01—Abstract
Summary
Summary of the 10-K filed February 26, 2016. Cited figures are marked; the original filing is the authoritative source.
Occidental Petroleum Corporation (OXY) reported a significant net loss of $7.8 billiona for the year ended December 31, 2015, a stark contrast to its $616 million net income in 2014.
This downturn was primarily driven by substantial asset impairments totaling $10.2 billionb, largely attributed to the steep decline in global oil and gas prices throughout 2015. The company's strategy focused on optimizing returns and maintaining financial discipline, leading to asset sales in non-core areas and a reduction in capital expenditures. Despite the challenging commodity price environment, Occidental continued to invest in key growth areas like the Permian Basin and Colombia, leveraging enhanced oil recovery techniques.
The company's chemical segment (OxyChem) demonstrated resilience, with segment earnings of $542 millionc, supported by improved PVC margins due to lower feedstock costs. However, the midstream and marketing segment reported a loss of $1.2 billion, primarily due to asset impairments, including a significant charge related to the Century gas processing plant. Looking ahead, Occidental signaled a commitment to prioritizing high-return projects with a planned capital spending reduction for 2016.
02—Key points
Key Highlights
- Occidental Petroleum reported a substantial net loss of $7.8 billion for 2015, a significant decrease from a net income of $616 million in 2014, primarily due to $10.2 billion in asset impairments and related charges.
- The sharp decline in oil and gas prices throughout 2015 (WTI averaging $48.80/barrel, down from $93.00 in 2014) was a major factor impacting financial results.
- The company divested non-core assets, including its Williston Basin operations and entered an agreement to sell its Piceance Basin assets, as part of its strategic review to focus on core operations and improve margins.
- Occidental maintained its dividend payments, with total dividends paid at $2.26 billion for 2015, reflecting a commitment to returning capital to shareholders.
- Capital expenditures were significantly reduced to $5.3 billion in 2015 from $8.9 billion in 2014, with further reductions planned for 2016.
- The chemical segment (OxyChem) performed relatively well, with segment earnings of $542 million in 2015, benefiting from lower feedstock costs.
- Proved reserves saw a decrease of 166 million BOE in 2015, largely due to price-related revisions, although additions from development programs and improved recovery were noted.
03—One dollar
04—Financials
Financial Highlights
Figures from 10-KFY2015filed February 26, 2016Financial Statements
FY2015 against FY2014
| Line item | FY2015FY2014 | Change |
|---|---|---|
| Revenue | $12.48B$19.31B | −35.4% |
| Operating Expenses | $1.27B$1.50B | −15.5% |
| Operating Income | -$8.15B-$144.00M | −5556.9% |
| Net Income | -$7.83B$616.00M | −1370.9% |
| EPS (Basic) | $-10.23$0.79 | −1394.9% |
| EPS (Diluted) | $-10.23$0.79 | −1394.9% |
| Shares Outstanding (Basic) | 765.60M781.10M | −2.0% |
| Shares Outstanding (Diluted) | 765.60M781.10M | −2.0% |
05—Questions
Frequently Asked Questions
What was Occidental's financial performance in 2015, and what were the main drivers?
Occidental reported a significant net loss of $7.8 billion in 2015, a reversal from a net income of $616 million in 2014. This was primarily driven by a substantial decline in commodity prices (oil and natural gas) and significant asset impairments totaling $10.2 billion across its operations, particularly in the oil and gas segment.
How did the company address the low commodity price environment?
Occidental implemented several strategies including reducing capital expenditures, selling non-core assets (like the Williston Basin assets), focusing on cost efficiencies, and prioritizing high-return projects, especially in the Permian Basin and Colombia. The company also continued to leverage enhanced oil recovery techniques.
What was the performance of Occidental's different business segments?
The oil and gas segment incurred significant losses due to impairments. The chemical segment (OxyChem) showed resilience with segment earnings of $542 million, supported by improved PVC margins. The midstream and marketing segment reported a loss of $1.2 billion, impacted by asset impairments and lower marketing margins.
What is Occidental's outlook for capital expenditures and future investments?
Occidental planned to reduce capital spending in 2016 to no more than $3 billion, focusing on its highest return projects. Investments were prioritized in core growth areas such as the Permian Basin and Colombia, with continued focus on enhanced oil recovery.
06—Continue