01—Abstract
Summary
Summary of the 10-K filed March 3, 2014. Cited figures are marked; the original filing is the authoritative source.
Occidental Petroleum Corporation (OXY) reported strong financial performance for the fiscal year ending December 31, 2013, driven by its diversified business segments: oil and gas, chemicals, and midstream/marketing.
The company demonstrated consistent revenue growth, with net sales reaching $24.455 billiona. Net income attributable to common stock was $5.903 billion, translating to $7.32 per diluted share. The oil and gas segment remains the primary revenue generator, benefiting from favorable domestic oil and gas prices and increased production volumes, particularly from its Permian Basin and California operations.
The chemical segment (OxyChem) showed resilience with improved domestic demand and margins, while the midstream and marketing segment contributed positively through optimized asset utilization and strategic infrastructure investments. OXY's strategic focus on maximizing shareholder returns through dividend growth and capital allocation remained evident. The company significantly increased its dividend payout to $2.56b per share in 2013, a 476% increase since 2002.
Capital expenditures were managed effectively, with a strong emphasis on domestic oil and gas development. The company also initiated a strategic review of its operations, which included pursuing the sale of minority interests in Middle East/North Africa operations and select Midcontinent assets, and the potential separation of its California assets, signaling a commitment to optimizing its portfolio and enhancing shareholder value.
02—Key points
Key Highlights
- Occidental Petroleum reported a net income of $5.903 billion for 2013, or $7.32 per diluted share, demonstrating robust profitability.
- Net sales increased to $24.455 billion, reflecting strong performance across all operating segments, particularly in oil and gas.
- The company continued its commitment to shareholder returns by paying a total dividend of $2.56 per share in 2013.
- Significant progress was made in enhancing operational efficiency, with domestic production costs decreasing by 17% per barrel in the Permian Basin.
- Occidental initiated a strategic review of its operations, including plans for potential divestitures and asset separations to streamline the business and enhance shareholder value.
- Proved oil and gas reserves increased to 3,483 million BOE at year-end 2013, driven by reserve additions from improved recovery and extensions/discoveries.
- The company maintained a strong balance sheet, reducing its debt-to-capitalization ratio to 14% by year-end 2013.
03—One dollar
04—Financials
Financial Highlights
Figures from 10-KFY2013filed March 3, 2014Financial Statements
FY2013 against FY2012
| Line item | FY2013FY2012 | Change |
|---|---|---|
| Revenue | $20.17B$20.10B | +0.3% |
| Operating Expenses | $1.54B$1.37B | +13.0% |
| Operating Income | $4.93B$3.83B | +28.8% |
| Net Income | $5.90B$4.60B | +28.4% |
| EPS (Basic) | $7.33$5.67 | +29.3% |
| EPS (Diluted) | $7.32$5.67 | +29.1% |
| Shares Outstanding (Basic) | 804.10M809.30M | −0.6% |
| Shares Outstanding (Diluted) | 804.60M810.00M | −0.7% |
05—Questions
Frequently Asked Questions
What were Occidental Petroleum's main business segments in 2013?
Occidental Petroleum operated through three main segments: Oil and Gas, Chemicals (OxyChem), and Midstream, Marketing, and Other. The Oil and Gas segment focuses on exploration, development, and production of oil, condensate, natural gas liquids, and natural gas. OxyChem manufactures and markets basic chemicals and vinyls. The Midstream, Marketing, and Other segment handles gathering, processing, transportation, storage, and marketing of commodities like oil, NGLs, natural gas, and CO2.
How did Occidental Petroleum's financial performance in 2013 compare to previous years?
Occidental Petroleum showed improved financial performance in 2013 compared to 2012. Net income increased to $5.903 billion from $4.598 billion in 2012, and net sales grew to $24.455 billion from $24.172 billion. This growth was driven by stronger domestic oil and gas prices and improved production volumes, alongside solid performance in its chemical and midstream segments.
What is Occidental Petroleum's strategy for future growth and shareholder value?
Occidental's strategy focuses on growing oil and gas production through development programs and acquisitions, allocating capital for returns exceeding the cost of capital, consistent dividend growth, and maintaining financial discipline. In 2013, the company also began a strategic review to streamline operations, which included pursuing sales of minority interests in certain international and domestic assets and considering the separation of its California assets to enhance shareholder value.
What were the key drivers of profitability in the Oil and Gas segment?
The oil and gas segment's profitability was driven by favorable commodity prices, particularly for oil, and increased production volumes. Operational efficiency initiatives, especially in the Permian Basin, led to reduced drilling and operating costs. Enhanced oil recovery (EOR) projects and development of unconventional resources also contributed to production growth and profitability.
06—Continue