10-QPeriod: Q3 FY2010

OCCIDENTAL PETROLEUM CORP /DE/ Quarterly Report for Q3 Ended Sep 30, 2010

Filed November 4, 2010For Securities:OXYOXY-WT

Summary

Occidental Petroleum Corporation's (OXY) third quarter 2010 filing reveals a robust financial performance, driven by a significant increase in net sales and net income compared to the prior year. This growth was primarily fueled by higher crude oil and natural gas prices and increased sales volumes across its key segments, particularly oil and gas. The company demonstrated strong operational execution, leading to substantial improvements in earnings per share for both the quarter and the year-to-date period. The company's balance sheet remains solid, with increased cash and cash equivalents and a managed debt level. Significant investments were made in property, plant, and equipment, alongside strategic acquisitions, indicating a commitment to future growth. While facing ongoing environmental liabilities and potential legal matters, management expresses confidence in its ability to manage these risks without material adverse effects on the company's financial position.

Financial Highlights

46 data points
Beta

Revenue

$4.76B

51.2% Gross Margin

Net Income

$1.19B

25.0% Net Margin

EPS (Diluted)

$1.46

Total Assets

$47.50B

Cash & Equivalents

$2.11B

Free Cash Flow

$1.40B

Financial Statements
Beta
Revenue$4.76B
Cost of Revenue$2.32B
Gross Profit$2.44B
Operating Expenses$277.00M
Operating Income$3.38B
Net Income$1.19B
EPS (Basic)$1.46
EPS (Diluted)$1.46
Shares Outstanding (Basic)812.70M
Shares Outstanding (Diluted)813.90M

Key Highlights

  • 1Net sales increased significantly to $4.9 billion for Q3 2010 and $14.4 billion for the nine months ended Sept 30, 2010, up from $4.1 billion and $10.9 billion respectively in the prior year periods.
  • 2Net income attributable to common stock saw a substantial rise, reaching $1.19 billion ($1.46 EPS) for Q3 2010 and $3.32 billion ($4.07 diluted EPS) for the nine months, compared to $927 million ($1.14 EPS) and $2.01 billion ($2.43 diluted EPS) respectively.
  • 3The Oil and Gas segment was the primary driver of performance, with earnings increasing to $1.75 billion for Q3 2010 and $5.42 billion for the nine months, benefiting from higher commodity prices and increased production volumes.
  • 4Cash and cash equivalents increased to $2.1 billion as of September 30, 2010, up from $1.23 billion at the end of 2009, indicating improved liquidity.
  • 5Capital expenditures for the nine months ended September 30, 2010, were $2.8 billion, with an additional $2.1 billion spent on acquisitions, reflecting significant investment in asset growth.
  • 6The company continues to manage environmental remediation reserves, with a total of $368 million set aside as of September 30, 2010, and estimates a potential additional loss of up to $375 million.
  • 7Occidental completed the acquisition of the Phibro trading unit on December 31, 2009, and its operations are being integrated, with risk management controls in place.

Frequently Asked Questions

The company's improved financial performance was primarily driven by higher crude oil and natural gas prices, alongside increased sales volumes, particularly in the oil and gas segment. Improved margins and volumes in the chemical segment and stronger results from the midstream, marketing, and trading businesses also contributed positively.

Occidental significantly increased its investment in assets during the first nine months of 2010, with capital expenditures of $2.8 billion and approximately $2.1 billion spent on acquisitions, primarily in domestic oil and gas properties. This indicates a strategic focus on expanding its operational footprint and asset base.

As of September 30, 2010, Occidental Petroleum had a healthy liquidity position with $2.1 billion in cash and cash equivalents and $1.5 billion in available, unused committed bank credit lines. The company anticipates these resources, combined with cash generated from operations, will be sufficient to meet its financial obligations and planned expenditures.

Occidental is actively managing environmental remediation liabilities, with reserves totaling $368 million as of September 30, 2010, and a potential additional loss estimated up to $375 million. The company is also involved in various lawsuits and subject to tax audits, though management believes these matters, after considering reserves, are unlikely to have a material adverse effect on its financial position or results of operations.