01—Abstract
Summary
Summary of the 10-K filed February 14, 2024. Cited figures are marked; the original filing is the authoritative source.
Occidental Petroleum Corporation (OXY) filed its 10-K for the fiscal year ended December 31, 2023, detailing its performance across its oil and gas, chemical, and midstream and marketing segments.
The company generated significant revenue, but experienced lower commodity prices compared to the prior year, impacting profitability. A major strategic initiative highlighted is the pending acquisition of CrownRock L.P., valued at $12.0 billiona, which is expected to enhance Occidental's Permian Basin operations and provide immediate cash flow accretion. Occidental is also actively pursuing its low-carbon ventures, notably with the acquisition of Carbon Engineering and progress on its Direct Air Capture (DAC) facility, STRATOS.
Financially, Occidental focused on debt reduction and shareholder returns, including a dividend increase and share repurchases. The company's financial health is supported by its investment-grade credit rating, although it continues to manage risks associated with commodity price volatility, regulatory changes, and operational execution. The report emphasizes a commitment to operational excellence, capital efficiency, and sustainability, with ambitious net-zero emissions goals.
02—Key points
Key Highlights
- Occidental Petroleum Corporation (OXY) reported 2023 results impacted by lower commodity prices, with WTI crude averaging $77.64/bbl and Brent averaging $82.25/bbl, a decrease from 2022.
- The company is pursuing a significant strategic move with the proposed $12.0 billion acquisition of CrownRock L.P., aiming to strengthen its Permian Basin presence and boost cash flow.
- Occidental is advancing its low-carbon strategy, notably through the acquisition of Carbon Engineering and the construction of its first large-scale Direct Air Capture (DAC) facility, STRATOS.
- The company returned capital to shareholders through dividends, declaring an increased quarterly dividend of $0.22 per share, and share repurchases totaling $1.8 billion in 2023.
- Occidental achieved investment-grade credit ratings from Moody's and Fitch in 2023, reflecting improved financial leverage.
- Operational focus remains on capital efficiency and cost control, with $5.0 billion invested in upstream assets in 2023 and plans for $4.8-$5.0 billion in 2024 (excluding CrownRock acquisition impact).
- The chemical segment (OxyChem) delivered its third-highest year of earnings despite a softening market, driven by cost advantages and integrated operations.
03—One dollar
04—Financials
Financial Highlights
Figures from 10-KFY2023filed February 14, 2024Financial Statements
FY2023 against FY2022
| Line item | FY2023FY2022 | Change |
|---|---|---|
| Revenue | $23.23B$36.23B | −35.9% |
| Cost of Revenue | $3.12B$3.27B | −4.8% |
| Gross Profit | $20.11B$32.96B | −39.0% |
| SG&A Expenses | $987.00M$945.00M | +4.4% |
| Net Income | $4.70B$13.30B | −64.7% |
| EPS (Basic) | $4.22$13.41 | −68.5% |
| EPS (Diluted) | $3.90$12.40 | −68.5% |
| Shares Outstanding (Basic) | 889.20M926.20M | −4.0% |
| Shares Outstanding (Diluted) | 960.90M1.00B | −4.1% |
05—Questions
Frequently Asked Questions
What are Occidental's key financial and operational highlights from the 2023 10-K?
Occidental reported lower commodity prices in 2023 compared to 2022, impacting revenue. However, the company maintained strong operational performance, especially in the Permian Basin, and advanced its strategic initiatives, including the significant CrownRock acquisition and investments in low-carbon technologies like Direct Air Capture. Shareholder returns were prioritized through dividend payments and share repurchases.
What is the status and expected impact of the CrownRock acquisition?
Occidental entered into an agreement to acquire CrownRock L.P. for $12.0 billion. This acquisition is pending regulatory approval and is expected to close in the second half of 2024. Occidental anticipates that the acquisition will be immediately cash flow accretive, enhance its scale in the Midland Basin, and support its Permian Basin operations. The company plans to finance the acquisition through a combination of new debt and equity issuance, and intends to divest assets to repay debt post-closing.
How is Occidental progressing with its low-carbon ventures and sustainability goals?
Occidental is actively developing its low-carbon ventures, highlighted by the full acquisition of Carbon Engineering, a developer of Direct Air Capture (DAC) technology. Construction of its first large-scale DAC facility, STRATOS, is underway. The company also aims to achieve net-zero greenhouse gas (GHG) emissions from its operations by 2040 and for its total carbon inventory by 2050, with ongoing efforts to reduce methane emissions and routine flaring.
What is Occidental's debt and capital allocation strategy?
Occidental is focused on reducing its long-term financial leverage. The company intends to reduce outstanding debt principal to below $15 billion before resuming significant share repurchases, following the planned increase in its sustainable dividend. Capital expenditures in 2024 are planned between $6.4 billion and $6.6 billion, allocated across its business segments, with a significant portion dedicated to upstream asset development.
06—Continue