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.