form8k-20100128.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 28, 2010

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 28, 2010, Occidental Petroleum Corporation released information regarding its results of operations for the three and twelve months ended December 31, 2009.  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.


Section 8 – Other Events

Item 8.01.  Other Events

On January 28, 2010, Occidental Petroleum Corporation announced net income of $938 million ($1.15 per diluted share) for the fourth quarter of 2009, compared with $443 million ($0.55 per diluted share) for the fourth quarter of 2008.  Core results for the fourth quarter of 2009 were $1.1 billion ($1.30 per diluted share), compared with $957 million ($1.18 per diluted share) for the fourth quarter of 2008.  Core results excluded after-tax charges of $120 million ($0.15 per diluted share) for 2009 and $514 million ($0.63 per diluted share) for 2008.

Net income for the twelve months of 2009 was $2.9 billion ($3.58 per diluted share), compared with $6.9 billion ($8.34 per diluted share) for the twelve months of 2008.  Full year core results were $3.1 billion ($3.78 per diluted share) for 2009, compared with $7.3 billion ($8.94 per diluted share) for 2008.

QUARTERLY RESULTS

Oil and Gas

Oil and gas segment earnings were $1.6 billion for the fourth quarter of 2009, compared with $339 million for the same period in 2008.  The fourth quarter of 2009 core results were $1.8 billion, excluding a pre-tax loss of $170 million related to impairment of assets.  The 2008 core results were $1 billion, excluding pre-tax losses of $657 million relating to the impairment of assets and other items.  The $800 million increase in the fourth quarter of 2009 core results was primarily due to higher crude oil prices and sales volumes and lower operating costs.

For the fourth quarter of 2009, daily oil and gas sales volumes averaged 650,000 barrels of oil equivalent (BOE), compared with 620,000 BOE per day in the fourth quarter of 2008, a year-over-year increase of nearly five percent.  Volumes increased by 14 percent in the Middle East/North Africa, and two percent each in the United States and Latin America.  The Middle East/North Africa increase included new production from the Bahrain start-up and increased production from the Mukhaizna field in Oman.

Oxy's realized price for worldwide crude oil was $69.39 per barrel for the fourth quarter of 2009, compared with $53.52 per barrel for the fourth quarter of 2008.  Domestic realized gas prices dropped from $4.67 per MCF in the fourth quarter of 2008 to $4.37 per MCF for the fourth quarter of 2009.

 
1
 
 
Chemicals

Chemical segment earnings for the fourth quarter of 2009 were $33 million, compared with $127 million for the same period in 2008.  The fourth quarter of 2008 core results were $217 million after excluding a $90 million pre-tax loss related to plant closure and impairments.  The fourth quarter 2009 results reflect the continued weakness in most domestic markets, but in particular U.S. housing, durable goods and agricultural sectors.

Midstream, Marketing and Other

Midstream segment earnings were $81 million for the fourth quarter of 2009, compared with $170 million for the fourth quarter of 2008.  Earnings for the fourth quarter of 2009 reflect lower margins in the marketing business in 2009, compared to 2008, partially offset by higher pipeline income from Dolphin and improved margins in the gas processing business.

TWELVE-MONTH RESULTS

Oil and Gas

Oil and gas segment earnings were $4.7 billion for the twelve months of 2009, compared with $10.7 billion for the same period of 2008.  Oil and gas core results, after excluding impairments and rig termination costs, were $4.9 billion for the twelve months of 2009, compared to $11.3 billion for the twelve months of 2008.  The $6.4 billion decrease in the 2009 core results reflected lower crude oil and natural gas prices, partially offset by increased oil and gas production and lower operating costs.

Daily oil and gas sales volumes for the year were 645,000 BOE per day for 2009, compared with 601,000 BOE per day for the 2008 period, a year-over-year increase of seven percent.  Volumes increased 4 percent domestically, mainly in California and Midcontinent Gas, by 10 percent in Latin America, and 13 percent in the Middle East/North Africa. The increase in the Middle East/North Africa resulted from higher production in the Mukhaizna field in Oman and higher volumes resulting from lower year-over-year average oil prices affecting our production sharing contracts.

Oxy's realized price for worldwide crude oil was $55.97 per barrel for the twelve months of 2009, compared with $88.26 per barrel for the twelve months of 2008.  Domestic realized gas prices decreased from $8.03 per MCF in the twelve months of 2008 to $3.46 per MCF in the twelve months of 2009.

Chemicals

Chemical segment earnings were $389 million for the twelve months of 2009 compared with $669 million for the twelve months of 2008.  The 2008 core results were $759 million after excluding charges for plant closure and impairments.  The decrease in 2009 results reflects lower volumes and prices for chlorine, caustic soda, polyvinyl chloride, and vinyl chloride monomer due to the economic slow down, partially offset by lower feedstock and energy costs.

Midstream, Marketing and Other

Midstream segment earnings were $235 million for the twelve months of 2009, compared with $520 million for the same period in 2008.  The 2009 results reflect lower marketing income and lower margins in the gas processing business.
 
 
2
 
 
Forward-Looking Statements

Statements in this report that contain words such as "will," “should,” "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 actual results to differ materially include, but are not limited to: global commodity price fluctuations and supply/demand considerations for oil, gas and chemicals; exploration risks, such as drilling of unsuccessful wells; not successfully completing (or any material delay in) any expansions, field development, capital projects, acquisitions, or dispositions; higher-than-expected costs; political risk; operational interruptions; and changes in tax rates.  You should not place undue reliance on these forward-looking statements which speak only as of the date of this 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.  U.S. investors are urged to consider carefully the disclosures 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.


 
3
 
 

Attachment 1
                                 
SUMMARY OF SEGMENT NET SALES AND EARNINGS
                                 
                                 
   
Fourth Quarter
 
Twelve Months
($ millions, except per-share amounts)
 
2009
 
2008
 
2009
 
2008
SEGMENT NET SALES
                               
Oil and Gas
 
$
3,646
   
$
2,746
   
$
11,598
   
$
18,187
 
Chemical
   
780
     
1,005
     
3,225
     
5,112
 
Midstream, Marketing and Other
   
253
     
394
     
1,016
     
1,598
 
Eliminations
   
(140
)
   
(124
)
   
(436
)
   
(680
)
                                 
Net Sales
 
$
4,539
   
$
4,021
   
$
15,403
   
$
24,217
 
                                 
SEGMENT EARNINGS
                               
Oil and Gas (a), (b)
 
$
1,643
   
$
339
   
$
4,735
   
$
10,651
 
Chemical (c)
   
33
     
127
     
389
     
669
 
Midstream, Marketing and Other
   
81
     
170
     
235
     
520
 
     
1,757
     
636
     
5,359
     
11,840
 
                                 
Unallocated Corporate Items
                               
Interest expense, net
   
(33
)
   
(16
)
   
(109
)
   
(26
)
Income taxes
   
(673
)
   
(118
)
   
(1,918
)
   
(4,629
)
Other (d)
   
(108
)
   
(54
)
   
(405
)
   
(346
)
                                 
Income from Continuing Operations (a)
   
943
     
448
     
2,927
     
6,839
 
Discontinued operations, net
   
(5
)
   
(5
)
   
(12
)
   
18
 
                                 
NET INCOME (a)
 
$
938
   
$
443
   
$
2,915
   
$
6,857
 
                                 
BASIC EARNINGS PER COMMON SHARE
                               
Income from continuing operations
 
$
1.16
   
$
0.55
   
$
3.60
   
$
8.35
 
Discontinued operations, net
   
(0.01
)
   
-
     
(0.01
)
   
0.02
 
   
$
1.15
   
$
0.55
   
$
3.59
   
$
8.37
 
                                 
DILUTED EARNINGS PER COMMON SHARE
                               
Income from continuing operations
 
$
1.16
   
$
0.55
   
$
3.59
   
$
8.32
 
Discontinued operations, net
   
(0.01
)
   
-
     
(0.01
)
   
0.02
 
   
$
1.15
   
$
0.55
   
$
3.58
   
$
8.34
 
AVERAGE BASIC COMMON SHARES OUTSTANDING
                               
BASIC
   
811.8
     
810.3
     
811.3
     
817.6
 
DILUTED
   
813.5
     
811.5
     
813.8
     
820.5
 
                                 
(a) Net Income - Net income and income from continuing operations represent amounts attributable to Common Stock, after deducting non-controlling interest amounts of $16 million and $12 million for the fourth quarter and $51 million and $116 million for the twelve months ended December 31, 2009 and 2008, 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 2009 include a pre-tax charge for asset impairment for $170 million.  The twelve months of 2009 also includes $8 million for rig contract termination costs.  The fourth quarter and 12 months 2008 include pre-tax charges of $599 million for asset impairments and $58 million for the termination of rig contracts.
 
(c) Chemical - The fourth quarter and 12 months of 2008 include a pre-tax charge of $90 million for plant closure and impairments costs.
 
(d) Unallocated Corporate Items - Other - The twelve months of 2009 includes non-core pre-tax charges of $40 million related to severance and  $15 million for railcar leases.


 
4
 
 

Attachment 2
                                 
SUMMARY OF CAPITAL EXPENDITURES AND DD&A EXPENSE
                                 
                                 
   
Fourth Quarter
 
Twelve Months
($ millions)
 
2009
 
2008
 
2009
 
2008
CAPITAL EXPENDITURES
 
$
932
   
$
1,594
   
$
3,581
   
$
4,664
 
                                 
DEPRECIATION, DEPLETION AND
                               
AMORTIZATION OF ASSETS
 
$
820
   
$
753
   
$
3,117
   
$
2,710
 
                                 
                                 
                                 
                                 
ITEMS AFFECTING COMPARABILITY OF CORE EARNINGS BETWEEN PERIODS
                                 
   
Fourth Quarter
 
Twelve Months
($ millions)
 
2009
 
2008
 
2009
 
2008
Foreign exchange gains *
 
$
8
   
$
88
   
$
36
   
$
91
 
* Amounts shown after tax.
                               


 
5
 
 
 
Attachment 3
                         
SUMMARY OF OPERATING STATISTICS - SALES
                         
                         
   
Fourth Quarter
 
Twelve Months
   
2009
 
2008
 
2009
 
2008
NET OIL, GAS AND LIQUIDS SALES PER DAY
                       
United States
                       
Crude Oil and Liquids (MBBL)
                       
California
 
92
   
97
   
93
   
89
 
Permian
 
168
   
167
   
168
   
168
 
Midcontinent Gas
 
11
   
9
   
10
   
6
 
Total
 
271
   
273
   
271
   
263
 
                         
Natural Gas (MMCF)
                       
California
 
282
   
221
   
250
   
235
 
Permian
 
197
   
188
   
199
   
181
 
Midcontinent Gas
 
166
   
187
   
186
   
171
 
Total
 
645
   
596
   
635
   
587
 
                         
Latin America
                       
Crude Oil (MBBL)
                       
Argentina
 
37
   
32
   
37
   
32
 
Colombia
 
36
   
39
   
39
   
37
 
Total
 
73
   
71
   
76
   
69
 
                         
Natural Gas (MMCF)
                       
Argentina
 
30
   
24
   
30
   
21
 
Bolivia
 
12
   
21
   
16
   
21
 
Total
 
42
   
45
   
46
   
42
 
                         
Middle East / North Africa
                       
Crude Oil and Liquids (MBBL)
                       
Oman
 
43
   
27
   
39
   
23
 
Dolphin
 
20
   
23
   
21
   
21
 
Qatar
 
48
   
48
   
48
   
47
 
Yemen
 
28
   
22
   
29
   
23
 
Libya
 
9
   
10
   
7
   
15
 
Bahrain
 
1
   
-
   
-
   
-
 
Total
 
149
   
130
   
144
   
129
 
                         
Natural Gas (MMCF)
                       
Oman
 
19
   
23
   
22
   
24
 
Dolphin
 
198
   
209
   
213
   
184
 
Bahrain
 
40
   
-
   
10
   
-
 
Total
 
257
   
232
   
245
   
208
 
                         
                         
                         
Barrels of Oil Equivalent (MBOE)
 
650
   
620
   
645
   
601
 
 

 
6
 
 

Attachment 4
                         
SUMMARY OF OPERATING STATISTICS - PRODUCTION
                         
                         
   
Fourth Quarter
 
Twelve Months
   
2009
 
2008
 
2009
 
2008
NET OIL, GAS AND LIQUIDS PRODUCTION PER DAY
                       
United States
                       
Crude Oil and Liquids (MBBL)
 
271
   
273
   
271
   
263
 
Natural Gas (MMCF)
 
645
   
596
   
635
   
587
 
                         
Latin America
                       
Crude Oil (MBBL)
                       
Argentina
 
36
   
38
   
36
   
34
 
Colombia
 
36
   
39
   
39
   
38
 
Total
 
72
   
77
   
75
   
72
 
                         
  Natural Gas (MMCF)
 
42
   
45
   
46
   
42
 
                         
Middle East / North Africa
                       
Crude Oil and Liquids (MBBL)
                       
Oman
 
45
   
28
   
39
   
23
 
Dolphin
 
20
   
22
   
22
   
20
 
Qatar
 
46
   
48
   
48
   
47
 
Yemen
 
27
   
22
   
28
   
23
 
Libya
 
5
   
8
   
6
   
15
 
Bahrain
 
1
   
-
   
-
   
-
 
Total
 
144
   
128
   
143
   
128
 
                         
Natural Gas (MMCF)
 
257
   
232
   
245
   
208
 
                         
                         
                         
Barrels of Oil Equivalent (MBOE)
 
644
   
623
   
643
   
603
 


 
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. These events may recur, even across successive reporting periods.  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)
 
2009
 
Diluted EPS
 
2008
 
Diluted EPS
TOTAL REPORTED EARNINGS
 
$
938
   
$
1.15
   
$
443
   
$
0.55
 
                                 
Oil and Gas
                               
Segment Earnings
 
$
1,643
           
$
339
         
Add:
                               
Asset impairments
   
170
             
599
         
Rig contract terminations
   
-
             
58
         
                                 
Segment Core Results
   
1,813
             
996
         
                                 
Chemicals
                               
Segment Earnings
   
33
             
127
         
Add:
                               
Plant closure and impairments
   
-
             
90
         
                                 
Segment Core Results
   
33
             
217
         
                                 
Midstream, Marketing and Other
                               
Segment Earnings
   
81
             
170
         
Add:
                               
No significant items affecting earnings
   
-
             
-
         
                                 
Segment Core Results
   
81
             
170
         
                                 
Total Segment Core Results
   
1,927
             
1,383
         
                                 
Corporate
                               
Corporate Results --
                               
Non Segment *
   
(819
)
           
(193
)
       
Add:
                               
Tax effect of pre-tax adjustments
   
(55
)
           
(238
)
       
Discontinued operations, net **
   
5
             
5
         
                                 
Corporate Core Results - Non Segment
   
(869
)
           
(426
)
       
                                 
TOTAL CORE RESULTS
 
$
1,058
   
$
1.30
   
$
957
   
$
1.18
 
                                 
 *  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)
 
2009
 
Diluted EPS
 
2008
 
Diluted EPS
TOTAL REPORTED EARNINGS
 
$
2,915
   
$
3.58
   
$
6,857
   
$
8.34
 
                                 
Oil and Gas
                               
Segment Earnings
 
$
4,735
           
$
10,651
         
Add:
                               
Asset impairments
   
170
             
599
         
Rig contract terminations
   
8
             
58
         
                                 
Segment Core Results
   
4,913
             
11,308
         
                                 
Chemicals
                               
Segment Earnings
   
389
             
669
         
Add:
                               
Plant closure and impairments
   
-
             
90
         
                                 
Segment Core Results
   
389
             
759
         
                                 
Midstream, Marketing and Other
                               
Segment Earnings
   
235
             
520
         
Add:
                               
No significant items affecting earnings
   
-
             
-
         
                                 
Segment Core Results
   
235
             
520
         
                                 
Total Segment Core Results
   
5,537
             
12,587
         
                                 
Corporate
                               
Corporate Results --
                               
Non Segment *
   
(2,444
)
           
(4,983
)
       
Add:
                               
Railcar leases
   
15
             
-
         
Severance accruals
   
40
             
-
         
Tax effect of pre-tax adjustments
   
(77
)
           
(238
)
       
Discontinued operations, net **
   
12
             
(18
)
       
                                 
Corporate Core Results - Non Segment
   
(2,454
)
           
(5,239
)
       
                                 
TOTAL CORE RESULTS
 
$
3,083
   
$
3.78
   
$
7,348
   
$
8.94
 
                                 
 *  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 28, 2010.
     
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 28, 2010
/s/ ROY PINECI
 
 
Roy Pineci, Vice President, Controller
 
 
and Principal Accounting Officer
 
     
     
     
     
     
     

 
 
11
 
 

EXHIBIT INDEX


99.1
 
Press release dated January 28, 2010.
     
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.