Putting in a strong second quarter, thanks to two previous transactions, Occidental Petroleum Corp. said Friday that its net income for the second quarter 2005 was more than twice as much as the company's net income for the second quarter 2004. For 2Q2005, Occidental posted net income of $1.536 billion ($3.82 per share), compared with $581 million ($1.48 per share) for 2Q2004.
Included in the second quarter 2005 net income are the benefits of two previously announced transactions -- a $619 million tax benefit related to the resolution of certain IRS tax issues and an $89 million after-tax gain from the sale of 11 million shares of Lyondell Chemical Co. Core earnings for the second quarter were $851 million ($2.12 per share), compared with $584 million ($1.49 per share) for the same period in 2004.
"Robust energy prices and strong chemical margins were key factors in our financial performance that drove our core earnings 46 percent higher than last year's second quarter and contributed to the strongest earnings for any six-month period in Oxy's history," said Dr. Ray R. Irani, Occidental's CEO. "We also were successful in setting the stage for future growth by concluding a new production-sharing contract to develop Oman's giant Mukhaizna oil field, reaching an agreement to resume operations in our historic contract areas in Libya and acquiring oil and gas producing properties in the Permian Basin of Texas."
On the U.S. natural gas production front, Occidental produced an average of 548 MMcf/d during 2Q2005, up from 513 MMcf/d during the same period of 2004. Production from the Permian Basin was 166 MMcf/d for 2Q2005, an increase of 34 MMcf/d over the same period of 2004. However, Horn Mountain produced only 9 MMcf/d for the quarter, down from the 15 MMcf/d during 2Q2004.
Oil and gas segment earnings for the quarter were $1.325 billion, compared with $980 million for 2Q2004. After adjusting for a $26 million charge related to a contract settlement, core earnings were $1.351 billion for the second quarter 2005. The improvement in 2Q2005 earnings reflected higher worldwide crude oil and gas prices, partially offset by higher operating and exploration expenses and increased depreciation, depletion and amortization rates. Exploration expenses were higher primarily as a result of a $66 million property impairment resulting from an unsuccessful deep gas well at Elk Hills.
For the first six months of 2005, net income was $2.382 billion ($5.94 per share), compared with $1.068 billion ($2.72 per share) for the first six months of 2004. Core earnings were $1.717 billion for the first six months of 2005, compared with $1.060 billion for the same period of 2004.
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