Occidental Petroleum Announces 2nd Quarter and Six Months 2014 Financial Results

Occidental Petroleum Corporation (NYSE:OXY) announced net income for the second quarter of 2014 of $1.4 billion ($1.82 per diluted share), compared with $1.3 billion ($1.64 per diluted share) for the second quarter of 2013. Core income was $1.4 billion ($1.79 per diluted share) for the second quarter of 2014, compared with $1.3 billion ($1.58 per diluted share) for the second quarter of 2013.

In announcing the results, Stephen I. Chazen, President and Chief Executive Officer, said, "For the fourth consecutive quarter, we have delivered strong domestic oil production growth, with increases coming from both our Permian and California assets. Domestic oil production was 278,000 barrels per day for the second quarter of 2014. Excluding the effect from the Hugoton sale, domestic oil production increased 21,000 barrels per day from the second quarter of 2013 with our Permian Resources business growing its oil production by over 21 percent. For the first half of 2014, our cash flow from operations was $5.6 billion. Capital expenditures, net of contributions from partners, were $4.7 billion and we purchased approximately 16.6 million shares of our stock.”

QUARTERLY RESULTS

Oil and Gas

Domestic core earnings were $1.1 billion pre-tax or $679 million after-tax for the second quarter of 2014, compared to $1.0 billion pre-tax or $635 million after-tax for the second quarter of 2013. The current quarter domestic results reflected higher realized prices across all products and higher oil volumes, partially offset by higher operating costs and higher DD&A. The increase in operating costs was due to increased maintenance activities and higher costs for CO₂, steam and power, which are influenced by crude oil and natural gas prices. International core earnings were $1.1 billion pre-tax or $576 million after-tax for the second quarter of 2014, compared to $1.2 billion pre-tax or $641 million after-tax for the second quarter of 2013. The current quarter international results reflected lower oil volumes, partially offset by higher oil prices and lower operating costs.

For the second quarter of 2014, total company average daily oil and gas production volumes, excluding the Hugoton production, averaged 736,000 barrels of oil equivalent (BOE), compared with 753,000 BOE in the second quarter of 2013. The sale of Hugoton assets closed on April 30, 2014. Hugoton production averaged 6,000 BOE per day and 19,000 BOE per day for the second quarter of 2014 and 2013, respectively. Domestic average daily production increased by 13,000 BOE to 464,000 BOE in the second quarter of 2014 compared to 451,000 BOE in the second quarter of 2013. Domestic average oil production increased by 21,000 barrels per day, primarily from California and Permian Resources. International average daily production decreased to 272,000 BOE in the second quarter of 2014 from 302,000 BOE in second quarter of 2013. The decrease primarily resulted from insurgent activities in Colombia, continued field and port strikes in Libya and lower cost recovery barrels in Iraq. Total company average daily sales volumes decreased to 735,000 BOE in the second quarter of 2014 from 745,000 BOE in the second quarter of 2013, mainly due to the timing of liftings.

Worldwide realized crude oil prices increased by 3 percent to $100.38 per barrel for the second quarter of 2014 compared with $97.91 per barrel for the second quarter of 2013 and improved slightly compared to the first quarter of 2014. Worldwide NGL prices increased by 10 percent to $42.82 per barrel in the second quarter of 2014, compared with $38.78 per barrel in the second quarter of 2013, but decreased by 7 percent compared with $46.05 in the first quarter of 2014. Domestic natural gas prices increased 12 percent in the second quarter of 2014 to $4.28 per MCF, compared with $3.82 in the second quarter of 2013, and fell by 6 percent compared with the first quarter of 2014.

Chemical

Chemical core earnings for the second quarter of 2014 were $133 million, compared to $144 million in the second quarter of 2013, excluding the $131 million gain on the sale of our investment in Carbocloro. The decrease in second quarter of 2014 earnings reflected lower caustic soda prices driven by new chlor-alkali capacity in the industry and higher natural gas costs, partially offset by higher vinyl margins resulting from improvement in the U.S. construction markets.

Midstream, Marketing and Other

Midstream core earnings were $219 million for the second quarter of 2014, compared with $48 million for the second quarter of 2013. The increase in earnings reflected improved marketing and trading performance.

Non-Core Items

The second quarter of 2014 included a net non-core income benefit of $27 million, which included a $341 million after-tax gain from the sale of Hugoton oil and gas assets, a $300 million after-tax charge for the impairment of certain non-producing domestic oil and gas acreage and on-going costs related to the California spin-off. The non-core items in the second quarter of 2013 provided a net income benefit of $46 million.

SIX-MONTH RESULTS

Net income for the first six months of 2014 was $2.8 billion ($3.58 per diluted share), compared with $2.7 billion ($3.32 per diluted share) for the same period in 2013. Core income for the first six months of 2014 was $2.8 billion ($3.54 per diluted share), compared with $2.6 billion ($3.27 per diluted share) for the same period in 2013.

Oil and Gas

Domestic core earnings were $2.1 billion pre-tax or $1.4 billion after-tax for the first six months of 2014, compared to $1.9 billion pre-tax or $1.2 billion after-tax for the first six months of 2013. The increase in domestic core earnings reflected higher realized prices across all products and higher oil volumes, partially offset by higher costs for CO₂, steam and power and higher DD&A. International core earnings were $2.2 billion pre-tax or $1.1 billion after-tax for the first six months of 2014, compared to $2.2 billion pre-tax or $1.2 billion after-tax for the first six months of 2013. International core earnings reflected lower Middle East/North Africa volumes, partially offset by lower operating costs.

Oil and gas production volumes, excluding Hugoton production, for the first six months of 2014 averaged 731,000 BOE per day, compared with 749,000 BOE per day for the first six months of 2013. Domestic daily production averaged 460,000 BOE and 455,000 BOE for the first six months of 2014 and 2013, respectively. Average domestic oil production increased by 15,000 barrels per day in the first six months of 2014, compared to the first six months of 2013. Average international daily production volumes decreased to 271,000 BOE for the first six months of 2014 from 294,000 BOE for the first six months of 2013. The decrease was primarily due to insurgent activities in Colombia, continued field and port strikes in Libya and lower cost recovery barrels in Iraq. Total company daily sales volumes averaged 726,000 BOE in the first six months of 2014, compared with 736,000 BOE for 2013. Sales volumes were lower than production volumes due to the timing of liftings in Middle East/North Africa.

Worldwide realized crude oil prices rose by 2 percent to $99.70 per barrel for the first six months of 2014, compared with $97.99 per barrel for the first six months of 2013. Worldwide NGL prices increased by 12 percent to $44.43 per barrel for the first six months of 2014, compared with $39.52 per barrel for the first six months of 2013. Domestic gas prices increased by 29 percent to $4.43 per MCF for the first six months of 2014, compared to $3.44 per MCF for the first six months of 2013.

Chemical

Chemical core earnings were $269 million for the first six months of 2014, compared with $303 million for the same period of 2013, excluding the $131 million gain on the sale of our investment in Carbocloro. The lower earnings reflected lower caustic soda prices, driven by new chlor-alkali capacity in the industry and higher natural gas costs, partially offset by higher vinyl margins and volume improvements across most products.

Midstream, Marketing and Other

Midstream core earnings were $389 million for the first six months of 2014, compared with $263 million for the same period of 2013. The increase in earnings reflected improved marketing and trading performance.

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. Occidental is one of the largest U.S. oil and gas companies, based on equity market capitalization. Occidental’s midstream and marketing segment gathers, processes, transports, stores, purchases and markets hydrocarbons and other commodities in support of Occidental’s businesses. Occidental’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

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. Actual results may differ from anticipated results, sometimes materially, and reported results should not be considered an indication of future performance. Factors that could cause results to differ include, but are not limited to: global commodity pricing fluctuations; supply and demand considerations for Occidental's products; higher-than-expected costs; the regulatory approval environment; reorganization or restructuring of Occidental's operations, including any delay of, or other negative developments affecting, the spin-off of California Resources Corporation; not successfully completing, or any material delay of, field developments, expansion projects, capital expenditures, efficiency projects, acquisitions or dispositions; lower-than-expected production from development projects or acquisitions; exploration risks; general economic slowdowns domestically or internationally; political conditions and events; liability under environmental regulations including remedial actions; litigation; disruption or interruption of production or manufacturing or facility damage due to accidents, chemical releases, labor unrest, weather, natural disasters, cyber attacks 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 prospective nature of 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 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. Material risks that may affect Occidental's results of operations and financial position appear in Part I, Item 1A “Risk Factors” of the 2013 Form 10-K. Occidental posts or provides links to important information on its website at www.oxy.com.

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