Occidental Exits 2008 with Highest Full-Year Earnings in Company's History

Occidental has announced net income of $443 million ($0.55 per diluted share) for the fourth quarter of 2008, compared with $1.452 billion ($1.74 per diluted share) for the fourth quarter of 2007.

Core results for the fourth quarter of 2008 were $957 million ($1.18 per diluted share), compared with $1.464 billion ($1.76 per diluted share) for the fourth quarter of 2007. Core results for 2008 excluded after-tax charges of $514 million ($0.63 per diluted share).

Net income for the twelve months of 2008 was $6.857 billion ($8.35 per diluted share), compared with $5.400 billion ($6.44 per diluted share) for the twelve months of 2007. Core results were $7.348 billion ($8.95 per diluted share) for the twelve months of 2008, compared with $4.405 billion ($5.25 per diluted share) for 2007.

In announcing the results, Dr. Ray R. Irani, Chairman and Chief Executive Officer, said, "In spite of a difficult fourth quarter, 2008 was a very strong year for Occidental with full year earnings being the highest in Oxy's history. In addition, our production grew by 5.4 percent from 2007 reaching 601,000 BOE per day.

"We are investing for the future growth of the company, despite volatile commodity prices, while maintaining a discipline of investing only in projects that we believe give us good return on capital employed. In the fourth quarter, we completed the acquisition of the remainder of Plains Exploration's interests in the Permian and Piceance Basins. We announced the signing of a preliminary agreement to develop the Jarn Yaphour and Ramhan oil and gas fields in the Emirate of Abu Dhabi and the signing of an exploration and production sharing agreement to develop existing gas fields in Northern Oman. Additionally, earlier this month we were selected from among several international companies to develop oil and gas reserves in the Kingdom of Bahrain.

"The current oil and gas industry cost structure is higher than what the current product prices can support. In order to protect our returns, we are announcing a 2009 capital program of $3.5 billion. We believe that with this level of capital, we will achieve our targeted returns in the current price environment as well as grow our production volumes in 2009, 2010 and beyond."

QUARTERLY RESULTS

Oil and Gas Oil and gas segment earnings were $339 million for the fourth quarter of 2008, compared with $2.461 billion for the same period in 2007. The fourth quarter of 2008 core results were $996 million after excluding pre-tax losses of $599 million relating to the impairment of assets and $58 million for rig termination costs. The $1.465 billion decrease in the fourth quarter of 2008 core results was due to lower crude oil and natural gas prices, higher operating expenses, DD&A rates and exploration expense.

For the fourth quarter of 2008, daily oil and gas sales volumes averaged 620,000 barrels of oil equivalent (BOE), compared with 590,000 BOE per day in the fourth quarter of 2007. The increase includes 22,000 BOE per day from the Dolphin Project, 14,000 BOE per day domestically and 6,000 BOE per day from Oman, offset by 12,000 BOE per day lower production in Libya as a result of the new contract terms.

Oxy's realized price for worldwide crude oil was $53.52 per barrel for the fourth quarter of 2008, compared with $80.30 per barrel for the fourth quarter of 2007. Domestic realized gas prices dropped from $6.77 per MCF in the fourth quarter of 2007 to $4.67 per MCF for the fourth quarter of 2008.

TWELVE-MONTH RESULTS
Oil and Gas

Oil and gas segment earnings were $10.651 billion for the twelve months of 2008, compared with $7.957 billion for the same period of 2007. Oil and gas core results were $11.308 billion for the twelve months of 2008 after excluding the fourth quarter impairments and rig termination costs described above, compared to 2007 core results of $7.369 billion. The $3.939 billion increase in the 2008 core results reflected $3.980 billion from higher crude oil and natural gas prices and $639 million from increased oil and gas production, offset by higher operating expenses and increased DD&A rates.

Daily oil and gas sales volumes for the year were 601,000 BOE per day for 2008, compared with 570,000 BOE per day for the same 2007 period. The 5.4 percent increase was largely the result of 39,000 BOE per day from the Dolphin project, offset by a reduction of 7,000 BOE per day in Libya, as a result of the new contract.

Oxy's realized price for worldwide crude oil was $88.26 per barrel for the twelve months of 2008, compared with $64.77 per barrel for the twelve months of 2007. Domestic realized gas prices increased from $6.53 per MCF in the twelve months of 2007 to $8.03 per MCF in the twelve months of 2008.
 

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