Occidental Petroleum Corp. Reports Strong Q1 1994 Earnings, Exceeding Analysts' Expectations

Occidental Petroleum Corp.'s first-quarter earnings more than doubled, reaching $178 million on revenues of $2.7 billion, a significant improvement from the $40 million loss recorded in the same period last year. The company's Chairman, Ray R. Irani, attributed the success to increased cash flow from operations, which will enable the company to accelerate its debt-reduction program. The earnings surpassed the expectations of most analysts, including Dean Witter Reynolds Inc.'s Eugene Nowak, who projected earnings of 40 cents per share.

Key Takeaways:

• Occidental Petroleum Corp. reported a net income of $178 million on revenues of $2.7 billion for the first quarter of 1994, a significant improvement from the $40 million loss recorded in the same period last year.
• The company's Chairman, Ray R. Irani, stated that the higher cash flow from operations will enable the company to accelerate its debt-reduction program.
• The company's chemicals segment posted earnings of $307 million, up from $22 million a year ago, driven by higher petrochemicals prices.
• Oil and gas earnings increased 15-fold to $60 million, driven by higher worldwide oil and gas production and stronger crude prices.
• Oil production rose 17% to 273,000 barrels per day, while gas production increased 14% to 752 million cubic feet per day.
• The company's natural gas transmission earnings totaled $75 million, a gain of $11 million.
• Occidental has announced plans to redeem $200 million of 10 3/4% debt in May 1995, $955 million of 11 3/4% debt in March 1996, and $300 million of 9 5/8% debt in July 1995.
• The company's debt stands at $5.8 billion.
• Occidental's capital spending decreased to $160 million in the first quarter, down from $336 million in the same period last year.
• The company's sale of its high-density polyethylene business to Lyondell Petrochemical Co. for approximately $400 million, as well as divestments in Canada and Pakistan, are expected to contribute to the elimination of $1 billion to $2 billion of debt over the next two years.

Statistics:

• Net income: $178 million
• Revenues: $2.7 billion
• Loss (previous year): $40 million
• Chemcials segment earnings: $307 million
• Oil and gas earnings: $60 million
• Oil production increase: 17%
• Gas production increase: 14%
• Natural gas transmission earnings: $75 million
• Debt: $5.8 billion
• Capital spending: $160 million
• Debt reduction target: $1 billion to $2 billion over the next two years

Sources:

• Occidental Petroleum Corp. news release
• Dean Witter Reynolds Inc. analyst Eugene Nowak
• Lyondell Petrochemical Co. press release