10-QPeriod: Q3 FY2015

OCCIDENTAL PETROLEUM CORP /DE/ Quarterly Report for Q3 Ended Sep 30, 2015

Filed October 30, 2015For Securities:OXYOXY-WT

Summary

Occidental Petroleum Corporation (OXY) reported a significant net loss of $2.6 billion for the third quarter and $2.7 billion for the first nine months of 2015, a stark contrast to the profits reported in the same periods of 2014. This downturn is primarily driven by a substantial decline in oil and gas commodity prices, which has led to significant asset impairments totaling $3.1 billion in the Oil and Gas segment for the third quarter. Despite lower commodity prices, the company saw an increase in oil and gas production volumes, particularly from its Permian Resources business unit and international operations. The Chemical and Midstream and Marketing segments showed resilience, with the Chemical segment posting higher earnings driven by lower costs and asset sale gains, although the Midstream segment experienced a decline. Financially, Occidental experienced a decrease in cash and cash equivalents and a build-up of restricted cash related to the California Resources spin-off. The company also issued new debt in June 2015. Shareholder equity declined primarily due to the current year's net loss and dividend payments. Investors should note the significant asset impairments and the impact of volatile commodity prices on the company's financial performance and outlook. The company's ability to navigate the low commodity price environment, manage its debt, and realize value from its production assets will be key going forward.

Financial Highlights

46 data points
Beta

Revenue

$3.12B

Net Income

-$2.61B

-83.7% Net Margin

EPS (Diluted)

$-3.42

Total Assets

$50.09B

Cash & Equivalents

$2.55B

Free Cash Flow

-$107.00M

Financial Statements
Beta
Revenue$3.12B
Operating Expenses$292.00M
Operating Income-$2.64B
Net Income-$2.61B
EPS (Basic)$-3.42
EPS (Diluted)$-3.42
Shares Outstanding (Basic)763.30M
Shares Outstanding (Diluted)763.30M

Key Highlights

  • 1Occidental Petroleum reported a substantial net loss of $2.6 billion for Q3 2015 and $2.7 billion for the first nine months of 2015, compared to net income in the prior year periods.
  • 2Significant asset impairments, totaling $3.1 billion, were recorded in the Oil and Gas segment during Q3 2015, primarily due to declining oil and gas prices and the pending sale of Williston operations.
  • 3Despite lower commodity prices, worldwide oil and gas production volumes increased for both the three and nine-month periods compared to 2014, driven by domestic (Permian Resources) and international operations.
  • 4Net sales decreased significantly in the three and nine-month periods due to lower realized prices for all oil and gas commodities, partially offset by higher crude oil volumes.
  • 5The Chemical segment showed improved earnings due to lower costs and a gain on asset sale, while the Midstream and Marketing segment experienced lower earnings.
  • 6Cash and cash equivalents decreased, while restricted cash related to the California Resources spin-off remained significant.
  • 7The company issued $1.5 billion in senior unsecured notes in June 2015.

Frequently Asked Questions

The primary reason for the significant net loss is the substantial decline in oil and gas commodity prices, which led to large asset impairment charges totaling $3.1 billion in the Oil and Gas segment. Lower realized prices for crude oil, NGLs, and natural gas across the board significantly impacted revenues and profitability.

Despite the challenging price environment, Occidental Petroleum experienced an increase in both production and sales volumes. Total worldwide average daily oil and gas production volumes rose in the third quarter and for the first nine months compared to 2014, with contributions from both domestic (particularly Permian Resources) and international operations.

The spin-off of California Resources, completed in November 2014, resulted in restricted cash of $1.8 billion remaining as of September 30, 2015. This restricted cash must be used within 18 months for specific purposes like dividends, share repurchases, or debt repayment. The spin-off also impacted historical financial comparisons, with California Resources' operations treated as discontinued operations in 2014.

The filing does not provide explicit future guidance for performance. However, management notes that income and cash flows are largely dependent on oil and gas segment's realized prices, sales volumes, and operating costs. The report indicates that lower prices will likely result in negative price-related changes to the company's year-end proved oil, NGLs, and gas reserves due to the shortening of their economic life.