10-KPeriod: FY2017

OCCIDENTAL PETROLEUM CORP /DE/ Annual Report, Year Ended Dec 31, 2017

Filed February 23, 2018For Securities:OXYOXY-WT

Summary

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 billion, 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.

Financial Highlights

51 data points
Beta

Revenue

$12.51B

76.5% Gross Margin

Net Income

$1.31B

10.5% Net Margin

EPS (Diluted)

$1.70

Total Assets

$42.03B

Cash & Equivalents

$1.67B

Free Cash Flow

$1.26B

Financial Statements
Beta
Revenue$12.51B
Cost of Revenue$2.94B
Gross Profit$9.57B
Operating Income$1.31B
Net Income$1.31B
EPS (Basic)$1.71
EPS (Diluted)$1.70
Shares Outstanding (Basic)765.10M
Shares Outstanding (Diluted)765.90M

Key Highlights

  • 1Occidental 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.
  • 2The 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.
  • 3OxyChem delivered strong results with improved margins for caustic soda and PVC, supported by increased domestic demand and advantageous feedstock costs.
  • 4The Midstream and Marketing segment experienced significant earnings growth, aided by increased crude oil exports and the full-year operation of the Ingleside Crude Terminal.
  • 5Occidental continued its strategy of portfolio optimization, divesting non-core assets while investing in high-return development opportunities, especially in the Permian Basin.
  • 6The company maintained a strong financial position, with a significant increase in operating cash flow to $4.996 billion in 2017.
  • 7Capital expenditures increased in 2017 to $3.6 billion, primarily directed towards the Permian Basin to capitalize on recovery in commodity prices.

Frequently Asked Questions

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.

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.

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.

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.