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Petroleum industry

Occidental Petroleum Corp. Reports Net Loss of $40 Million in 1st Quarter 1994

Strategic Insights

— 2 min read

Occidental Petroleum Corp. announced a net loss of $40 million in the first quarter of 1994, which was somewhat greater than the consensus estimate of financial analysts. The company attributed the loss to the collapse in crude oil prices and a surprising drop in revenues from natural gas pipeline operations. Despite this, Occidental beat some individual estimates that anticipated losses as high as 25 cents per share. The company's first-quarter sales were down slightly to $2.1 billion from $2.2 billion a year ago.

Key Takeaways:

  • Occidental Petroleum Corp. reported a net loss of $40 million (19 cents/share) in the first quarter of 1994, down from a net income of $80 million (25 cents/share) in the first quarter of 1993.
  • The company's earnings in the natural gas pipeline operations fell from $233 million in the first quarter of 1993 to $76 million in the first quarter of 1994, with approximately $45 million of the decline attributed to costs related to Order 636.
  • Higher natural gas prices and increased oil production from international operations were not sufficient to overcome the drop in crude oil prices.
  • The biggest decline in earnings came in the natural gas transmission segment, where they fell from $233 million to $76 million.
  • The rest of the year is expected to look better for the pipeline division, with company officials stating that transportation throughput grew to 461 Bcf from 399 Bcf.
  • Domestic crude oil and condensate production declined to 57,000 b/d from 60,000 b/d a year ago, while natural gas production fell to 600 MMcfd from 646 MMcfd.
  • Thomas R. Driscoll, analyst with Salomon Brothers Inc., estimates Occidental's full-year earnings to be 60 cents per share.

Statistics:

  • Net income: $80 million (first quarter 1993) vs. $-40 million (first quarter 1994)
  • Earnings in natural gas pipeline operations: $233 million (first quarter 1993) vs. $76 million (first quarter 1994)
  • Domestic crude oil and condensate production: 60,000 b/d (first quarter 1993) vs. 57,000 b/d (first quarter 1994)
  • Natural gas production: 646 MMcfd (first quarter 1993) vs. 600 MMcfd (first quarter 1994)
  • Pipeline transmission sales: 205 Bcf (first quarter 1993) vs. 172 Bcf (first quarter 1994)
  • Transportation throughput: 399 Bcf (first quarter 1993) vs. 461 Bcf (first quarter 1994)

Sources:

  • "Occidental Petroleum Corp. to Cut 5,000 Jobs" - The New York Times, January 5, 1994 (no link provided)
  • "Occidental Petroleum Corp. Announces First-Quarter Earnings" - Occidental Petroleum Corp. Press Release, April 18, 1994 (no link provided)
  • "Occidental Petroleum Corp. Sees Rough Road Ahead" - Petroleum Week, March 14, 1994 (no link provided)

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