form8k-20100727.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 27, 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 July 27, 2010, Occidental Petroleum Corporation released information regarding its results of operations for the three and six months ended June 30, 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 speech given by Stephen I. Chazen is 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 July 27, 2010, Occidental Petroleum Corporation announced net income of $1.1 billion ($1.31 per diluted share) for the second quarter of 2010, compared with $682 million ($0.84 per diluted share) for the second quarter of 2009.

QUARTERLY RESULTS

Oil and Gas

Oil and gas segment earnings were $1.9 billion for the second quarter of 2010, compared with $1.1 billion for the same period in 2009. The increase in the second quarter of 2010 results was due to higher crude oil and natural gas prices and higher volumes.

For the second quarter of 2010, daily oil and gas sales volumes averaged 747,000 barrels of oil equivalent (BOE), compared with 719,000 BOE in the second quarter of 2009. Volumes increased in the Middle East/North Africa and California and were partially offset by decreases in Colombia. The Middle East/North Africa increase included new production from the Bahrain start-up and increased production from the Mukhaizna field in Oman. Underlying daily production volumes were 743,000 BOE in the second quarter of 2010 compared to 717,000 BOE in the second quarter of 2009, an increase of over three and one-half percent. Production was negatively impacted in the Middle East/North Africa, Long Beach and Colombia due to higher oil prices affecting our production sharing and similar contracts by a total of 29,000 BOE per day.

Oxy's realized price for worldwide crude oil was $72.13 per barrel for the second quarter of 2010, compared with $52.97 per barrel for the second quarter of 2009. Domestic realized gas prices rose from $2.87 per MCF in the second quarter of 2009 to $4.19 per MCF for the second quarter of 2010.


Chemicals

Chemical segment earnings for the second quarter 2010 were $108 million, compared with $115 million for the same period in 2009. The second quarter of 2010 results continue to reflect the significant caustic soda price erosion and higher raw material prices experienced in the second half of 2009 offset by improved volumes across most product lines.

 
 
1
 
 

Midstream, Marketing and Other

Midstream segment earnings were $13 million for the second quarter of 2010, compared with $63 million for the second quarter of 2009. Earnings for the second quarter of 2010 reflect lower margins in the marketing and trading businesses, partially offset by higher margins in the gas processing business and pipelines businesses.

SIX-MONTH RESULTS

Net income for the first six months of 2010 was $2.1 billion ($2.61 per diluted share), compared with $1.1 billion ($1.29 per diluted share) for the same period in 2009. Year-to-date 2010 core results were $2.1 billion ($2.63 per diluted share), compared with $1.1 billion ($1.34 per diluted share).

Oil and Gas

Oil and gas segment earnings were $3.7 billion for the six months of 2010, compared with $1.6 billion for the same period of 2009. The $2.1 billion increase in the 2010 results reflected higher crude oil and natural gas prices and higher volumes.

Daily oil and gas sales volumes for the six months were 737,000 BOE per day for 2010, compared with 716,000 BOE per day for the 2009 period. Volumes increased in the Middle East/North Africa, resulting from the new production in Bahrain and higher production in the Mukhaizna field in Oman, and domestically in California. Volumes declined in Latin America, mainly in Colombia. Underlying daily production volumes were 743,000 BOE in the first six months of 2010, compared with 713,000 BOE for 2009, an increase of over four percent. Production was negatively impacted in the Middle East/North Africa, Long Beach and Colombia resulting from higher year-over-year average oil prices affecting our production sharing and similar contracts by 28,000 BOE per day.

Oxy's realized price for worldwide crude oil was $72.01 per barrel for the six months of 2010, compared with $46.05 per barrel for the six months of 2009. Domestic realized gas prices increased from $3.20 per MCF in the six months of 2009 to $4.90 per MCF in the six months of 2010.

Chemicals

Chemical segment earnings were $138 million for the six months of 2010, compared with $284 million for the same period in 2009.  The 2010 six-month results reflect the significant margin erosion in caustic soda, which began in 2009 due to the economic downturn, particularly in the housing and construction sectors, combined with higher raw material costs primarily for ethylene.  Volumes and prices across most product lines are gradually recovering, resulting in the improvement in earnings from first quarter $30 million to second quarter of $108 million.

Midstream, Marketing and Other

Midstream segment earnings were $107 million for the six months of 2010, compared with $77 million for the same period in 2009.  The 2010 results reflect higher margins in the gas processing business and increased earnings in the pipeline and power generation businesses, partially offset by lower marketing and trading income.

 
 
2
 
 

Forward-Looking Statements

Statements in this report 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 actual results to differ materially include, but are not limited to: global commodity price fluctuations and supply/demand considerations for oil, gas and chemicals; 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; changes in tax rates; exploration risks, such as drilling of unsuccessful wells; and commodity trading risks.  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
                                 
   
Second Quarter
  
Six Months
($ millions, except per-share amounts)
  
2010
  
2009
  
2010
  
2009
SEGMENT NET SALES
                                
Oil and Gas
  
$
3,676
    
$
2,726
    
$
7,322
    
$
4,863
  
Chemical
    
1,013
      
811
      
1,969
      
1,603
  
Midstream, Marketing and Other
    
236
      
250
      
605
      
478
  
Eliminations
    
(164
)
    
(100
)
    
(364
)
    
(184
)
                                 
Net Sales
  
$
4,761
    
$
3,687
    
$
9,532
    
$
6,760
  
                                 
SEGMENT EARNINGS
                                
Oil and Gas (a)
  
$
1,853
    
$
1,083
    
$
3,672
    
$
1,628
  
Chemical
    
108
      
115
      
138
      
284
  
Midstream, Marketing and Other
    
13
      
63
      
107
      
77
  
     
1,974
      
1,261
      
3,917
      
1,989
  
                                 
Unallocated Corporate Items
                                
Interest expense, net
    
(22
)
    
(23
)
    
(58
)
    
(43
)
Income taxes
    
(800
)
    
(455
)
    
(1,529
)
    
(696
)
Other (b)
    
(83
)
    
(99
)
    
(190
)
    
(195
)
                                 
Income from Continuing Operations (a)
    
1,069
      
684
      
2,140
      
1,055
  
Discontinued operations, net
    
(6
)
    
(2
)
    
(13
)
    
(5
)
                                 
NET INCOME (a)
  
$
1,063
    
$
682
    
$
2,127
    
$
1,050
  
                                 
BASIC EARNINGS PER COMMON SHARE
                                
Income from continuing operations
  
$
1.31
    
$
0.84
    
$
2.63
    
$
1.30
  
Discontinued operations, net
    
-
      
-
      
(0.02
)
    
(0.01
)
   
$
1.31
    
$
0.84
    
$
2.61
    
$
1.29
  
                                 
DILUTED EARNINGS PER COMMON SHARE
                                
Income from continuing operations
  
$
1.31
    
$
0.84
    
$
2.63
    
$
1.30
  
Discontinued operations, net
    
-
      
-
      
(0.02
)
    
(0.01
)
   
$
1.31
    
$
0.84
    
$
2.61
    
$
1.29
  
AVERAGE BASIC COMMON SHARES OUTSTANDING
                                
BASIC
    
812.6
      
811.0
      
812.3
      
810.8
  
DILUTED
    
813.8
      
814.0
      
813.7
      
813.7
  
                                 
(a) Net Income - Net income and income from continuing operations represent amounts attributable to Common Stock, after deducting non-controlling interest of $12 million for the second quarter of 2010 and 2009 and $36 million and $21 million for the first six months of 2010 and 2009, respectively.  Oil and gas segment earnings are presented net of these non-controlling interest amounts.
                                 
(b) Unallocated Corporate Items - Other - The second quarter of 2009 includes a pre-tax charge of $8 million related to severance.  The first six months of 2009 includes additional pre-tax charges of $32 million for severance and  $15 million for railcar leases.
 
 
4
 
 

                   
Attachment 2
                                 
SUMMARY OF CAPITAL EXPENDITURES AND DD&A EXPENSE
                                 
   
Second Quarter
  
Six Months
($ millions)
  
2010
  
2009
  
2010
  
2009
CAPITAL EXPENDITURES
  
$
868
    
$
831
    
$
1,716
    
$
1,902
  
                                 
DEPRECIATION, DEPLETION AND
                                
AMORTIZATION OF ASSETS
  
$
876
    
$
742
    
$
1,750
    
$
1,528
  
                                 
                                 
                                 
                                 
ITEMS AFFECTING COMPARABILITY OF CORE EARNINGS BETWEEN PERIODS
                                 
Income / (Expense)
  
Second Quarter
  
Six Months
($ millions)
  
2010
  
2009
  
2010
  
2009
                                 
Foreign exchange gains and (losses) *
  
$
4
    
$
(6
)
  
$
(1
)
  
$
31
  
                                 
* Amounts shown after tax.
                                

 
5
 
 

                   
Attachment 3
                                 
SUMMARY OF OPERATING STATISTICS - SALES
                                 
   
Second Quarter
  
Six Months
   
2010
  
2009
  
2010
  
2009
NET OIL, GAS AND LIQUIDS SALES PER DAY
                                
United States
                                
Crude Oil and Liquids (MBBL)
                                
California
    
92
      
90
      
93
      
93
  
Permian
    
159
      
163
      
159
      
165
  
Midcontinent Gas
    
18
      
14
      
17
      
13
  
Total
    
269
      
267
      
269
      
271
  
                                 
Natural Gas (MMCF)
                                
California
    
293
      
232
      
294
      
224
  
Permian
    
129
      
124
      
127
      
124
  
Midcontinent Gas
    
259
      
265
      
257
      
273
  
Total
    
681
      
621
      
678
      
621
  
                                 
Latin America
                                
Crude Oil  (MBBL)
                                
Argentina
    
37
      
37
      
37
      
41
  
Colombia
    
27
      
42
      
30
      
41
  
Total
    
64
      
79
      
67
      
82
  
                                 
Natural Gas (MMCF)
                                
Argentina
    
32
      
30
      
32
      
32
  
Bolivia
    
15
      
19
      
13
      
17
  
Total
    
47
      
49
      
45
      
49
  
                                 
Middle East / North Africa
                                
Crude Oil and Liquids (MBBL)
                                
Bahrain
    
3
      
-
      
3
      
-
  
Dolphin
    
23
      
29
      
23
      
26
  
Libya
    
25
      
14
      
14
      
10
  
Oman
    
58
      
49
      
57
      
48
  
Qatar
    
78
      
82
      
76
      
79
  
Yemen
    
32
      
32
      
33
      
37
  
Total
    
219
      
206
      
206
      
200
  
                                 
Natural Gas (MMCF)
                                
Bahrain
    
161
      
-
      
163
      
-
  
Dolphin
    
235
      
282
      
232
      
257
  
Oman
    
48
      
50
      
50
      
52
  
Total
    
444
      
332
      
445
      
309
  
                                 
Barrels of Oil Equivalent (MBOE)
                                
                                 
Total  Sales - MBOE
    
747
      
719
      
737
      
716
  

 
6
 
 

                   
Attachment 4
                                 
SUMMARY OF OPERATING STATISTICS - PRODUCTION
                                 
   
Second Quarter
  
Six Months
   
2010
  
2009
  
2010
  
2009
NET OIL, GAS AND LIQUIDS PRODUCTION
                                
PER DAY
                                
United States
                                
Crude Oil and Liquids (MBBL)
    
269
      
267
      
269
      
271
  
Natural Gas (MMCF)
    
681
      
621
      
678
      
621
  
                                 
Latin America
                                
Crude Oil (MBBL)
                                
Argentina
    
37
      
38
      
37
      
38
  
Colombia
    
32
      
41
      
33
      
41
  
Total
    
69
      
79
      
70
      
79
  
                                 
Natural Gas (MMCF)
    
47
      
49
      
45
      
49
  
                                 
Middle East / North Africa
                                
Crude Oil and Liquids (MBBL)
                                
Bahrain
    
3
      
-
      
3
      
-
  
Dolphin
    
23
      
29
      
24
      
26
  
Libya
    
15
      
13
      
15
      
11
  
Oman
    
60
      
49
      
58
      
47
  
Qatar
    
78
      
78
      
76
      
79
  
Yemen
    
31
      
35
      
33
      
37
  
Total
    
210
      
204
      
209
      
200
  
                                 
Natural Gas (MMCF)
    
444
      
332
      
445
      
309
  
                                 
Barrels of Oil Equivalent (MBOE)
                                
                                 
Total Worldwide Production - MBOE
    
743
      
717
      
743
      
713
  

 
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)
  
2010
  
Diluted
EPS
  
2009
  
Diluted
EPS
TOTAL REPORTED EARNINGS
  
$
1,063
    
$
1.31
    
$
682
    
$
0.84
  
                                 
Oil and Gas
                                
Segment Earnings
  
$
1,853
            
$
1,083
          
Add:
                                
No significant items affecting earnings
    
-
              
-
          
                                 
Segment Core Results
    
1,853
              
1,083
          
                                 
Chemicals
                                
Segment Earnings
    
108
              
115
          
Add:
                                
No significant items affecting earnings
    
-
              
-
          
                                 
Segment Core Results
    
108
              
115
          
                                 
Midstream, Marketing and Other
                                
Segment Earnings
    
13
              
63
          
Add:
                                
No significant items affecting earnings
    
-
              
-
          
                                 
Segment Core Results
    
13
              
63
          
                                 
Total Segment Core Results
    
1,974
              
1,261
          
                                 
Corporate
                                
Corporate Results --
                                
Non Segment *
    
(911
)
            
(579
)
        
Add:
                                
Severance accrual
    
-
              
8
          
Tax effect of pre-tax adjustments
    
-
              
(3
)
        
Discontinued operations, net **
    
6
              
2
          
                                 
Corporate Core Results - Non Segment
    
(905
)
            
(572
)
        
                                 
TOTAL CORE RESULTS
  
$
1,069
    
$
1.31
    
$
689
    
$
0.85
  
                                 
*  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)
  
2010
  
Diluted
EPS
  
2009
  
Diluted
EPS
TOTAL REPORTED EARNINGS
  
$
2,127
    
$
2.61
    
$
1,050
    
$
1.29
  
                                 
Oil and Gas
                                
Segment Earnings
  
$
3,672
            
$
1,628
          
Add:
                                
Rig Terminations
    
-
              
8
          
                                 
Segment Core Results
    
3,672
              
1,636
          
                                 
Chemicals
                                
Segment Earnings
    
138
              
284
          
Add:
                                
No significant items affecting earnings
    
-
              
-
          
                                 
Segment Core Results
    
138
              
284
          
                                 
Midstream, Marketing and Other
                                
Segment Earnings
    
107
              
77
          
Add:
                                
No significant items affecting earnings
    
-
              
-
          
                                 
Segment Core Results
    
107
              
77
          
                                 
Total Segment Core Results
    
3,917
              
1,997
          
                                 
Corporate
                                
Corporate Results --
                                
Non Segment *
    
(1,790
)
            
(939
)
        
Add:
                                
Severance accruals
    
-
              
40
          
Railcar leases
    
-
              
15
          
Tax effect of pre-tax adjustments
    
-
              
(22
)
        
Discontinued operations, net **
    
13
              
5
          
                                 
Corporate Core Results - Non Segment
    
(1,777
)
            
(901
)
        
                                 
TOTAL CORE RESULTS
  
$
2,140
    
$
2.63
    
$
1,096
    
$
1.34
  
                                 
*  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 27, 2010.
     
99.2
  
Full text of speech given by 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:                      July 27, 2010
/s/ ROY PINECI
  
 
Roy Pineci, Vice President, Controller
  
 
and Principal Accounting Officer
  
     
     
     
     
     
     
 
 
 
11
 
 


EXHIBIT INDEX


99.1
  
Press release dated July 27, 2010.
     
99.2
  
Full text of speech given by 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.