10-QPeriod: Q1 FY2011

OCCIDENTAL PETROLEUM CORP /DE/ Quarterly Report for Q1 Ended Mar 31, 2011

Filed May 5, 2011For Securities:OXYOXY-WT

Summary

Occidental Petroleum Corporation (OXY) reported a strong first quarter for 2011, with net income rising to $1.5 billion ($1.90 per diluted share) from $1.1 billion ($1.31 per diluted share) in the same period of 2010. This growth was driven by higher crude oil and natural gas liquids (NGL) prices and increased volumes across its oil and gas segment, coupled with improved margins and volumes in the chemical segment. The company also benefited from significant gains related to asset dispositions, including its Argentine operations. Operationally, OXY has made strategic moves, including a substantial investment in the Shah Field gas development project in Abu Dhabi and acquisitions of oil and gas properties in the U.S. The company also addressed its debt structure by redeeming senior notes. While exploration in Libya has ceased due to political unrest, the impact on producing fields remains uncertain. OXY maintains a solid liquidity position with substantial cash on hand and available credit facilities, expecting sufficient funds for ongoing operations and planned capital expenditures.

Financial Highlights

45 data points
Beta

Revenue

$5.73B

55.9% Gross Margin

Net Income

$1.55B

27.1% Net Margin

EPS (Diluted)

$1.90

Total Assets

$54.06B

Cash & Equivalents

$2.10B

Free Cash Flow

$897.00M

Financial Statements
Beta
Revenue$5.73B
Cost of Revenue$2.53B
Gross Profit$3.20B
Operating Expenses$441.00M
Operating Income$1.41B
Net Income$1.55B
EPS (Basic)$1.90
EPS (Diluted)$1.90
Shares Outstanding (Basic)812.60M
Shares Outstanding (Diluted)813.40M

Key Highlights

  • 1Net income increased by 43% to $1.5 billion in Q1 2011, with diluted EPS reaching $1.90, up from $1.31 in Q1 2010.
  • 2Revenue grew to $5.7 billion from $4.6 billion, primarily driven by higher commodity prices and increased sales volumes in the oil and gas segment.
  • 3The company made significant strategic investments, including a 40% interest in the $10 billion Shah Field gas development project in Abu Dhabi and acquisitions of oil and gas properties in the U.S.
  • 4Occidental completed the sale of its Argentine oil and gas operations in February 2011, realizing a pre-tax gain of $225 million.
  • 5Exploration activities in Libya have been suspended due to political instability and sanctions, leading to a $35 million write-off of exploration costs.
  • 6Cash flow from operating activities remained strong at $2.2 billion, consistent with the prior year, despite a working capital build-up.
  • 7Capital expenditures increased significantly to $1.3 billion, with a substantial portion allocated to oil and gas projects.

Frequently Asked Questions

The increase in net income was primarily driven by higher average prices for crude oil and NGLs, along with increased sales volumes across most products in the oil and gas segment. Additionally, the chemical segment saw improved margins and volumes. Significant gains from the sale of Argentine operations also contributed positively.

Occidental acquired a 40% stake in the Shah Field gas development project in Abu Dhabi for approximately $4 billion and also invested about $3 billion in oil and gas properties in South Texas, California, and the Permian Basin. The company divested its Argentine oil and gas operations, realizing a significant gain.

Occidental has ceased its exploration activities in Libya due to political unrest and sanctions, resulting in a $35 million write-off. While producing fields are operated by Libyan companies, the impact of the current situation and sanctions on these operations is uncertain. The net book value of its Libyan producing properties was $839 million as of March 31, 2011.

Occidental redeemed $1.4 billion of senior notes in the first quarter of 2011 and reported $2.1 billion in cash and cash equivalents, along with $1.5 billion in available credit facilities. The company expects its cash flow from operations to be sufficient to fund its operating needs, planned capital expenditures, and dividends.