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Press release from Business Wire

Occidental Petroleum Announces Second Quarter of 2012 Income

<ul> <li class='bwlistitemmargb'> Q2 2012 net income of $1.3 billion ($1.64 per diluted share) </li> <li class='bwlistitemmargb'> Q2 2012 total daily oil and gas production of 766,000 barrels of oil equivalent, the second consecutive quarter of record production </li> <li class='bwlistitemmargb'> Q2 2012 domestic daily oil and gas production of 462,000 barrels of oil equivalent, a record for the seventh consecutive quarter. </li> </ul>

Thursday, July 26, 2012

Occidental Petroleum Announces Second Quarter of 2012 Income07:30 EDT Thursday, July 26, 2012 LOS ANGELES (Business Wire) -- Occidental Petroleum Corporation (NYSE:OXY) announced net income of $1.3 billion ($1.64 per diluted share) for the second quarter of 2012, compared with the second quarter of 2011 net income of $1.8 billion ($2.23 per diluted share). In announcing the results, Stephen I. Chazen, President and Chief Executive Officer, said, "Our second quarter 2012 total Company production of 766,000 barrels of oil equivalent per day was the second consecutive quarter of record production. Our domestic production was 9 percent higher than the second quarter of 2011 and total production was 7 percent higher. Our domestic production of 462,000 barrels of oil equivalent per day was a record for the seventh consecutive quarter. We increased our daily domestic production by 7,000 barrels from the first quarter of 2012 and by 38,000 barrels from the second quarter of 2011. "Lower product prices impacted our second quarter results, resulting in diluted EPS of $1.64 per share. We generated cash flow from operations of $6.0 billion for the first six months of 2012 and invested $5.1 billion in capital expenditures." Oil and Gas Oil and gas segment earnings were $2.0 billion for the second quarter of 2012, compared with $2.6 billion for the second quarter of 2011. Lower oil and gas prices, higher operating costs and higher DD&A rates in the second quarter of 2012 were partially offset by higher volumes. For the second quarter of 2012, daily oil and gas production volumes averaged 766,000 barrels of oil equivalent (BOE), compared with 715,000 BOE in the second quarter of 2011. The second quarter 2012 production increase resulted from 38,000 BOE per day higher domestic volumes and a 13,000 BOE per day increase in the Middle East/North Africa. Daily sales volumes increased from 705,000 BOE in the second quarter of 2011 to 759,000 BOE in the second quarter of 2012. Oxy's realized price for worldwide crude oil was $99.34 per barrel for the second quarter of 2012, compared with $103.12 per barrel for the second quarter of 2011. The second quarter of 2012 realized oil price represents 106 percent of the average WTI and 91 percent of the average Brent price for the quarter. Worldwide NGL prices were $42.06 per barrel in the second quarter of 2012, compared with $57.67 per barrel in the second quarter of 2011. Domestic gas prices decreased 51 percent from $4.27 per MCF in the second quarter of 2011 to $2.09 per MCF for the second quarter of 2012. Second quarter 2012 realized prices were also lower than first quarter 2012 prices for all our products. On a sequential quarterly basis, price decreases were 8 percent for worldwide crude oil, 20 percent for worldwide NGLs and 26 percent for domestic natural gas. Chemicals Chemical segment earnings for the second quarter of 2012 were $194 million, compared with $253 million in the second quarter of 2011. The year-over-year decrease was the result of lower domestic and export caustic volumes, lower vinyl chloride monomer (VCM) export demand, and lower polyvinyl chloride and VCM export prices, partially offset by lower natural gas and ethylene costs. Midstream, Marketing and Other Midstream segment earnings were $77 million for the second quarter of 2012, compared with $187 million for the second quarter of 2011. The results predominantly reflect lower margins in the marketing and trading businesses and the gas processing businesses, partially offset by higher income in the pipeline businesses. SIX-MONTH RESULTS Year-to-date 2012 core income was $2.9 billion ($3.56 per diluted share), compared with $3.4 billion ($4.19 per diluted share) for the same period in 2011. Net income for the first six months of 2012 was $2.9 billion ($3.55 per diluted share), compared with $3.4 billion ($4.13 per diluted share) for the same period in 2011. Oil and Gas Oil and gas segment earnings were $4.5 billion for the six months of 2012, compared with $5.1 billion for the same period of 2011. The $600 million decrease in the 2012 results reflected lower NGL and natural gas prices, higher operating costs and higher DD&A rates, partially offset by higher oil prices and increased volumes. Oil and gas production volumes for the six months were 760,000 BOE per day for 2012, compared with 723,000 BOE per day for the 2011 period. Year-over-year, our domestic production increased by 11 percent, while total production increased by 5 percent. Higher year-over-year average oil prices and other factors affecting our production-sharing and similar contracts lowered our Middle East/North Africa and Long Beach production by 7,000 BOE per day. The six-month 2012 daily production volume increase resulted from 44,000 BOE higher domestic volumes, partially offset by lower volumes of 2,000 BOE in the Middle East/North Africa and 5,000 BOE in Latin America. Daily sales volumes were 752,000 BOE in the first six months of 2012, compared with 717,000 BOE for 2011. Oxy's realized prices improved for crude oil but declined for natural gas and NGLs on a year-over-year basis. Worldwide crude oil prices were $103.63 per barrel for the six months of 2012, compared with $97.38 per barrel for the six months of 2011. Worldwide NGL prices were $47.52 per barrel for the six months of 2012, compared with $55.38 per barrel in the six months of 2011. Domestic gas prices declined 42 percent, from $4.24 per MCF in the six months of 2011 to $2.46 per MCF in the six months of 2012. Chemicals Chemical segment earnings were $378 million for the six months of 2012, compared with $472 million for the same period in 2011. The 2012 six-month reduction was primarily a result of lower export volumes and prices due to the weakening economic conditions in Europe and Asia, partially offset by lower energy costs. Midstream, Marketing and Other Midstream segment earnings were $208 million for the six months of 2012, compared with $301 million for the same period in 2011. The 2012 results reflect lower results in the marketing and trading business, the gas processing business and the power generation business, partially offset by improved results in the pipeline businesses. 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. Factors that could cause results to differ materially include, but are not limited to: global commodity pricing fluctuations; supply and demand considerations for Occidental's products; general domestic political and regulatory approval conditions; international political conditions; not successfully completing, or any material delay of, any development of new fields, expansion projects, capital expenditures, efficiency-improvement projects, acquisitions or dispositions; potential failure to achieve expected production from existing and future oil and gas development projects; exploration risks such as drilling unsuccessful wells; any general economic recession or slowdown domestically or internationally; higher-than-expected costs; potential liability for remedial actions under existing or future environmental regulations and litigation; potential liability resulting from pending or future litigation; potential disruption or interruption of Occidental's production or manufacturing or damage to facilities due to accidents, chemical releases, labor unrest, weather, natural disasters, political events 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 uncertainty of future 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 report. 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 1, Item 1A "Risk Factors" of the 2011 Form 10-K. Attachment 1                                                     SUMMARY OF SEGMENT NET SALES AND EARNINGS                                           Second Quarter Six Months ($ millions, except per-share amounts)   2012     2011     2012     2011   SEGMENT NET SALES Oil and Gas $4,495 $ 4,591 $9,397 $ 8,958 Chemical 1,172 1,325 2,320 2,490 Midstream, Marketing and Other 262 441 655 853 Eliminations   (161)   (184 )   (336)   (402 )   Net Sales $5,768   $ 6,173   $12,036   $ 11,899     SEGMENT EARNINGS Oil and Gas (a) $2,043 $ 2,624 $4,547 $ 5,092 Chemical 194 253 378 472 Midstream, Marketing and Other   77     187     208     301   2,314 3,064 5,133 5,865   Unallocated Corporate Items Interest expense, net (b) (25) (22 ) (53) (236 ) Income taxes (c) (875) (1,111 ) (2,014) (2,165 ) Other   (82)   (112 )   (174)   (240 )   Income from Continuing Operations1,332 1,819 2,892 3,224 Discontinued operations, net (d)   (4)   (2 )   (5)   142     NET INCOME$1,328   $ 1,817   $2,887   $ 3,366     BASIC EARNINGS PER COMMON SHARE Income from continuing operations $1.64 $ 2.23 $3.56 $ 3.96 Discontinued operations, net   -     -     (0.01)   0.18   $1.64   $ 2.23   $3.55   $ 4.14     DILUTED EARNINGS PER COMMON SHARE Income from continuing operations $1.64 $ 2.23 $3.56 $ 3.96 Discontinued operations, net   -     -     (0.01)   0.17   $1.64   $ 2.23   $3.55   $ 4.13   AVERAGE COMMON SHARES OUTSTANDING BASIC 810.3 812.5 810.4 812.5 DILUTED   811.0     813.3     811.2     813.3     (a) Oil and Gas - The six months of 2011 include pre-tax charges of $35 million related to exploration write-offs in Libya and $29 million related to Colombia net worth tax. Also, included in the six months of 2011 results is a pre-tax gain for sale of an interest in a Colombia pipeline of $22 million.   (b) Unallocated Corporate Items - Interest Expense, net - The six months of 2011 include a pre-tax charge of $163 million related to the premium on debt extinguishment.   (c) Unallocated Corporate Items - Taxes - The six months of 2011 include a net $21 million charge for out-of-period state income taxes.   (d) Discontinued Operations, net - The six months of 2011 include a $144 million after-tax gain from the sale of the Argentine operations.   Attachment 2                                                     SUMMARY OF CAPITAL EXPENDITURES AND DD&A EXPENSE   Second Quarter Six Months ($ millions)   2012     2011     2012     2011   CAPITAL EXPENDITURES$2,713   $ 1,633   $5,125   $ 2,958     DEPRECIATION, DEPLETION ANDAMORTIZATION OF ASSETS$1,087   $ 839   $2,172   $ 1,729             Attachment 3                                                     SUMMARY OF OPERATING STATISTICS - PRODUCTION   Second Quarter Six Months     2012     2011     2012     2011   NET OIL, GAS AND LIQUIDS PRODUCTION PER DAYUnited States Crude Oil (MBBL) California 88 78 87 77 Permian 138 132 139 132 Midcontinent and Other   23     16     20     15   Total 249 226 246 224   NGL (MBBL) California 15 15 15 15 Permian 39 40 39 38 Midcontinent and Other   19     16     19     12   Total 73 71 73 65   Natural Gas (MMCF) California 269 252 268 247 Permian 151 143 153 154 Midcontinent and Other   420     366     416     347   Total 840 761 837 748   Latin America Crude Oil (MBBL) - Colombia 31 30 27 31   Natural Gas (MMCF) - Bolivia 14 16 14 16   Middle East / North Africa Crude Oil (MBBL) Bahrain 4 3 4 3 Dolphin 9 10 9 10 Oman 62 68 63 67 Qatar 74 68 73 72 Other   32     28     37     43   Total 181 177 186 195   NGL (MBBL) Dolphin 9 11 9 10   Natural Gas (MMCF) Bahrain 230 172 224 172 Dolphin 194 203 183 199 Oman   57     49     57     50   Total 481 424 464 421     Barrels of Oil Equivalent (MBOE)   766     715     760     723         Attachment 4                                                     SUMMARY OF OPERATING STATISTICS - SALES   Second Quarter Six Months     2012     2011     2012     2011   NET OIL, GAS AND LIQUIDS SALES PER DAY   United States Crude Oil (MBBL) 249 226 246 224 NGL (MBBL) 73 71 73 65 Natural Gas (MMCF) 835 761 835 748   Latin America Crude Oil (MBBL) - Colombia 31 30 27 31   Natural Gas (MMCF) - Bolivia 14 16 14 16   Middle East / North Africa Crude Oil (MBBL) Bahrain 4 3 4 3 Dolphin 8 10 8 10 Oman 60 66 63 69 Qatar 73 65 71 71 Other   30     23     32     36   Total 175 167 178 189   NGL (MBBL) Dolphin 9 11 9 10   Natural Gas (MMCF) 481 424 464 421     Barrels of Oil Equivalent (MBOE)   759     705     752     717         Attachment 5                                                     SIGNIFICANT TRANSACTIONS AND EVENTS AFFECTING EARNINGS   Occidental's results of operations often include the effects of significant transactions and events affecting earnings that vary widely and unpredictably in nature, timing and amount. Therefore, management uses a measure called "core results," which excludes those items. This non-GAAP measure is not meant to disassociate those items from management's performance, but rather is meant to provide useful information to investors interested in comparing Occidental's earnings performance between periods. Reported earnings are considered representative of management's performance over the long term. Core results is not considered to be an alternative to operating income in accordance with generally accepted accounting principles.   Second Quarter   Diluted Diluted ($ millions, except per-share amounts)   2012   EPS   2011   EPS TOTAL REPORTED EARNINGS$1,328   $1.64   $ 1,817   $ 2.23     Oil and Gas Segment Earnings $2,043 $ 2,624 Add: No significant items affecting earnings   -     -     Segment Core Results   2,043     2,624     Chemicals Segment Earnings 194 253 Add: No significant items affecting earnings   -     -     Segment Core Results   194     253     Midstream, Marketing and Other Segment Earnings 77 187 Add: No significant items affecting earnings   -     -     Segment Core Results   77     187     Total Segment Core Results   2,314     3,064     Corporate Corporate Results -- Non Segment * (986) (1,247 ) Add: Discontinued operations, net **   4     2     Corporate Core Results - Non Segment   (982)   (1,245 )   TOTAL CORE RESULTS$1,332   $1.64   $ 1,819   $ 2.23     * Interest expense, income taxes, G&A expense and other. ** Amounts shown after tax.   Attachment 6                                                     SIGNIFICANT TRANSACTIONS AND EVENTS AFFECTING EARNINGS (continued)   Six Months   Diluted Diluted ($ millions, except per-share amounts)   2012   EPS   2011   EPS TOTAL REPORTED EARNINGS$2,887   $3.55   $ 3,366   $ 4.13     Oil and Gas Segment Earnings $4,547 $ 5,092 Add: Libya exploration write-off - 35 Gain on sale of Colombia pipeline interest - (22 ) Foreign tax   -     29     Segment Core Results   4,547     5,134     Chemicals Segment Earnings 378 472 Add: No significant items affecting earnings   -     -     Segment Core Results   378     472     Midstream, Marketing and Other Segment Earnings 208 301 Add: No significant items affecting earnings   -     -     Segment Core Results   208     301     Total Segment Core Results   5,133     5,907     Corporate Corporate Results -- Non Segment * (2,246) (2,499 ) Add: Premium on debt extinguishments - 163 State income tax charge - 33 Tax effect of pre-tax adjustments - (50 ) Discontinued operations, net **   5     (142 )   Corporate Core Results - Non Segment   (2,241)   (2,495 )   TOTAL CORE RESULTS$2,892   $3.56   $ 3,412   $ 4.19     * Interest expense, income taxes, G&A expense and other ** Amounts shown after tax. Occidental Petroleum CorporationMelissa E. Schoeb (media)melissa_schoeb@oxy.com310-443-6504orChris Stavros (investors)chris_stavros@oxy.com212-603-8184orFor further analysis of Occidental's quarterly performance,please visit the website: www.oxy.com