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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 19, 1999
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
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Item 5. Other Events
------------
Occidental Petroleum Corporation reported on October 19, 1999 net income of
$126 million ($.35 per share) for the third quarter of 1999, compared with net
income of $38 million ($.10 per share) for the third quarter of 1998.
Earnings before special items were $125 million for the third quarter of
1999, compared with earnings before special items of $3 million for the third
quarter of 1998. Sales were $2.1 billion for the third quarter of 1999, compared
with sales of $1.7 billion for the same period in 1998.
OIL AND GAS
-----------
Oil and gas divisional earnings before special items were $278 million for
the third quarter of 1999, compared with $61 million for the third quarter of
1998, primarily as a result of higher crude oil and natural gas prices, lower
exploration costs and lower operating costs resulting from a more focused base
of operations.
Oil and gas third quarter 1999 earnings were 69 percent greater than second
quarter 1999 earnings.
Oil and gas results after special items for the third quarter of 1999 and
1998 were $279 million and $156 million, respectively. The 1999 results include
a charge of $10 million for the recently announced closing of the Bakersfield
office and income of $11 million for a contingent payment on the 1998 sale of
Occidental's interests in the Netherlands. The 1998 results included gains on
asset sales, the write-off of its investment in certain exploration projects,
and a charge for reorganization.
In the Horn Mountain discovery in Mississippi Canyon Block 127, announced
in August by operator Vastar Resources, an exploratory well encountered 285 feet
of net pay. Appraisal work is under way. Occidental has a one-third interest.
CHEMICALS
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Chemical divisional earnings were $40 million for the third quarter of
1999, compared with $62 million for the third quarter of 1998. The decline is
due primarily to higher raw material costs, partially offset by increased sales
price realization.
Chemical third quarter 1999 earnings were 135 percent greater than second
quarter 1999 earnings before special items.
During the third quarter, significant posted price increases were announced
for chlorine, caustic soda and PVC. Due to competitive conditions and contract
provisions, earnings may not reflect the full impact of these increases until
the first quarter of next year.
OTHER
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Unallocated corporate other expenses were $23 million for the third quarter
of 1999, compared to $25 million for the same period in 1998. Distributions paid
on the Trust Preferred Securities issued by a subsidiary trust of Occidental in
the first quarter were $11 million in the third quarter of 1999.
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For the first nine months of 1999, Occidental's net income was $65 million
($.17 per share), compared with net income of $401 million ($1.11 per share) for
the first nine months of 1998. The nine months results before special items were
net income of $61 million for 1999, compared with earnings before special items
of $139 million in 1998. Sales were $5.1 billion for the nine months of 1999,
compared with sales of $4.9 billion for the same period of 1998.
Forward-looking statements and estimates regarding exploration and
production activities, oil, gas and commodity chemical prices and their related
earnings effects, and cost reductions in this report are based on assumptions
concerning market, competitive, regulatory, environmental and other conditions.
Actual results could differ materially as a result of factors discussed in
Occidental's Annual Report on Form 10-K.
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SUMMARY OF DIVISIONAL NET SALES AND EARNINGS
(Millions, except per-share amounts)
<TABLE>
<CAPTION>
Third Quarter Six Months
--------------------- ---------------------
Periods Ended September 30 1999 1998 1999 1998
==================================== ========= ========= ========= =========
<S> <C> <C> <C> <C>
DIVISIONAL NET SALES
Oil and Gas $ 1,265 $ 1,030 $ 2,955 $ 2,509
Chemical 848 631 2,149 2,395
--------- --------- --------- ---------
$ 2,113 $ 1,661 $ 5,104 $ 4,904
==================================== ========= ========= ========= =========
DIVISIONAL EARNINGS
Oil and Gas $ 279 $ 156 $ 507 $ 768
Chemical 40 62 78 280
--------- --------- --------- ---------
319 218 585 1,048
UNALLOCATED CORPORATE ITEMS
Interest expense, net (118) (106) (357) (336)
Income taxes (a) (41) (49) (65) (291)
Trust preferred distributions (11) -- (30) --
Other (23) (25) (52) (58)
--------- --------- --------- ---------
INCOME FROM CONTINUING OPERATIONS 126 38 81 363
Discontinued operations, net -- -- -- 38
Extraordinary loss, net (b) -- -- (3) --
Cumulative effect of changes in
accounting principles, net (c) -- -- (13) --
--------- --------- --------- ---------
NET INCOME 126 38 65 401
Preferred dividends -- (4) (7) (13)
--------- --------- --------- ---------
EARNINGS APPLICABLE TO COMMON
STOCK $ 126 $ 34 $ 58 $ 388
========= ========= ========= =========
EARNINGS PER COMMON SHARE
BASIC
Income from continuing
operations $ .35 $ .10 $ .22 $ 1.00
Discontinued operations, net -- -- -- .11
Extraordinary loss, net (b) -- -- (.01) --
Cumulative effect of changes in
accounting principles, net (c) -- -- (.04) --
--------- --------- --------- ---------
BASIC EARNINGS PER COMMON
SHARE (d) $ .35 $ .10 $ .17 $ 1.11
========= ========= ========= =========
DILUTED
Income from continuing
operations $ .35 $ .10 $ .22 $ .99
Discontinued operations, net -- -- -- .10
Extraordinary loss, net (b) -- -- (.01) --
Cumulative effect of changes in
accounting principles, net (c) -- -- (.04) --
--------- --------- --------- ---------
DILUTED EARNINGS PER COMMON
SHARE $ .35 $ .10 $ .17 $ 1.09
========= ========= ========= =========
AVERAGE COMMON SHARES OUTSTANDING 357.6 350.0 351.3 351.2
==================================== ========= ========= ========= =========
</TABLE>
See footnotes on following page.
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SUMMARY OF OPERATING STATISTICS
<TABLE>
<CAPTION>
Third Quarter Nine Months
--------------------- ---------------------
Periods Ended September 30 1999 1998 1999 1998
==================================== ========= ========= ========= =========
<S> <C> <C> <C> <C>
NET OIL, GAS AND LIQUIDS
PRODUCTION PER DAY
United States
Crude oil and condensate
(thousands of barrels) 62 69 64 75
Natural gas liquids
(thousands of barrels) 9 9 9 8
Natural gas
(millions of cubic feet) 673 603 664 603
Other Western Hemisphere
Crude oil and condensate
(thousands of barrels) 95 79 103 84
Eastern Hemisphere
Crude oil and condensate
(thousands of barrels) 127 164 141 146
Natural gas
(millions of cubic feet) 51 54 53 105
CAPITAL EXPENDITURES (millions) $ 120 $ 254 $ 383 $ 840
========= ========= ========= =========
DEPRECIATION, DEPLETION AND
AMORTIZATION OF ASSETS (millions) $ 198 $ 202 $ 598 $ 653
==================================== ========= ========= ========= =========
</TABLE>
(a) Includes an offset for charges and credits in lieu of U.S. federal income
taxes allocated to the divisions. Divisional earnings have been impacted
from allocations of a $1 million charge and $4 million credit at oil and
gas and chemical, respectively, in the third quarter of 1999 and by $2
million and $7 million credits at oil and gas and chemical, respectively,
in the third quarter of 1998.
(b) The nine months of 1999 reflects the partial early extinguishment of
11-1/8% senior debentures at a redemption price of 105.563% of the
principal amount. The impact of the early extinguishment is a $3 million
charge which is net of a $1 million income tax benefit.
(c) The nine months of 1999 reflects the adoption of SOP 98-5 "Reporting on the
Costs of Start-Up Activities", which requires expensing of start-up costs
as incurred and those costs that are currently capitalized at date of
adoption. The impact of SOP 98-5 is a $15 million charge which is net of an
$8 million income tax benefit. Also reflects the adoption of EITF 98-10
"Accounting for Contracts Involved in Energy Trading and Risk Management
Activities", which requires energy trading contracts to be marked to
market. The impact of EITF 98-10 is a $2 million credit which is net of a
$1 million income tax charge.
(d) The 1999 earnings per share calculations include the effect of preferred
stock being converted into common stock as a result of the previously
announced September 16, 1999 conversion.
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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 20, 1999 S. P. Dominick, Jr.
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S. P. Dominick, Jr., Vice President and Controller
(Chief Accounting and Duly Authorized Officer)
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