In announcing the results, Dr. Ray R. Irani, chairman and chief executive officer, said, ``Robust energy prices and record oil and gas production combined to generate the highest reported earnings for any quarter or six-month period in the company's history. Oil and gas production averaged 574,000 barrels of oil equivalent per day in the second quarter and 571,000 barrels per day for the first six months, 6 percent higher than the comparable periods in 2003. We also have used our strong cash flow from operations to pay off $360 million in other obligations during the quarter, thereby bringing the total reduction in debt-like obligations since the beginning of the year to more than one billion dollars.''
Oil and Gas
Oil and gas segment and core earnings were $814 million for the second quarter 2004, compared with $637 million for the second quarter 2003. The improvement in the second quarter 2004 earnings reflected approximately $294 million from higher worldwide crude oil and gas prices and increased sales volumes; partially offset by higher operating expenses and increased DD&A rates. The second quarter 2003 included $14 million in after-tax gains on asset sales.
Chemical segment and core earnings were $85 million for the second quarter 2004, compared with $43 million for the second quarter 2003. The improvement in the second quarter 2004 results was primarily due to higher sales volumes for all major products and higher sales prices for vinyl chloride monomer, polyvinyl chloride, ethylene dichloride and chlorine; partially offset by lower caustic soda prices and higher ethylene and energy costs. The second quarter 2003 included a $9 million asset-writedown charge and a $15 million severance charge.
For the first six months of 2004, net income was $1.07 billion ($2.72 per share), compared with $699 million ($1.84 per share) for the first six months of 2003.
Core earnings were $1.06 billion for 2004 compared with $807 million for 2003. See the attached schedule for a reconciliation of net income to core earnings.
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