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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) JULY 19, 2000
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
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Second Quarter Earnings
-----------------------
Occidental Petroleum Corporation announced on July 19, 2000 that its second
quarter 2000 net income of $564 million ($1.53 per share) marks the best quarter
in the company's history.
These results included an after-tax gain of approximately $300 million
related to the previously announced sale of Occidental's 29.2 percent interest
in Canadian Occidental Petroleum Ltd. (CanOxy) and an after-tax charge of
approximately $80 million for the previously announced decision to exit several
of Occidental's chemical intermediate businesses.
The 2000 second quarter net income compares to $9 million ($.02 per share)
of net income reported for the second quarter of 1999. Earnings before special
items were $343 million for the second quarter of 2000, compared with earnings
before special items of $4 million for the second quarter of 1999. Sales of $3.1
billion for the second quarter of 2000 were nearly double the $1.6 billion
reported for the same period in 1999.
Oil and Gas
-----------
Oil and gas divisional earnings were $557 million for the second quarter of
2000, compared with $166 million for the second quarter of 1999. The significant
improvement in earnings is primarily the result of higher worldwide crude oil
and natural gas prices and higher production volumes. The increase in domestic
production volumes, resulting from the completed acquisitions of Altura Energy
Ltd. and ARCO Long Beach Inc., (THUMS) more than offset the lower international
production resulting from the sale of our producing assets in Peru.
Chemicals
---------
Chemical divisional results before special items were $154 million for the
second quarter of 2000, compared with $21 million for the second quarter of
1999. The improvement in earnings is due to higher margins and sales volumes for
Polyvinyl Chloride resins, Ethylene Dichloride, Vinyl Chloride Monomer and
Chlorine. Partially offsetting these increases were higher energy and feedstock
costs.
Chemical results after special items for the second quarter of 2000 were
$34 million compared with $33 million for the second quarter of 1999. The 2000
results include a $120 million pre-tax charge resulting from the decision to
exit several of its chemical intermediate businesses. The 1999 results included
a $12 million gain from the sale of a plant by an equity affiliate.
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Other
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The second quarter of 2000 included a $493 million pre-tax gain related to
the sale of Occidental's investment in CanOxy.
For the first six months of 2000, Occidental's net income was $835 million
($2.27 per share), compared with a net loss of $61 million ($.20 per share) for
the first six months of 1999. The six months results before special items were
net income of $607 million for 2000, compared with a loss before special items
of $64 million for 1999. Sales were $5.6 billion for the six months of 2000,
compared with $3.0 billion for the same period of 1999.
2
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SUMMARY OF DIVISIONAL NET SALES AND EARNINGS
(Millions, except per-share amounts)
<TABLE>
Second Quarter Six Months
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Periods Ended June 30 2000 1999 2000 1999
==================================== ========= ========= ========= =========
<S> <C> <C> <C> <C>
DIVISIONAL NET SALES
Oil and gas $ 2,122 $ 944 $ 3,649 $ 1,690
Chemical 1,006 703 1,987 1,301
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Net sales $ 3,128 $ 1,647 $ 5,636 $ 2,991
==================================== ========= ========= ========= =========
DIVISIONAL EARNINGS
Oil and gas $ 557 $ 166 $ 951 $ 231
Chemical 34 33 177 45
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591 199 1,128 276
UNALLOCATED CORPORATE ITEMS
Interest expense, net (a) (104) (123) (203) (239)
Income taxes (b) (349) (27) (499) (24)
Permian preferred distributions (30) -- (30) --
Trust preferred distributions
& other (16) (15) (33) (29)
Other 472 (22) 472 (29)
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INCOME (LOSS) BEFORE EXTRAORDINARY
ITEMS AND EFFECT OF CHANGES IN
ACCOUNTING PRINCIPLES 564 12 835 (45)
Extraordinary loss, net -- (3) -- (3)
Cumulative effect of changes in
accounting principles, net -- -- -- (13)
--------- --------- --------- ---------
NET INCOME (LOSS) 564 9 835 (61)
Effect of repurchase of Trust
Preferred Securities -- -- 1 --
Preferred dividends -- (3) -- (7)
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EARNINGS (LOSS) APPLICABLE
TO COMMON STOCK $ 564 $ 6 $ 836 $ (68)
========= ========= ========= =========
BASIC AND DILUTED EARNINGS (LOSS)
PER COMMON SHARE
Income (loss) before
extraordinary items and
effect of changes in
accounting principles $ 1.53 $ .03 $ 2.27 $ (.15)
Extraordinary loss, net -- (.01) -- (.01)
Cumulative effect of changes in
accounting principles, net -- -- -- (.04)
--------- --------- --------- ---------
$ 1.53 $ .02 $ 2.27 $ (.20)
========= ========= ========= =========
AVERAGE BASIC COMMON SHARES
OUTSTANDING 368.8 348.4 368.5 348.1
==================================== ========= ========= ========= =========
</TABLE>
(a) The year 2000 includes $30 million interest income on notes receivable from
Altura partners.
(b) Includes an offset for credits in lieu of U.S. federal income taxes
allocated to the divisions. Divisional earnings have benefited from credits
allocated by $2 million and $4 million at Oil and Gas and Chemical,
respectively, in the second quarter of 2000 and by $31 million and $4
million at Oil and Gas and Chemical, respectively, in the second quarter of
1999.
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SUMMARY OF OPERATING STATISTICS
<TABLE>
Second Quarter Six Months
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Periods Ended June 30 2000 1999 2000 1999
==================================== ========= ========= ========= =========
<S> <C> <C> <C> <C>
NET OIL, GAS AND LIQUIDS
PRODUCTION PER DAY
United States
Crude oil and condensate
(thousands of barrels) 167 62 115 64
Natural gas liquids
(thousands of barrels) 25 9 16 9
Natural gas
(millions of cubic feet) 715 670 669 659
Other Western Hemisphere
Crude oil and condensate
(thousands of barrels) 62 110 57 106
Eastern Hemisphere
Crude oil and condensate
(thousands of barrels) 130 151 124 148
Natural gas
(millions of cubic feet) 51 54 51 53
Barrels of Oil Equivalent (MBOE) 512 453 432 446
CAPITAL EXPENDITURES (millions) $ 210 $ 131 $ 333 $ 263
========= ========= ========= =========
DEPRECIATION, DEPLETION AND
AMORTIZATION OF ASSETS (millions) $ 233 $ 203 $ 419 $ 400
==================================== ========= ========= ========= =========
</TABLE>
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Item 5. Other Events (Continued)
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Recent Development - Monetization of Gulf of Mexico Assets
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Occidental Petroleum Corporation announced on July 20, 2000, that it has
agreed to two transactions with Apache Corporation involving Occidental's
interests in proved reserves of about 50 million barrels of oil equivalent in
the Continental Shelf of the Gulf of Mexico. These transactions will generate
proceeds of $341 million this year and and are expected to generate additional
proceeds of $11 million per year for the next four years -- for a total
consideration of $385 million.
In one transaction, Occidental agreed to sell its share of gas production
of a wholly owned subsidiary holding its Gulf of Mexico shelf assets for
approximately $280 million. In a separate transaction, Occidental also agreed to
sell an interest in that subsidiary for approximately $61 million, with an
option to purchase additional interests for $44 million.
As a result of these two transactions, which are expected to close August
15, Occidental will record a pretax gain of approximately $65 million.
Forward-Looking Statements
This report contains forward-looking statements which reflect management's
expectations and are based upon data available at the time the statements were
made. Actual results are subject to future events and uncertainties, which could
materially impact performance.
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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: July 20, 2000 S. P. Dominick, Jr.
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S. P. Dominick, Jr., Vice President and Controller
(Chief Accounting and Duly Authorized Officer)
