Occidental Petroleum Announces Second Quarter and First Six Months of 2010 Results

Occidental Petroleum Announces Second Quarter and First Six Months of 2010 Results

Q2 2010 net income $1.1 billion ($1.31 per diluted share)
Q2 2010 daily oil and gas sales average of 747,000 BOE
Quarterly year-over-year production volume growth of over 3 ½ percent

Occidental Petroleum Corporation (NYSE:OXY) 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.

In announcing the results, Dr. Ray R. Irani, Chairman and Chief Executive Officer, said, “The second quarter 2010 net income of $1.1 billion was a 56-percent increase over the same period of 2009. The second quarter 2010 production was 743,000 BOE per day, a 3.6-percent increase from the second quarter of 2009 despite losing 29,000 BOE per day from the effect of production sharing and similar contracts. We continue to generate significant cash flow with the first six months of 2010 results generating cash flow from operating activities of $4.3 billion. Free cash flow after capital spending and dividends was over $2 billion.”

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.

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.

About Oxy

Occidental Petroleum Corporation is an international oil and gas exploration and production company with operations in the United States, Middle East/North Africa and Latin America regions. Oxy is the fourth largest U.S. oil and gas company, based on equity market capitalization. Oxy’s wholly owned subsidiary, OxyChem, manufactures and markets chlor-alkali products and vinyls. Occidental is committed to safeguarding the environment, protecting the safety and health of employees and neighboring communities and upholding high standards of social responsibility in all of the company’s worldwide operations.

Forward-Looking Statements

Statements in this release 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.

For further analysis of Occidental’s quarterly performance, please visit the web site: www.oxy.com

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