Occidental Petroleum Announces Record Third Quarter Core Results

Source: www.gulfoilandgas.com 10/24/2007, Location: North America

Occidental Petroleum Corporation announced net income of $1.324 billion ($1.58 per diluted share) for the third quarter of 2007, compared with $1.170 billion ($1.36 per diluted share) for the third quarter of 2006. Core results for the third quarter of 2007 were a record high of $1.210 billion ($1.45 per diluted share), after excluding after-tax gains of $72 million from the sale of exploration properties, net of asset impairments, $34 million from the sale of non-core assets and $8 million from discontinued operations; compared with $1.103 billion ($1.28 per diluted share) for the third quarter of 2006. See the attached schedule for a reconciliation of net income to core results.

In announcing the results, Dr. Ray R. Irani, Chairman, President and Chief Executive Officer said, "Increase in our production volume, including initial production from the Dolphin Project and increases in worldwide crude oil prices, contributed to Oxy's record setting third quarter core income results of $1.210 billion. This reflects the continued successful implementation of our long-term strategy that is focused on current and new long-lived oil and gas assets in our core regions that produce strong financial returns."

Quarterly Results

Oil and Gas
Oil and gas segment earnings were $2.029 billion for the third quarter of 2007, compared with $1.790 billion for the same period in 2006. The third quarter of 2007 core results were $1.988 billion, after excluding pre-tax gains of $12 million from the sale of domestic interests and $103 million from the sale of exploration properties, partially offset by a $74 million pre-tax loss from the impairment of assets, primarily exploration properties. The $198 million increase in the third quarter 2007 core results to $1.988 billion from $1.790 billion in 2006 reflected increases from higher crude oil prices and production volumes, partially offset by increased DD&A rates and higher operating expenses.

The average price for West Texas Intermediate crude oil in the third quarter of 2007 was $75.38 per barrel compared to $70.53 per barrel in the third quarter of 2006. Oxy's realized price for worldwide crude oil was $67.81 per barrel for the third quarter of 2007, compared with $61.83 per barrel for the third quarter of 2006. The average price for NYMEX gas in the third quarter of 2007 was $6.69 per MCF, compared with $6.33 per MCF in the third quarter of 2006. Domestic realized gas prices increased slightly from $5.88 per MCF in the third quarter of 2006 to $5.90 per MCF for the third quarter of 2007.

Production
For the third quarter of 2007, daily oil and gas production averaged 570,000 barrels of oil equivalent (BOE), compared with 533,000 BOE per day produced in the third quarter of 2006. The increased production included 15,000 BOE per day from Dolphin, 12,000 BOE per day from domestic operations and the remainder primarily from the Middle East.

Chemicals
Chemical segment earnings for the third quarter of 2007 were $212 million, compared with $248 million for the same period in 2006. The third quarter of 2007 results reflect lower margins for polyvinyl chloride.

Nine-Months Results

Net income for the nine months of 2007 was $3.948 billion ($4.69 per diluted share), compared with $3.261 billion ($3.78 per diluted share) for the nine months of 2006. Core results were $2.941 billion ($3.50 per diluted share) for the nine months of 2007, compared with $3.332 billion ($3.86 per diluted share) for the nine months of 2006. Net income for the nine months of 2007 includes, after-tax: a $72 million gain from the sale of exploration properties, net of asset impairments, a $22 million gain from the sale of domestic oil and gas interests, a $112 million gain for litigation settlements, a $208 million gain from the sale of 21 million shares of Lyondell Chemical Corporation, a $412 million gain resulting from the sale of Oxy's 50-percent investment in Russia, a $107 million charge for the completion of cash tender offers for various debt issues, a $30 million provision for a plant closure and related environmental remediation reserve and $318 million income from discontinued operations. Net income for the nine months of 2006 includes a $71 million after-tax loss from discontinued operations. See the attached schedule for a reconciliation of net income to core results.

Oil and Gas
Oil and gas segment earnings were $5.719 billion for the nine months of 2007, compared with $5.458 billion for the same period of 2006. Oil and gas core results were $5.131 billion for the nine months of 2007 after excluding gains from the sale of Oxy's investment in Russia, sales of exploration properties, net of asset impairments, sales of domestic oil and gas interests, and litigation settlements. The decline of $327 million in the nine months of 2007 core results from $5.458 billion in 2006 reflected lower crude oil and natural gas prices, increased DD&A rates and higher exploration and operating expenses, partially offset by higher crude oil and natural gas production.

The average price for West Texas Intermediate crude oil in the nine months of 2007 was $66.20 per barrel compared to $68.24 per barrel in the nine months of 2006. Oxy's realized price for worldwide crude oil was $59.47 per barrel for the nine months of 2007, compared with $59.61 per barrel for the nine months of 2006. The average price for NYMEX gas in the nine months of 2007 was $7.14 per MCF, compared with $8.34 per MCF in the nine months of 2006. Domestic realized gas prices decreased from $6.79 per MCF in the nine months of 2006 to $6.45 per MCF for the same period of 2007.

Production
For the nine months of 2007, daily oil and gas production averaged 563,000 BOE, compared with 539,000 BOE per day produced in the nine months of 2006.

Chemicals
Chemical segment earnings for the nine months of 2007 were $507 million, compared with $749 million for the same period in 2006. The 2007 results reflect lower margins for polyvinyl chloride.


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