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Occidental Records 52% Earnings Hike on Production, Price Increases

April 28, 2008
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Sparked by increased production levels and rising commodity prices, Occidental Petroleum Corp. (Oxy) posted record net income of $1.846 billion ($2.23/share) for the first quarter of 2008, a 52% spike over the $1.212 billion ($1.43/share) recorded during the first quarter of 2007.

Oil and gas segment earnings were $2.888 billion for 1Q2008, compared with $1.883 billion for the same period in 2007. Oil and gas core results for the first quarter of 2007 were $1.362 billion, after excluding a $412 million gain from the sale of Oxy's Russian joint venture and $109 million gain from the resolution of certain legal disputes. The $1.5 billion increase in the first quarter 2008 core results reflected $1.6 billion of increases from record crude oil and higher natural gas prices, production from the Dolphin natural gas project offshore Qatar coming on line in the second half of 2007, partially offset by increased DD&A rates and higher operating expenses.

The Los Angeles-based exploration and production company noted that 1Q2008 daily oil and gas production averaged 607,000 boe, compared with 560,000 boe produced in the 1Q2007. The bulk of the production increase was the result of 55,000 boe/d from the Dolphin project, which began production in the third quarter of 2007, partially offset by lower volumes from production-sharing contracts due to higher prices. Oxy has a 24.5% interest he Dolphin natural gas project offshore Qatar.

Oxy said its realized price for worldwide crude oil was $86.75/bbl for the first quarter of 2008, compared with $51.67/bbl for the first quarter of 2007. Domestic realized gas prices increased from $6.38/Mcf in the first quarter of 2007 to $8.15/Mcf for the first quarter of 2008.

"Our net income for the first quarter of 2008 set a new company record, driven by an 8.4% increase in production over last year's first quarter, as well as improved oil and gas prices," said CEO Ray R. Irani. "These results continue our momentum from 2007, the most successful year in Oxy's history, and provide a strong start to propel us into the remainder of 2008."

In the United States, Oxy's crude oil and liquids production increased slightly from 254,000 b/d in the 2007 quarter to 261,000 b/d during 1Q2008. On the natural gas side, U.S. production was flat compared with the 580,000 MMcf/d recorded during 1Q2007.

Oxy's midstream, marketing and other segment, which gathers, processes, transports, stores and markets crude oil, natural gas, natural gas liquids and carbon dioxide, reported preliminary earnings of approximately $123 million for 1Q2008 compared with approximately $119 million for 1Q2007. The transportation and storage systems primarily serve operations from New Mexico across the Permian Basin to Cushing, OK. Oxy's 24.5% equity interest in the Qatar Dolphin pipeline project is also included in this segment. Additionally, this segment also generates electricity at facilities in Texas, Louisiana and California.

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