In announcing the results, Dr. Ray R. Irani, chairman, president and chief executive officer, said, ``Daily production from continuing operations increased to 609,000 barrels of oil equivalent, 93,000 barrels higher than in the second quarter 2005. Higher production and robust crude oil prices were key factors in our financial performance that drove our core earnings 50 percent higher than last year's second quarter results.''
Core earnings for the second quarter 2006 were $1.204 billion ($2.77 per diluted share), compared with $799 million ($1.96 per diluted share) for the same period in 2005. The second quarter 2006 core earnings excludes a net after-tax loss of $347 million in discontinued operations, which includes the impairment charge for Occidental's Block 15 investment in Ecuador and income from Vintage properties held for sale. The second quarter 2005 core income excludes a $619 million tax benefit related to the resolution of tax issues with the IRS and an $89 million after-tax gain from the sale of an investment. See the attached schedule for a reconciliation of net income to core earnings.
Oil and Gas
Oil and gas segment earnings were $1.953 billion for the second quarter 2006, a 56 percent increase from the $1.255 billion segment earnings for the second quarter 2005. The improvement in the second quarter 2006 earnings reflected a $557 million increase from higher worldwide crude oil prices, a $262 million increase from higher production, and lower exploration expense, partially offset by higher operating expenses and increased DD&A rates.
The average price for West Texas Intermediate crude oil in the second quarter 2006 was $70.70 per barrel compared to $53.17 per barrel in the second quarter 2005. Occidental's realized price for worldwide crude oil was $60.67 per barrel for the second quarter 2006, compared with $46.27 per barrel for the second quarter 2005. The average price for NYMEX gas in the second quarter 2006 was $7.26 per MMCF, compared with $6.80 per MMCF in the second quarter 2005. Domestic realized gas prices increased from $6.18 per MMCF in the second quarter 2005 to $6.24 per MMCF for the second quarter 2006.
For the quarter, oil and gas daily production from continuing operations averaged 609,000 barrels of oil equivalent(BOE), which was an 18 percent increase over the 516,000 equivalent barrels per day produced in the second quarter 2005. The increase included Vintage production of 62,000 BOE per day and Libya production of 27,000 BOE per day.
Worldwide daily production from continuing operations for the six months of 2006 averaged 601,000 BOE, compared with 519,000 BOE for the six months of 2005. The increase included five months of Vintage production at 60,000 BOE per day which added 50,000 BOE per day to Occidental's year-to-date production and Libya production of 25,000 BOE per day that came on line in the third quarter of 2005.
Chemical segment earnings were $250 million for the second quarter 2006, compared with $225 million for the second quarter 2005. The improvement in the second quarter 2006 results was due to chlor-alkali volume increases.
For the first six months of 2006, net income was $2.086 billion ($4.83 per diluted share), compared with $2.382 billion ($5.86 per diluted share) for the first six months of 2005.
Core earnings were $2.355 billion ($5.45 per diluted share) for 2006, compared with $1.612 billion ($3.96 per diluted share) for 2005.
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