10-QPeriod: Q1 FY2017

OCCIDENTAL PETROLEUM CORP /DE/ Quarterly Report for Q1 Ended Mar 31, 2017

Filed May 4, 2017For Securities:OXYOXY-WT

Summary

Occidental Petroleum Corporation (OXY) reported a significant improvement in financial performance for the first quarter of 2017 compared to the same period in 2016. Net income rose to $117 million from $78 million, driven primarily by higher oil prices which boosted net sales to $2.96 billion from $2.12 billion. The company's oil and gas segment saw a substantial rebound, moving from a loss of $485 million to a profit of $220 million, largely due to a 67% increase in realized crude oil prices. The chemical segment also demonstrated resilience, with earnings of $170 million, supported by improved caustic soda pricing and volumes. Despite overall segment losses, the midstream and marketing segment showed a reduction in losses due to higher marketing margins and new terminal operations. Occidental's liquidity remains robust, with $1.5 billion in cash, and the company expects to fund its needs through operations, asset monetization, and potential borrowings.

Financial Highlights

42 data points
Beta

Revenue

$2.96B

Net Income

$117.00M

4.0% Net Margin

EPS (Diluted)

$0.15

Total Assets

$42.47B

Cash & Equivalents

$1.49B

Free Cash Flow

-$217.00M

Financial Statements
Beta
Revenue$2.96B
Net Income$117.00M
EPS (Basic)$0.15
EPS (Diluted)$0.15
Shares Outstanding (Basic)764.40M
Shares Outstanding (Diluted)765.20M

Key Highlights

  • 1Net income increased to $117 million in Q1 2017 from $78 million in Q1 2016, reflecting improved commodity prices.
  • 2Net sales surged by 39% to $2.96 billion in Q1 2017, driven by higher prices across oil, chemicals, and vinyls.
  • 3The oil and gas segment's pre-tax operating profit dramatically improved, turning from a loss of $485 million in Q1 2016 to a profit of $220 million in Q1 2017, primarily due to higher oil prices.
  • 4Average realized oil prices increased by 67% to $49.04 per barrel in Q1 2017 compared to $29.42 in Q1 2016.
  • 5Occidental completed the sale of its South Texas operations in April 2017, with related assets classified as held for sale on the balance sheet as of March 31, 2017.
  • 6Cash provided by operating activities remained strong at $652 million for Q1 2017, consistent with the prior year, despite a significant increase in working capital usage.
  • 7Capital expenditures increased to $722 million in Q1 2017 from $646 million in Q1 2016, primarily focused on the oil and gas segment.

Frequently Asked Questions

The primary driver was a significant increase in commodity prices, particularly for oil. This led to higher net sales and a substantial turnaround in the oil and gas segment's profitability, moving from a loss in the prior year to a profit. Improved pricing and volumes in the chemical segment also contributed positively.

Occidental is actively managing its portfolio, evidenced by the sale of its South Texas operations in April 2017. These assets were classified as 'held for sale' on the March 31, 2017 balance sheet. This strategy aims to focus on core assets and potentially generate cash for other strategic initiatives or debt reduction.

The company reported $1.5 billion in cash at the end of the first quarter of 2017 and maintained strong operating cash flows. Management expects to fund its liquidity needs, including dividends, through existing cash, operational cash generation, monetization of non-core assets, and potential borrowings, indicating a stable short-term liquidity position.

Occidental has established environmental remediation reserves totaling $867 million as of March 31, 2017. The company also disclosed a reasonably possible range of additional losses up to $1.1 billion beyond these recorded liabilities. These reserves are primarily related to CERCLA sites and other environmental matters, with ongoing legal proceedings and potential costs associated with the Maxus bankruptcy and Passaic River cleanup.