Occidental Petroleum Announces 4th Quarter and Twelve Months of 2013 Net Income

Net income for the twelve months of 2013 was $5.9 billion ($7.32 per diluted share), compared with $4.6 billion ($5.67 per diluted share) for the same period in 2012. After excluding the non-core items, 2013 core income was $5.6 billion ($6.95 per diluted share) for the full year of 2013, compared with $5.8 billion ($7.09 per diluted share) for the same period in 2012.

In announcing the results, Stephen I. Chazen, President and Chief Executive Officer, said, "We had strong results in our domestic program in 2013. We grew our domestic liquids production by 15,000 barrels per day, or 5 percent, to 343,000 barrels per day on a year-over-year basis. Our focused drilling program and emphasis on efficiencies yielded a 24-percent reduction in our drilling costs relative to 2012 and a 17-percent improvement in operating costs, resulting in domestic oil and gas operating expenses of $14.43 per BOE for the year. Our domestic proved liquids reserve replacement was 228 percent and we replaced all of our domestic gas production with our drilling program.

"Based on our preliminary reserve estimates, we added about 470 million barrels of reserves, resulting in a reserve replacement ratio of 169 percent for the total company. Of the total reserve additions, 156 percent, or about 433 million barrels, resulted from our development program.

"Our focus on capital and operating efficiencies helped us generate $12.9 billion of cash flow from operations during the twelve months of 2013. We spent $8.8 billion of our cash flow on capital expenditures, repurchased almost 11 million shares and reduced our debt by 9 percent. Our year-end cash balance was $3.4 billion compared to the 2012 year-end level of $1.6 billion."

TWELVE-MONTH RESULTS

Oil and Gas

Oil and gas core earnings were $8.5 billion for the twelve months of 2013, compared with $8.8 billion for the same period of 2012. The 2013 results reflect higher domestic earnings resulting from improved oil and gas realized prices and higher liquids volumes, lower operating costs partially offset by higher DD&A rates and lower NGL prices. International results were lower on a year-over-year basis, due to lower liquids sales volumes, lower oil prices and higher operating costs and DD&A rates in the Middle East/North Africa.

Operating costs dropped significantly in 2013 compared with 2012. Domestic operating costs for the twelve months of 2013 were $14.43 per barrel, compared to $17.43 for the full year of 2012. For the entire company, operating costs for the twelve months were $13.76 per barrel, compared to $14.99 for the full year of 2012.

Oil and gas production volumes for the twelve months were 763,000 barrels of oil equivalent per day (BOE) per day for 2013, compared with 766,000 BOE per day for the 2012 period. Year-over-year, Oxy’s domestic production increased by 9,000 BOE per day. International production was 12,000 BOE per day lower, mainly due to lower cost recovery barrels in the Dolphin and Oman operations and field and port strikes in Libya. Daily sales volumes were 762,000 BOE in the twelve months of 2013, compared with 764,000 BOE for 2012.

Oxy's worldwide realized prices were flat for crude oil and lower for NGLs but increased for both domestic crude oil and natural gas on a year-over-year basis. Worldwide realized crude oil prices were $99.84 per barrel for the twelve months of 2013, compared with $99.87 per barrel for the twelve months of 2012. Worldwide NGL prices were $41.03 per barrel for the twelve months of 2013, a reduction of 9 percent from $45.18 per barrel for the twelve months of 2012. Domestic crude oil prices increased from $93.72 per barrel in the twelve months of 2012 to $96.42 per barrel in the twelve months of 2013. Domestic gas prices increased by about 29 percent from $2.62 per MCF in the twelve months of 2012 to $3.37 per MCF in the twelve months of 2013.

Chemical

Chemical core earnings were $612 million for the twelve months of 2013, compared with $720 million for the same period in 2012. The lower 2013 earnings primarily resulted from higher energy costs, higher ethylene costs and lower chlor-alkali and chlorinated organics pricing driven by continued unfavorable supply/demand fundamentals and reduced export demand.

Midstream, Marketing and Other

Midstream core earnings were $543 million for the twelve months of 2013, compared with $439 million for the same period in 2012. The 2013 results reflected higher earnings in the pipeline and power generation businesses and improved marketing and trading performance. Marketing performance improved $110 million on a year-over-year basis mainly by capturing regional crude price differentials by utilizing new pipelines providing access to Gulf refineries. These improvements were partially offset by lower income in the gas processing business due in part to the plant turnarounds in the Permian operations.

QUARTERLY RESULTS

Oil and Gas

Oil and gas segment earnings were $1.5 billion for the fourth quarter of 2013, which included $607 million pre-tax charges for impairment of certain non-producing domestic properties. After excluding the asset impairments from both periods, oil and gas core earnings were $2.1 billion for the fourth quarter of 2013, compared with $2.3 billion for the fourth quarter of 2012. The current quarter results reflect higher domestic earnings resulting from improved oil realized prices and higher volumes, and lower operating costs partially offset by higher DD&A rates. International results were lower on a year-over-year basis, due to lower liquids sales volumes and higher DD&A rates in the Middle East/North Africa.

For the fourth quarter of 2013, daily oil and gas production volumes averaged 750,000 BOE, compared with 779,000 BOE in the fourth quarter of 2012. While production increased in the California and South Texas operations, overall domestic production was lower due to severe weather conditions and plant turnarounds in the Permian operations and reduced domestic gas drilling. Middle East/North Africa production was lower mostly due to lower cost recovery barrels in Oman and Iraq and field and port strikes in Libya. Daily sales volumes were 772,000 BOE for the fourth quarter of 2013 and 784,000 BOE for the fourth quarter of 2012. Sales volumes were higher than production volumes due to the timing of liftings in Oxy’s international operations, primarily in Iraq.

Oxy’s realized price for worldwide crude oil increased 3 percent to $99.27 per barrel for the fourth quarter of 2013, compared with $96.19 per barrel for the fourth quarter of 2012. Domestic crude oil prices increased by almost 8 percent in the fourth quarter of 2013 to $94.52 per barrel, compared to $87.81 per barrel in the fourth quarter of 2012. Middle East/North Africa crude oil prices and worldwide NGL prices were lower on a year-over-year basis for the fourth quarter of 2013. Domestic gas prices increased by almost 8 percent in the fourth quarter of 2013 to $3.33 per MCF, compared with $3.09 in the fourth quarter of 2012.

On a sequential quarterly basis, worldwide realized crude oil prices decreased approximately 5 percent and worldwide realized NGL prices increased approximately 10 percent. On a geographic basis, domestic crude oil prices decreased by about 9 percent and Middle East/North Africa oil prices increased by about 3 percent.

Chemical

Chemical segment earnings for the fourth quarter of 2013 were $128 million, compared with $180 million in the fourth quarter of 2012. The decrease was primarily due to higher energy and ethylene costs and lower caustic soda prices. New chlor-alkali capacity resulted in a significant increase in competitive activity in the fourth quarter, causing price pressure.

Midstream, Marketing and Other

Midstream segment earnings were $1.1 billion for the fourth quarter of 2013. After excluding non-core items, which were primarily the gain on the sale of a portion of the Plains Pipeline investment, core earnings were $68 million for the fourth quarter of 2013, compared with $75 million for the fourth quarter of 2012. The decrease reflected lower marketing and trading performance and weaker results in the gas processing business due in part to the plant turnarounds in the Permian operations, partially offset by higher earnings in the pipeline business.

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