form8k-20121025.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) October 25, 2012

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 October 25, 2012, Occidental Petroleum Corporation released information regarding its results of operations for the three and nine months ended September 30, 2012.  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 Cynthia L. Walker and Stephen 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.  The information in this Item 2.02 and Exhibits 99.1 through 99.5, inclusive, shall not be deemed “filed” for purposes of Section 18 of the Securities Exchange Act of 1934, as amended, nor shall it be deemed incorporated by reference in any filing under the Securities Act of 1933, as amended, except as shall be expressly set forth by specific reference in such filing.
 

Section 8 – Other Events

Item 8.01.  Other Events
 
On October 25, 2012, Occidental Petroleum Corporation announced income from continuing operations of $1.4 billion ($1.70 per diluted share) for the third quarter of 2012, compared with the third quarter of 2011 income from continuing operations of $1.8 billion ($2.18 per diluted share).

Oil and Gas

Oil and gas segment earnings were $2.0 billion for the third quarter of 2012, compared with $2.6 billion for the third quarter of 2011.  Lower product prices and higher costs in the third quarter of 2012 were partially offset by higher oil volumes.

For the third quarter of 2012, daily oil and gas production volumes averaged 766,000 barrels of oil equivalent (BOE), compared with 739,000 BOE in the third quarter of 2011.

The third quarter 2012 production increase resulted from higher volumes of 33,000 BOE per day from domestic operations, partially offset by a decrease in international production.  The international decrease included lower volumes from Dolphin, resulting from the full cost recovery of pre-startup capital, and in Yemen due to the Masila field contract expiration, partially offset by higher volumes from other international operations.

Daily sales volumes increased from 743,000 BOE in the third quarter of 2011 to 765,000 BOE in the third quarter of 2012.

Oxy’s realized price for worldwide crude oil was $96.62 per barrel for the third quarter of 2012, compared with $97.24 per barrel for the third quarter of 2011. The third quarter of 2012 realized oil price represents 105 percent of the average WTI and 88 percent of the average Brent price for the quarter. Worldwide NGL prices were $40.65 per barrel in the third quarter of 2012, compared with $56.06 per barrel in the third quarter of 2011. Domestic gas prices decreased 41 percent from $4.23 per MCF in the third quarter of 2011 to $2.48 per MCF for the third quarter of 2012.
 
1
 
 
 
 
Third quarter 2012 realized prices were lower than second quarter 2012 prices for worldwide oil and NGLs and were higher for domestic natural gas.  On a sequential quarterly basis, prices decreased 3 percent for worldwide crude oil and NGLs and increased 19 percent for domestic natural gas.

Chemicals

Chemical segment earnings for the third quarter of 2012 were $162 million, compared with $245 million in the third quarter of 2011.  The decrease was the result of lower prices across most product lines, particularly in polyvinyl chloride (PVC) and vinyl chloride monomer (VCM), partially offset by lower natural gas and ethylene costs.

Midstream, Marketing and Other

Midstream segment earnings were $156 million for the third quarter of 2012, compared with $77 million for the third quarter of 2011. The results reflect higher margins in the marketing and trading businesses, partially offset by lower income in the gas processing and pipeline businesses.

NINE-MONTH RESULTS

Core income for the first nine months of 2012 was $4.3 billion ($5.26 per diluted share), compared with $5.2 billion ($6.37 per diluted share) for the same period in 2011.  Cash flow from operations after working capital changes was $8.5 billion.

Oil and Gas

Oil and gas segment earnings were $6.6 billion for the first nine months of 2012, compared with $7.7 billion for the same period of 2011.  The decrease in 2012 reflected lower NGL and natural gas prices, higher operating costs, exploration expense and DD&A rates, partially offset by higher oil prices and domestic volumes.

Oil and gas production volumes for the nine months were 762,000 BOE per day for 2012, compared with 728,000 BOE per day for the same period in 2011.  Year-over-year, our domestic production increased by nearly 10 percent, while total company production increased by nearly 5 percent.  Dolphin's full cost recovery of pre-startup capital, which reduced our production, was the only operation where production sharing and similar contracts had an appreciable effect.

The nine-month 2012 production increase resulted from 41,000 BOE per day in higher domestic volumes, partially offset by lower volumes in the Middle East/North Africa and Latin America.

Daily sales volumes were 757,000 BOE in the first nine months of 2012, compared with 726,000 BOE for the same period in 2011.

Oxy's realized prices improved for crude oil but declined for natural gas and NGLs on a year-over-year basis. Worldwide crude oil prices were $101.20 per barrel for the nine months of 2012, compared with $97.33 per barrel for the nine months of 2011.  Worldwide NGL prices were $45.21 per barrel for the nine months of 2012, compared with $55.63 per barrel in the nine months of 2011.  Domestic gas prices declined 42 percent, from $4.24 per MCF in the nine months of 2011 to $2.47 per MCF in the nine months of 2012.

2
 
 
 
 
Chemicals

Chemical segment earnings were $540 million for the nine months of 2012, compared with $717 million for the same period in 2011.  The reduction was primarily a result of lower export volumes and prices due to the economic conditions in Europe and Asia, partially offset by lower energy and feedstock costs.

Midstream, Marketing and Other

Midstream segment earnings were $364 million for the nine months of 2012, compared with $378 million for the same period in 2011.

Forward-Looking Statements

Portions of this press release contain forward-looking statements and involve risks and uncertainties that could materially affect expected results of operations, liquidity, cash flows and business prospects. Factors that could cause results to differ materially include, but are not limited to: global commodity pricing fluctuations; supply and demand considerations for Occidental’s products; general domestic political and regulatory approval conditions; higher-than-expected costs; international political conditions; not successfully completing, or any material delay of, any development of new fields, expansion projects, capital expenditures, efficiency-improvement projects, acquisitions or dispositions; potential failure to achieve expected production from existing and future oil and gas development projects or acquisitions; exploration risks such as drilling unsuccessful wells; any changes in general economic conditions domestically or internationally; the ability to attract trained engineers; potential liability for remedial actions under existing or future environmental regulations and litigation; potential liability resulting from pending or future litigation; potential disruption or interruption of Occidental’s production or manufacturing or damage to facilities due to accidents, chemical releases, labor unrest, weather, natural disasters, political events or insurgent activity; failure of risk management; changes in law or regulations; or changes in tax rates. Words such as "estimate", "project", "predict", "will", "would", "should", "could", "may", "might", "anticipate", "plan", "intend", "believe", "expect", "aim", "goal", "target", "objective", "likely" or similar expressions that convey the uncertainty of future events or outcomes generally indicate forward-looking statements. You should not place undue reliance on these forward-looking statements, which speak only as of the date of this report. 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. Material risks that may affect Occidental’s results of operations and financial position appear in Part 1, Item 1A "Risk Factors" of the 2011 Form 10-K.
 
3
 
 
 
 
 
Attachment 1
                                 
SUMMARY OF SEGMENT NET SALES AND EARNINGS
                                 
   
Third Quarter
  
Nine Months
($ millions, except per-share amounts)
  
2012
  
2011
  
2012
  
2011
SEGMENT NET SALES
                                
Oil and Gas
  
$
4,635
    
$
4,677
    
$
14,032
    
$
13,635
  
Chemical
    
1,119
      
1,231
      
3,439
      
3,721
  
Midstream, Marketing and Other
    
389
      
256
      
1,044
      
1,109
  
Eliminations
    
(178
)
    
(158
)
    
(514
)
    
(560
)
                                 
Net Sales
  
$
5,965
    
$
6,006
    
$
18,001
    
$
17,905
  
                                 
SEGMENT EARNINGS
                                
Oil and Gas  (a)
  
$
2,026
    
$
2,612
    
$
6,573
    
$
7,704
  
Chemical
    
162
      
245
      
540
      
717
  
Midstream, Marketing and Other
    
156
      
77
      
364
      
378
  
     
2,344
      
2,934
      
7,477
      
8,799
  
                                 
Unallocated Corporate Items
                                
Interest expense, net (b)
    
(34
)
    
(23
)
    
(87
)
    
(259
)
Income taxes (c)
    
(855
)
    
(1,087
)
    
(2,869
)
    
(3,252
)
Other
    
(76
)
    
(49
)
    
(250
)
    
(289
)
                                 
Income from Continuing Operations
    
1,379
      
1,775
      
4,271
      
4,999
  
Discontinued operations, net (d)
    
(4
)
    
(4
)
    
(9
)
    
138
  
                                 
NET INCOME
  
$
1,375
    
$
1,771
    
$
4,262
    
$
5,137
  
                                 
BASIC EARNINGS PER COMMON SHARE
                                
Income from continuing operations
  
$
1.70
    
$
2.18
    
$
5.26
    
$
6.14
  
Discontinued operations, net
    
(0.01
)
    
(0.01
)
    
(0.01
)
    
0.17
  
   
$
1.69
    
$
2.17
    
$
5.25
    
$
6.31
  
                                 
DILUTED EARNINGS PER COMMON SHARE
                                
Income from continuing operations
  
$
1.70
    
$
2.18
    
$
5.26
    
$
6.14
  
Discontinued operations, net
    
(0.01
)
    
(0.01
)
    
(0.01
)
    
0.17
  
   
$
1.69
    
$
2.17
    
$
5.25
    
$
6.31
  
AVERAGE COMMON SHARES OUTSTANDING
                                
BASIC
    
809.7
      
812.5
      
810.1
      
812.6
  
DILUTED
    
810.4
      
813.2
      
810.8
      
813.3
  
                                 
(a) Oil and Gas - The nine months of 2011 include pre-tax charges of $35 million related to exploration write-offs in Libya and $29 million related to Colombia net worth tax.  Also, included in the nine months of 2011 results is a pre-tax gain for sale of an interest in a Colombia pipeline of $22 million.
(b) Unallocated Corporate Items - Interest Expense, net - The nine months of 2011 include a pre-tax charge of $163 million related to the premium on debt extinguishment.
(c) Unallocated Corporate Items - Taxes - The nine months of 2011 include a net $21 million charge for out-of-period state income taxes.
(d) Discontinued Operations, net - The nine months of 2011 include a $144 million after-tax gain from the sale of the Argentine operations.
 
4
 
 
 
 
 
Attachment 2
                                 
SUMMARY OF CAPITAL EXPENDITURES AND DD&A EXPENSE
                                 
   
Third Quarter
  
Nine Months
($ millions)
  
2012
  
2011
  
2012
  
2011
CAPITAL EXPENDITURES
  
$
2,591
    
$
2,011
    
$
7,716
    
$
4,969
  
                                 
DEPRECIATION, DEPLETION AND
                                
AMORTIZATION OF ASSETS
  
$
1,149
    
$
924
    
$
3,320
    
$
2,653
  
 
5
 
 
 
 
 
Attachment 3
                                 
SUMMARY OF OPERATING STATISTICS - PRODUCTION
                                 
   
Third Quarter
  
Nine Months
   
2012
  
2011
  
2012
  
2011
NET OIL, GAS AND LIQUIDS PRODUCTION PER DAY
                                
United States
                                
Crude Oil (MBBL)
                                
California
    
88
      
80
      
87
      
78
  
Permian
    
144
      
133
      
140
      
132
  
Midcontinent and Other
    
28
      
17
      
24
      
16
  
Total
    
260
      
230
      
251
      
226
  
                                 
NGL (MBBL)
                                
California
    
18
      
16
      
16
      
15
  
Permian
    
40
      
37
      
39
      
38
  
Midcontinent and Other
    
16
      
20
      
18
      
14
  
Total
    
74
      
73
      
73
      
67
  
                                 
Natural Gas (MMCF)
                                
California
    
247
      
269
      
261
      
254
  
Permian
    
151
      
151
      
153
      
153
  
Midcontinent and Other
    
414
      
379
      
414
      
357
  
Total
    
812
      
799
      
828
      
764
  
                                 
Latin America
                                
Crude Oil  (MBBL) - Colombia
    
30
      
27
      
28
      
29
  
                                 
Natural Gas (MMCF) - Bolivia
    
12
      
15
      
13
      
16
  
                                 
Middle East / North Africa
                                
Crude Oil (MBBL)
                                
Bahrain
    
4
      
4
      
5
      
4
  
Dolphin
    
7
      
10
      
8
      
10
  
Oman
    
69
      
69
      
65
      
68
  
Qatar
    
69
      
73
      
71
      
72
  
Other
    
34
      
32
      
36
      
39
  
Total
    
183
      
188
      
185
      
193
  
                                 
NGL (MBBL)
                                
Dolphin
    
7
      
11
      
9
      
11
  
Other
    
1
      
-
      
-
      
-
  
Total
    
8
      
11
      
9
      
11
  
                                 
Natural Gas (MMCF)
                                
Bahrain
    
237
      
169
      
229
      
171
  
Dolphin
    
147
      
215
      
171
      
205
  
Oman
    
57
      
59
      
57
      
53
  
Total
    
441
      
443
      
457
      
429
  
                                 
                                 
Barrels of Oil Equivalent (MBOE)
    
766
      
739
      
762
      
728
  
 
6
 
 
 
 
 
Attachment 4
                                 
SUMMARY OF OPERATING STATISTICS - SALES
                                 
   
Third Quarter
  
Nine Months
   
2012
  
2011
  
2012
  
2011
NET OIL, GAS AND LIQUIDS SALES PER DAY
                                
                                 
United States
                                
Crude Oil (MBBL)
    
259
      
230
      
251
      
226
  
NGL (MBBL)
    
74
      
73
      
73
      
67
  
Natural Gas (MMCF)
    
807
      
799
      
825
      
764
  
                                 
Latin America
                                
Crude Oil  (MBBL) - Colombia
    
30
      
24
      
28
      
29
  
                                 
Natural Gas (MMCF) - Bolivia
    
12
      
15
      
13
      
16
  
                                 
Middle East / North Africa
                                
Crude Oil (MBBL)
                                
Bahrain
    
4
      
4
      
4
      
4
  
Dolphin
    
7
      
9
      
8
      
9
  
Oman
    
67
      
71
      
64
      
70
  
Qatar
    
68
      
76
      
70
      
73
  
Other
    
38
      
35
      
34
      
35
  
Total
    
184
      
195
      
180
      
191
  
                                 
NGL (MBBL)
                                
Dolphin
    
8
      
11
      
9
      
11
  
                                 
Natural Gas (MMCF)
    
441
      
443
      
457
      
429
  
                                 
                                 
Barrels of Oil Equivalent (MBOE)
    
765
      
743
      
757
      
726
  
 
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.
                                 
   
Third Quarter
($ millions, except per-share amounts)
  
2012
  
Diluted
EPS
  
2011
  
Diluted
EPS
TOTAL REPORTED EARNINGS
  
$
1,375
    
$
1.69
    
$
1,771
    
$
2.17
  
                                 
Oil and Gas
                                
Segment Earnings
  
$
2,026
            
$
2,612
          
Add:
                                
No significant items affecting earnings
    
-
              
-
          
                                 
Segment Core Results
    
2,026
              
2,612
          
                                 
Chemicals
                                
Segment Earnings
    
162
              
245
          
Add:
                                
No significant items affecting earnings
    
-
              
-
          
                                 
Segment Core Results
    
162
              
245
          
                                 
Midstream, Marketing and Other
                                
Segment Earnings
    
156
              
77
          
Add:
                                
No significant items affecting earnings
    
-
              
-
          
                                 
Segment Core Results
    
156
              
77
          
                                 
Total Segment Core Results
    
2,344
              
2,934
          
                                 
Corporate
                                
Corporate Results --
                                
Non Segment *
    
(969
)
            
(1,163
)
        
Add:
                                
Discontinued operations, net **
    
4
              
4
          
                                 
Corporate Core Results - Non Segment
    
(965
)
            
(1,159
)
        
                                 
TOTAL CORE RESULTS
  
$
1,379
    
$
1.70
    
$
1,775
    
$
2.18
  
                                 
 *  Interest expense, income taxes, G&A expense and other.
** Amounts shown after tax.
  
 
8
 
 
 
 
 
Attachment 6
                                 
SIGNIFICANT TRANSACTIONS AND EVENTS AFFECTING EARNINGS (continued)
                                 
   
Nine Months
($ millions, except per-share amounts)
  
2012
  
Diluted
EPS
  
2011
  
Diluted
EPS
TOTAL REPORTED EARNINGS
  
$
4,262
    
$
5.25
    
$
5,137
    
$
6.31
  
                                 
Oil and Gas
                                
Segment Earnings
  
$
6,573
            
$
7,704
          
Add:
                                
Libya exploration write-off
    
-
              
35
          
Gain on sale of Colombia pipeline interest
    
-
              
(22
)
        
Foreign tax
    
-
              
29
          
                                 
Segment Core Results
    
6,573
              
7,746
          
                                 
Chemicals
                                
Segment Earnings
    
540
              
717
          
Add:
                                
No significant items affecting earnings
    
-
              
-
          
                                 
Segment Core Results
    
540
              
717
          
                                 
Midstream, Marketing and Other
                                
Segment Earnings
    
364
              
378
          
Add:
                                
No significant items affecting earnings
    
-
              
-
          
                                 
Segment Core Results
    
364
              
378
          
                                 
Total Segment Core Results
    
7,477
              
8,841
          
                                 
Corporate
                                
Corporate Results --
                                
Non Segment *
    
(3,215
)
            
(3,662
)
        
Add:
                                
Premium on debt extinguishments
    
-
              
163
          
State income tax charge
    
-
              
33
          
Tax effect of pre-tax adjustments
    
-
              
(50
)
        
Discontinued operations, net **
    
9
              
(138
)
        
                                 
Corporate Core Results - Non Segment
    
(3,206
)
            
(3,654
)
        
                                 
TOTAL CORE RESULTS
  
$
4,271
    
$
5.26
    
$
5,187
    
$
6.37
  
                                 
 *  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 October 25, 2012.
     
99.2
  
Full text of speeches given by Cynthia L. Walker and Stephen 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:  October 25, 2012
/s/ ROY PINECI
  
 
Roy Pineci, Vice President, Controller
  
 
and Principal Accounting Officer
  
 
 
 
 
 

EXHIBIT INDEX

(d)
  
Exhibits
     
99.1
  
Press release dated October 25, 2012.
     
99.2
  
Full text of speeches given by Cynthia L. Walker and Stephen Chazen.
     
99.3
  
Investor Relations Supplemental Schedules.
     
99.4
  
Earnings Conference Call Slides.
     
99.5
  
Forward-Looking Statements Disclosure for Earnings Release Presentation Materials.