01—Abstract
Summary
Summary of the 10-K filed February 21, 2019. Cited figures are marked; the original filing is the authoritative source.
Occidental Petroleum Corporation (OXY) reported a strong financial performance in its 2018 10-K filing, driven by increased oil and gas prices and higher production volumes, particularly from its Permian Basin operations.
The company's integrated business model, encompassing oil and gas exploration and production, chemicals (OxyChem), and midstream and marketing, contributed to a significant increase in net sales and profitability compared to the previous year. Occidental's strategy focuses on delivering shareholder value through consistent dividend growth, capital allocation to high-return projects, production growth, and maintaining a strong balance sheet. The company's commitment to operational efficiency, technological advancements, and strategic asset management positions it well for continued value creation.
Key financial highlights include a substantial increase in net sales and income from continuing operations, reflecting improved commodity prices and production. The company also reported significant progress in its Permian Basin operations, a core growth area, with substantial capital allocation towards development. Occidental continued its disciplined approach to capital expenditures and demonstrated a commitment to returning cash to shareholders through dividends and share repurchases.
The company's chemical segment also performed well, benefiting from favorable pricing and operational efficiencies. Occidental's forward-looking strategy emphasizes sustainability and cost-effective operations across all its business segments.
02—Key points
Key Highlights
- Occidental Petroleum reported a significant increase in net sales to $17.82 billion in 2018, up from $12.51 billion in 2017, driven by higher oil prices and volumes.
- Income from continuing operations surged to $4.13 billion in 2018, a substantial increase from $1.31 billion in 2017, reflecting improved commodity prices and operational performance.
- Total proved reserves increased to 2,752 million BOE at year-end 2018, with additions of 154 million BOE mainly from development programs and improved recovery techniques.
- Capital expenditures increased to $4.98 billion in 2018, with a significant portion allocated to high-return assets in the Permian Basin, underscoring the company's focus on core growth areas.
- Occidental returned significant value to shareholders, paying $2.37 billion in dividends and repurchasing $1.25 billion of treasury stock in 2018.
- The chemical segment (OxyChem) showed strong performance with segment results of $1.16 billion in 2018, up from $822 million in 2017, driven by improved pricing and contributions from new facilities.
- The company maintained a strong balance sheet with total assets of $43.85 billion and stockholders' equity of $21.33 billion at December 31, 2018.
03—One dollar
Follow one dollar
Of each $1.00 of revenue in FY2018, Occidental Petroleum Corp kept $0.23.
- Revenue$17.82B100.0%
- Cost of revenue−$2.83B15.9%
- Gross profit$14.99B84.1%
- Operating costs−$10.86B60.9%
- Operating income$4.13B23.2%
- Interest, other & tax−$17.0M0.1%
- Net income$4.11B23.1%
Where FY2018 revenue went
$17.82B- Other operating costs: $10.28B, 58% of revenue
- Net income: $4.11B, 23% of revenue
- Cost of revenue: $2.83B, 16% of revenue
- SG&A: $585.0M, 3.3% of revenue
Kept 23% as net income
Full revenue history →04—Financials
Financial Highlights
Figures from 10-KFY2018filed February 21, 2019Financial Statements
FY2018 against FY2017
| Line item | FY2018FY2017 | Change |
|---|---|---|
| Revenue | $17.82B$12.51B | +42.5% |
| Cost of Revenue | $2.83B$2.94B | −3.6% |
| Gross Profit | $14.99B$9.57B | +56.6% |
| SG&A Expenses | $585.00M— | — |
| Operating Income | $4.13B$1.31B | +215.1% |
| Net Income | $4.11B$1.31B | +213.8% |
| EPS (Basic) | $5.40$1.71 | +215.8% |
| EPS (Diluted) | $5.39$1.70 | +217.1% |
| Shares Outstanding (Basic) | 761.70M765.10M | −0.4% |
| Shares Outstanding (Diluted) | 763.30M765.90M | −0.3% |
05—Questions
Frequently Asked Questions
What were Occidental's main sources of revenue and profit in 2018?
Occidental's primary revenue generator was its Oil and Gas segment, which accounted for $10.44 billion in segment sales. The Chemical segment (OxyChem) contributed $4.66 billion in segment sales, and the Midstream and Marketing segment added $3.66 billion. The company reported strong profitability across all segments, with the Oil and Gas segment generating $2.44 billion in results, the Chemical segment $1.16 billion, and the Midstream and Marketing segment $2.80 billion (significantly boosted by asset sale gains).
How did Occidental's proved oil and gas reserves change in 2018?
Occidental's total proved reserves increased by 154 million BOE in 2018, reaching 2,752 million BOE at year-end. This growth was primarily driven by additions of 294 million BOE from improved recovery techniques and 301 million BOE from the development program, partially offset by production and sales.
What was Occidental's capital expenditure strategy in 2018, and where was capital focused?
Occidental invested $4.98 billion in capital expenditures in 2018, an increase from $3.60 billion in 2017. The majority of this investment was directed towards its high-return assets, with approximately $4.41 billion allocated to the Oil and Gas segment. A significant portion of this oil and gas capital was focused on the Permian Basin, reflecting the company's strategy to leverage its strong position in this key growth area.
How did Occidental manage its balance sheet and return capital to shareholders in 2018?
Occidental maintained a strong balance sheet with total assets of $43.85 billion and stockholders' equity of $21.33 billion. The company demonstrated a commitment to shareholder returns by paying $2.37 billion in dividends and repurchasing $1.25 billion of treasury stock in 2018. The company also managed its debt, issuing $1.0 billion in senior notes and repaying $500 million of existing debt.
06—Continue