International oil and gas exploration and production company Occidental Petroleum announced core income of $1.8 billion ($2.23 per diluted share) for the second quarter of 2011, compared with $1.1 billion ($1.32 per diluted share) for the second quarter of 2010.
Announcing the results, Stephen Chazen, President and Chief Executive Officer, said in a company statement that “the second quarter 2011 net income of $1.8 billion was an increase of 17% over the first quarter results. Improved earnings in all of our business segments resulted in a six month, year-to-date cash flow from operations of $5.6 billion and an annualized return on equity of 20 percent. Our second quarter domestic oil and gas production grew 11 percent from the second quarter of the prior year to 424,000 boe per day.”
QUARTERLY RESULTS
Oil and Gas
Oil and gas segment earnings were $2.6 billion for the second quarter of 2011, compared with $1.9 billion for the same period in 2010. The increase in the second quarter of 2011 earnings was due mainly to higher crude oil prices.
For the second quarter of 2011, daily oil and gas production volumes averaged 715,000 barrels of oil equivalent (BOE), compared with 701,000 BOE in the second quarter of 2010. As a result of higher year-over-year average oil prices and other factors affecting production sharing and similar contracts, production was reduced in the Middle East/North Africa and Colombia by 11,000 BOE per day, with another 1,000 BOE per day reduction at THUMS in Long Beach.
The second quarter 2011 production volume increase was a result of 42,000 BOE per day higher domestic volumes, partially offset by reduced volumes in the Middle East / North Africa. The domestic increase was mainly from the new acquisitions in South Texas and the North Dakota Williston Basin. The Middle East/North Africa was lower primarily due to the lack of production in Libya and price impacts on production sharing contracts, partially offset by production from Iraq coming on line in 2011 and higher volumes from the Mukhaizna field in Oman.
Daily sales volumes remained flat at 705,000 BOE per day in the second quarter of 2011, compared with 705,000 BOE per day in the second quarter of 2010. The 2011 sales volumes were lower than the production volumes due to the timing of liftings in Iraq, Qatar and Oman.
Second quarter realized prices improved for all products on a year-over-year basis. The price for worldwide crude oil was $103.12 per barrel for the second quarter of 2011, compared with $74.39 per barrel for the second quarter of 2010. The second quarter of 2011 realized oil price represents 101 percent of the average WTI price for the quarter. Worldwide NGL prices were $57.67 per barrel in the second quarter of 2011, compared with $44.08 per barrel in the second quarter of 2010. Domestic gas prices increased from $4.19 per MCF in the second quarter of 2010 to $4.27 per MCF for the second quarter of 2011.
Chemicals
Chemical segment earnings for the second quarter of 2011 were $253 million, compared with $108 million for the same period in 2010. The second quarter of 2011 results reflect continued strong export sales demand and higher margins resulting from improved supply and demand balances across most products.
Midstream, Marketing and Other
Midstream segment earnings were $187 million for the second quarter of 2011, compared with $13 million for the second quarter of 2010. Higher earnings for the second quarter of 2011 were primarily due to higher margins in the marketing business and improved earnings in our pipeline businesses.
Year-to-date 2011 core results were over $3.4 billion ($4.19 per diluted share), compared with $2.2 billion ($2.67 per diluted share) for the same period in 2010. Net income for the first six months of 2011 was $3.4 billion ($4.13 per diluted share), compared with $2.1 billion ($2.61 per diluted share) for the same period in 2010.
Oil and Gas
Oil and gas segment earnings were $5.1 billion for the six months of 2011, compared with $3.7 billion for the same period of 2010. The $1.4 billion increase in the 2011 results reflected higher crude oil and NGL prices and higher sales volumes, partially offset by higher operating costs and DD&A rates.
Daily oil and gas production volumes for the six months were 723,000 boe per day for 2011, compared with 701,000 boe per day for the 2010 period.
Higher year-over-year average oil prices and other factors affecting our production sharing and similar contracts lowered our Middle East/North Africa, Long Beach and Colombia production by 14,000 boe per day.
Domestic volumes increased primarily due to new operations in South Texas and the Williston Basin, partially offset by lower gas volumes in California. The Middle East/North Africa’s production declined due to impacts of price and other factors on production sharing contracts, lower production in Libya and planned maintenance in Dolphin. Partially offsetting these declines were increases from the new production in Iraq and higher production in the Mukhaizna field in Oman.
Daily sales volumes were 717,000 boe in the first six months of 2011, compared with 695,000 boe for 2010.
Oxy’s realized prices improved for crude oil and NGLs but declined for natural gas on a year-over-year basis. Worldwide crude oil prices were $97.38 per barrel for the six months of 2011, compared with $74.24 per barrel for the six months of 2010. Worldwide NGL prices were $55.38 per barrel for the six months of 2011, compared with $45.73 per barrel in the six months of 2010. Domestic gas prices declined from $4.90 per MCF in the six months of 2010 to $4.24 per MCF in the six months of 2011.
Chemicals
Chemical segment earnings were $472 million for the six months of 2011, compared with $138 million for the same period in 2010. The 2011 six-month results reflect strong export sales demand and higher margins resulting from improved supply and demand balances across most products.
