Occidental Petroleum Corp. said Thursday that several 4Q2004 charges and a tax credit, unrelated to its oil and natural gas business, will negatively impact earnings by about $65 million (16 cents/share). The biggest charge follows the closing of the company’s chemicals affiliate, Occidental Chemical Corp. (OxyChem), which it said it was exiting for “strategic and economic reasons.” The unprofitable vinyl specialty resins business is in Pottstown, PA was closed, resulting in a pre-tax charge of $53 million. Approximately 220 employees will be affected by the closure, Occidental said. Besides the plant closure, Occidental also will take a pre-tax charge of $12 million to write-off some production facilities using mercury cell technology at OxyChem’s Delaware City, DE chloralkali plant. These actions were taken to strengthen the company’s profitable core chloralkali and polyvinyl chloride (PVC) business. Occidental also will take pre-tax charges totaling $76 million to increase its environmental remediation reserves, provide for several ongoing litigation matters and increase its self-insurance reserves. The environmental charge included in the total mainly reflects revisions of cost estimates and changes in work programs at a number of existing remediation sites. These charges will be partially offset by a tax credit of approximately $27 million that will be recorded to reflect the settlement of some income tax audit issues. Following the announcement, Standard & Poor’s Equity Research reiterated a “buy” rating and lowered the 4Q2004 operating earnings estimate to $1.70/share from $1.72. S&P Equity Research raised 2005 earnings estimates by a penny to $6.31.

Energen Corp. has hedged an additional 10.1 Bcf of its 2005 natural gas production — or more than 80% of its estimated annual production — at an average New York Mercantile Exchange-equivalent price of $6.08/Mcf. Approximately 75% of Energen’s 2005 oil production and 65% of its estimated natural gas liquids (NGL) production also was hedged. The Birmingham, AL-based company’s current 2005 earnings guidance, issued in December, ranges between $4.25-4.45/diluted share. Included in the guidance is an estimated 3 cents/diluted share from an unidentified acquisition of $200 million in the fourth quarter. The company’s 2005 guidance also assumes that prices applicable to Energen’s unhedged production will average $6/Mcf for gas, $32/bbl for oil, and 53 cents/gallon for NGLs. All of its hedge positions may be found on the web site at www.energen.com.

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