01—Abstract
Summary
Summary of the 10-K filed February 23, 2018. Cited figures are marked; the original filing is the authoritative source.
Occidental Petroleum Corporation (OXY) filed its 2017 10-K on February 23, 2018, detailing its operations across three primary segments: Oil and Gas, Chemical (OxyChem), and Midstream and Marketing.
The company reported a return to profitability in 2017, with net income of $1.311 billiona, a significant turnaround from a net loss of $574 million in 2016. This recovery was driven by higher commodity prices, particularly for oil, and improved performance in its chemical and midstream segments. The company continued its strategic focus on enhancing asset quality and delivering shareholder value through a combination of dividend growth, value-driven development, and disciplined capital allocation.
Key operational highlights include growth in oil and gas production, especially from its Permian Basin assets, and strategic divestitures of non-core acreage. The Midstream and Marketing segment benefited from increased export activity following the lifting of the crude oil export ban, with significant expansion underway at its Ingleside Crude Terminal.
OxyChem demonstrated strong performance with improved margins in caustic soda and PVC. The company remains committed to a low-cost, high-margin value proposition, positioning itself to navigate commodity price cycles and deliver sustainable shareholder returns.
02—Key points
Key Highlights
- Occidental Petroleum reported a net income of $1.311 billion in 2017, a substantial improvement from a net loss of $574 million in 2016, driven by higher commodity prices and improved segment performance.
- The company's oil and gas segment saw increased production, particularly from its core Permian Basin operations, and benefited from higher realized oil and NGL prices.
- OxyChem delivered strong results with improved margins for caustic soda and PVC, supported by increased domestic demand and advantageous feedstock costs.
- The Midstream and Marketing segment experienced significant earnings growth, aided by increased crude oil exports and the full-year operation of the Ingleside Crude Terminal.
- Occidental continued its strategy of portfolio optimization, divesting non-core assets while investing in high-return development opportunities, especially in the Permian Basin.
- The company maintained a strong financial position, with a significant increase in operating cash flow to $4.996 billion in 2017.
- Capital expenditures increased in 2017 to $3.6 billion, primarily directed towards the Permian Basin to capitalize on recovery in commodity prices.
03—One dollar
Follow one dollar
Of each $1.00 of revenue in FY2017, Occidental Petroleum Corp kept $0.10.
- Revenue$12.51B100.0%
- Cost of revenue−$2.94B23.5%
- Gross profit$9.57B76.5%
- Operating costs−$8.26B66.0%
- Operating income$1.31B10.5%
- Interest, other & tax$-00.0%
- Net income$1.31B10.5%
Where FY2017 revenue went
$12.51B- Operating costs: $8.26B, 66% of revenue
- Cost of revenue: $2.94B, 23% of revenue
- Net income: $1.31B, 10% of revenue
Kept 10% as net income
Full revenue history →04—Financials
Financial Highlights
Figures from 10-KFY2017filed February 23, 2018Financial Statements
FY2017 against FY2016
| Line item | FY2017FY2016 | Change |
|---|---|---|
| Revenue | $12.51B$10.09B | +24.0% |
| Cost of Revenue | $2.94B— | — |
| Gross Profit | $9.57B— | — |
| Operating Income | $1.31B-$1.00B | +230.8% |
| Net Income | $1.31B-$574.00M | +328.4% |
| EPS (Basic) | $1.71$-0.75 | +328.0% |
| EPS (Diluted) | $1.70$-0.75 | +326.7% |
| Shares Outstanding (Basic) | 765.10M763.80M | +0.2% |
| Shares Outstanding (Diluted) | 765.90M763.80M | +0.3% |
05—Questions
Frequently Asked Questions
What was Occidental Petroleum's financial performance in 2017 compared to 2016?
Occidental Petroleum saw a significant improvement in its financial performance in 2017. Net income was $1.311 billion, a substantial turnaround from a net loss of $574 million in 2016. This was primarily due to higher oil and NGL prices, increased production in key areas like the Permian Basin, and improved results in the Chemical and Midstream/Marketing segments.
How did Occidental Petroleum manage its asset portfolio in 2017?
In 2017, Occidental continued its strategy of portfolio optimization. This included divesting non-core acreage in the Permian Basin and selling its South Texas operations. Concurrently, the company acquired additional ownership interests in CO2 enhanced oil recovery properties in the Permian Basin, reinforcing its focus on core, high-return assets.
What are the key drivers for Occidental Petroleum's Midstream and Marketing segment?
The Midstream and Marketing segment's earnings in 2017 were significantly boosted by improved Permian to Gulf Coast price differentials and higher income from a full year of operating the Ingleside Crude Terminal. The segment also benefited from increased crude oil exports, a market that has grown since the lifting of the U.S. export ban in 2016.
What is Occidental Petroleum's strategy for shareholder value creation?
Occidental's strategy for shareholder value creation focuses on a combination of consistent dividend growth, value growth through oil and gas development meeting high return targets (over 15% for domestic, over 20% for international projects), targeted production growth of 5-8% annually over the long-term, and maintaining a strong balance sheet.
06—Continue