations
   
(161
)
   
(184
)
   
(336
)
   
(402
)
                                 
Net Sales
 
$
5,768
   
$
6,173
   
$
12,036
   
$
11,899
 
                                 
SEGMENT EARNINGS
                               
Oil and Gas  (a)
 
$
2,043
   
$
2,624
   
$
4,547
   
$
5,092
 
Chemical
   
194
     
253
     
378
     
472
 
Midstream, Marketing and Other
   
77
     
187
     
208
     
301
 
     
2,314
     
3,064
     
5,133
     
5,865
 
                                 
Unallocated Corporate Items
                               
Interest expense, net (b)
   
(25
)
   
(22
)
   
(53
)
   
(236
)
Income taxes (c)
   
(875
)
   
(1,111
)
   
(2,014
)
   
(2,165
)
Other
   
(82
)
   
(112
)
   
(174
)
   
(240
)
                                 
Income from Continuing Operations
   
1,332
     
1,819
     
2,892
     
3,224
 
Discontinued operations, net (d)
   
(4
)
   
(2
)
   
(5
)
   
142
 
                                 
NET INCOME
 
$
1,328
   
$
1,817
   
$
2,887
   
$
3,366
 
                                 
BASIC EARNINGS PER COMMON SHARE
                               
Income from continuing operations
 
$
1.64
   
$
2.23
   
$
3.56
   
$
3.96
 
Discontinued operations, net
   
-   
     
-
     
(0.01
)
   
0.18
 
   
$
1.64
   
$
2.23
   
$
3.55
   
$
4.14
 
                                 
DILUTED EARNINGS PER COMMON SHARE
                               
Income from continuing operations
 
$
1.64
   
$
2.23
   
$
3.56
   
$
3.96
 
Discontinued operations, net
   
-   
     
-
     
(0.01
)
   
0.17
 
   
$
1.64
   
$
2.23
   
$
3.55
   
$
4.13
 
AVERAGE COMMON SHARES OUTSTANDING
                               
BASIC
   
810.3
     
812.5
     
810.4
     
812.5
 
DILUTED
   
811.0
     
813.3
     
811.2
     
813.3
 
                                 
(a) Oil and Gas - The six months of 2011 include pre-tax charges of $35 million related to exploration write-offs in Libya and $29 million related to Colombia net worth tax.   Also, included in the six months of 2011 results is a pre-tax gain for sale of an interest in a Colombia pipeline of $22 million.
(b) Unallocated Corporate Items - Interest Expense, net - The six months of 2011 include a pre-tax charge of $163 million related to the premium on debt extinguishment.
(c) Unallocated Corporate Items - Taxes - The six months of 2011 include a net $21 million charge for out-of-period state income taxes.
(d) Discontinued Operations, net - The six months of 2011 include a $144 million after-tax gain from the sale of the Argentine operations.
 
4
 
 
 
 
 
Attachment 2
                                 
SUMMARY OF CAPITAL EXPENDITURES AND DD&A EXPENSE
                                 
   
Second Quarter
 
Six Months
($ millions)
 
2012
 
2011
 
2012
 
2011
CAPITAL EXPENDITURES
 
$
2,713
   
$
1,633
   
$
5,125
   
$
2,958
 
                                 
DEPRECIATION, DEPLETION AND
                               
AMORTIZATION OF ASSETS
 
$
1,087
   
$
839
   
$
2,172
   
$
1,729
 
 
5
 
 
 
 
 
Attachment 3
                                 
SUMMARY OF OPERATING STATISTICS - PRODUCTION
                                 
   
Second Quarter
 
Six Months
   
2012
 
2011
 
2012
 
2011
NET OIL, GAS AND LIQUIDS PRODUCTION PER DAY
                               
United States
                               
Crude Oil (MBBL)
                               
California
   
88
     
78
     
87
     
77
 
Permian
   
138
     
132
     
139
     
132
 
Midcontinent and Other
   
23
     
16
     
20
     
15
 
Total
   
249
     
226
     
246
     
224
 
                                 
NGL (MBBL)
                               
California
   
15
     
15
     
15
     
15
 
Permian
   
39
     
40
     
39
     
38
 
Midcontinent and Other
   
19
     
16
     
19
     
12
 
Total
   
73
     
71
     
73
     
65
 
                                 
Natural Gas (MMCF)
                               
California
   
269
     
252
     
268
     
247
 
Permian
   
151
     
143
     
153
     
154
 
Midcontinent and Other
   
420
     
366
     
416
     
347
 
Total
   
840
     
761
     
837
     
748
 
                                 
Latin America
                               
Crude Oil  (MBBL) - Colombia
   
31
     
30
     
27
     
31
 
                                 
Natural Gas (MMCF) - Bolivia
   
14
     
16
     
14
     
16
 
                                 
Middle East / North Africa
                               
Crude Oil (MBBL)
                               
Bahrain
   
4
     
3
     
4
     
3
 
Dolphin
   
9
     
10
     
9
     
10
 
Oman
   
62
     
68
     
63
     
67
 
Qatar
   
74
     
68
     
73
     
72
 
Other
   
32
     
28
     
37
     
43
 
Total
   
181
     
177
     
186
     
195
 
                                 
NGL (MBBL)
                               
Dolphin
   
9
     
11
     
9
     
10
 
                                 
Natural Gas (MMCF)
                               
Bahrain
   
230
     
172
     
224
     
172
 
Dolphin
   
194
     
203
     
183
     
199
 
Oman
   
57
     
49
     
57
     
50
 
Total
   
481
     
424
     
464
     
421
 
                                 
                                 
Barrels of Oil Equivalent (MBOE)
   
766
     
715
     
760
     
723
 
 
6
 
 
 
 
 
Attachment 4
                                 
SUMMARY OF OPERATING STATISTICS - SALES
                                 
   
Second Quarter
 
Six Months
   
2012
 
2011
 
2012
 
2011
NET OIL, GAS AND LIQUIDS SALES PER DAY
                               
                                 
United States
                               
Crude Oil (MBBL)
   
249
     
226
     
246
     
224
 
NGL (MBBL)
   
73
     
71
     
73
     
65
 
Natural Gas (MMCF)
   
835
     
761
     
835
     
748
 
                                 
Latin America
                               
Crude Oil  (MBBL) - Colombia
   
31
     
30
     
27
     
31
 
                                 
Natural Gas (MMCF) - Bolivia
   
14
     
16
     
14
     
16
 
                                 
Middle East / North Africa
                               
Crude Oil (MBBL)
                               
Bahrain
   
4
     
3
     
4
     
3
 
Dolphin
   
8
     
10
     
8
     
10
 
Oman
   
60
     
66
     
63
     
69
 
Qatar
   
73
     
65
     
71
     
71
 
Other
   
30
     
23
     
32
     
36
 
Total
   
175
     
167
     
178
     
189
 
                                 
NGL (MBBL)
                               
Dolphin
   
9
     
11
     
9
     
10
 
                                 
Natural Gas (MMCF)
   
481
     
424
     
464
     
421
 
                                 
                                 
Barrels of Oil Equivalent (MBOE)
   
759
     
705
     
752
     
717
 
 
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.
                                 
   
Second Quarter
($ millions, except per-share amounts)
 
2012
 
Diluted
EPS
 
2011
 
Diluted
EPS
TOTAL REPORTED EARNINGS
 
$
1,328
   
$
1.64
   
$
1,817
   
$
2.23
 
                                 
Oil and Gas
                               
Segment Earnings
 
$
2,043
           
$
2,624
         
Add:
                               
No significant items affecting earnings
   
-
             
-
         
                                 
Segment Core Results
   
2,043
             
2,624
         
                                 
Chemicals
                               
Segment Earnings
   
194
             
253
         
Add:
                               
No significant items affecting earnings
   
-
             
-
         
                                 
Segment Core Results
   
194
             
253
         
                                 
Midstream, Marketing and Other
                               
Segment Earnings
   
77
             
187
         
Add:
                               
No significant items affecting earnings
   
-
             
-
         
                                 
Segment Core Results
   
77
             
187
         
                                 
Total Segment Core Results
   
2,314
             
3,064
         
                                 
Corporate
                               
Corporate Results --
                               
Non Segment *
   
(986
)
           
(1,247
)
       
Add:
                               
Discontinued operations, net **
   
4
             
2
         
                                 
Corporate Core Results - Non Segment
   
(982
)
           
(1,245
)
       
                                 
TOTAL CORE RESULTS
 
$
1,332
   
$
1.64
   
$
1,819
   
$
2.23
 
                                 
*  Interest expense, income taxes, G&A expense and other.
** Amounts shown after tax.
 
8
 
 
 
 
 
Attachment 6
                                 
SIGNIFICANT TRANSACTIONS AND EVENTS AFFECTING EARNINGS (continued)
                                 
   
Six Months
($ millions, except per-share amounts)
 
2012
 
Diluted
EPS
 
2011
 
Diluted
EPS
TOTAL REPORTED EARNINGS
 
$
2,887
   
$
3.55
   
$
3,366
   
$
4.13
 
                                 
Oil and Gas
                               
Segment Earnings
 
$
4,547
           
$
5,092
         
Add:
                               
Libya exploration write-off
   
-
             
35
         
Gain on sale of Colombia pipeline interest
   
-
             
(22
)
       
Foreign tax
   
-
             
29
         
                                 
Segment Core Results
   
4,547
             
5,134
         
                                 
Chemicals
                               
Segment Earnings
   
378
             
472
         
Add:
                               
No significant items affecting earnings
   
-
             
-
         
                                 
Segment Core Results
   
378
             
472
         
                                 
Midstream, Marketing and Other
                               
Segment Earnings
   
208
             
301
         
Add:
                               
No significant items affecting earnings
   
-
             
-
         
                                 
Segment Core Results
   
208
             
301
         
                                 
Total Segment Core Results
   
5,133
             
5,907
         
                                 
Corporate
                               
Corporate Results --
                               
Non Segment *
   
(2,246
)
           
(2,499
)
       
Add:
                               
Premium on debt extinguishments
   
-
             
163
         
State income tax charge
   
-
             
33
         
Tax effect of pre-tax adjustments
   
-
             
(50
)
       
Discontinued operations, net **
   
5
             
(142
)
       
                                 
Corporate Core Results - Non Segment
   
(2,241
)
           
(2,495
)
       
                                 
TOTAL CORE RESULTS
 
$
2,892
   
$
3.56
   
$
3,412
   
$
4.19
 
                                 
*  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 July 26, 2012.
     
99.2
 
Full text of speeches given by James M. Lienert and Stephen 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:  July 26, 2012
/s/ ROY PINECI
 
 
Roy Pineci, Vice President, Controller
 
 
and Principal Accounting Officer
 
 
 
 
 
 

EXHIBIT INDEX

(d)
 
Exhibits
     
99.1
 
Press release dated July 26, 2012.
     
99.2
 
Full text of speeches given by James M. Lienert and Stephen Chazen.
     
99.3
 
Investor Relations Supplemental Schedules.
     
99.4
 
Earnings Conference Call Slides.
     
99.5
 
Forward-Looking Statements Disclosure for Earnings Release Presentation Materials.