Occidental: Record High Net Income for First Half 2007

Occidental Petroleum reported net income for the second quarter 2007 was $1.412 billion ($1.68 per diluted share), compared with $860 million ($0.99 per diluted share) for the second quarter 2006. The second quarter 2007 net income includes $419 million after-tax gains ($0.50 per diluted share) from the sale of non-core assets. The second quarter 2006 net income includes a $347 million after-tax loss ($0.40 per diluted share) from the write-off of assets and income from the operations of assets written off and held for sale.

In announcing the results, Dr. Ray R. Irani, Chairman, President and Chief Executive Officer said, "Net income for the first six months of 2007 was at a record high $2.624 billion. We look ahead to the remainder of the year as the giant Dolphin Project, one of the largest energy projects ever undertaken in the Middle East, has become operational. Dolphin is now delivering natural gas from its wells in Qatar's North Field to customers in the United Arab Emirates. This unique project will have significant impact on the region and we expect our 24.5-percent interest in Dolphin to provide a steady contribution to Oxy's financial performance for the next 25 years."

"During the first half of 2007, Occidental has strengthened its asset base by acquiring additional producing properties in the Permian Basin in Texas and by divesting of non-core assets in the Gulf of Mexico, Pakistan, and Russia. The net impact of these transactions, together with the Dolphin Project production ramp-up, should result in Occidental producing at a year-end exit rate in the range of 630,000 to 650,000 barrels of oil equivalent per day," said Dr. Irani.

QUARTERLY RESULTS

Oil and Gas

Oil and gas segment earnings, excluding the results of Pakistan, which was sold, and Horn Mountain, which was exchanged, at the end of June, were $1.682 billion for the second quarter 2007, compared with $1.857 billion for the same period in 2006. The decline in the second quarter 2007 earnings reflected decreases from lower crude oil prices, increased DD&A rates and higher exploration and operating expenses, partially offset by higher production and natural gas prices.

The average price for West Texas Intermediate crude oil in the second quarter 2007 was $65.05 per barrel compared to $70.70 per barrel in the second quarter 2006. Oxy's realized price for worldwide crude oil was $59.11 per barrel for the second quarter 2007, compared with $61.66 per barrel for the second quarter 2006. The average price for NYMEX gas in the second quarter 2007 was $7.56 per MCF, compared with $7.26 per MCF in the second quarter 2006. Domestic realized gas prices increased from $6.23 per MCF in the second quarter 2006 to $7.07 per MCF for the second quarter 2007.

Production

For the second quarter 2007, daily oil and gas production averaged 583,000 barrels of oil equivalent (BOE), compared with 609,000 BOE per day produced in the second quarter 2006. Daily production, excluding Horn Mountain, Pakistan and Russia, was 558,000 BOE for the second quarter 2007, compared with 551,000 BOE for the second quarter 2006.

Chemicals

Chemical segment earnings for the second quarter of 2007 were $158 million, compared with second quarter 2006 segment earnings of $251 million. The second quarter 2007 results reflect lower margins for chloro-vinyl products.

Items Affecting Net Income

The second quarter 2007 net income includes after-tax gains of $419 million, consisting of: a $181 million gain resulting from the sale of 18.6 million shares of the investment in Lyondell common stock, a $116 million gain from the sale of Pakistan assets to BP, a $107 million gain from the swap of Horn Mountain assets with BP and a $15 million gain from the sale of domestic mineral interests.

The second quarter 2006 net income includes a net after-tax loss of $347 million, consisting of: a $415 million loss from the write-off of assets, $45 million income for the operations of assets written off and $23 million income from the Vintage properties held for sale.

In addition to the second quarter items affecting net income, net income for the six months of 2007 includes, net of tax: a $112 million gain for litigation settlements, a $412 million gain resulting from the sale of Oxy's 50-percent investment in the Russian Vanyoganneft joint venture, a $107 million charge for the completion of cash tender offers for various debt issues, and a $30 million provision for a plant closure and related environmental remediation reserve. The six months of 2006 includes an additional $78 million income from operations of assets held for sale.

SIX-MONTHS RESULTS

Net income for the six months of 2007 was $2.624 billion ($3.11 per diluted share), compared with $2.091 billion ($2.42 per diluted share) for the six months of 2006.

Oil and Gas

Oil and gas segment earnings, excluding Pakistan and Horn Mountain results, were $3.690 billion for the six months of 2007, compared with $3.668 billion for the same period and on the same basis in 2006. Oil and gas earnings were $3.143 billion for the six months of 2007, after also excluding gains from the sale of Oxy's investment in the Russian Vanyoganneft joint venture, sale of mineral interests and litigation settlements. The decline in the six months of 2007 reflected $284 million of decreases from lower crude oil and natural gas prices, increased DD&A rates and higher exploration and operating expenses, partially offset by higher crude oil and natural gas production.

The average price for West Texas Intermediate crude oil in the six months of 2007 was $61.61 per barrel compared to $67.09 per barrel in the six months of 2006. Oxy's realized price for worldwide crude oil was $55.34 per barrel for the six months of 2007, compared with $58.53 per barrel for the six months of 2006. The average price for NYMEX gas in the six months of 2007 was $7.37 per MCF, compared with $9.34 per MCF in the six months of 2006. Domestic realized gas prices decreased from $7.25 per MCF in the six months of 2006 to $6.74 per MCF for the same period of 2007.

Production

For the six months of 2007, daily oil and gas production averaged 587,000 BOE, compared with 601,000 BOE per day produced in the six months of 2006. Daily production, excluding Horn Mountain, Pakistan and Russia, was 559,000 BOE for the six months of 2007, compared with 542,000 BOE for the six months of 2006.

Chemicals

Chemical segment earnings for the six months of 2007 were $295 million, compared with six months of 2006 segment earnings of $501 million. The 2007 results reflect lower margins for chloro-vinyl products.

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