10-QPeriod: Q1 FY2018

OCCIDENTAL PETROLEUM CORP /DE/ Quarterly Report for Q1 Ended Mar 31, 2018

Filed May 8, 2018For Securities:OXYOXY-WT

Summary

Occidental Petroleum Corporation (OXY) reported a significant improvement in financial performance for the first quarter of 2018 compared to the same period in 2017. Net income surged to $708 million from $117 million, driven by higher crude oil prices and volumes in its oil and gas segment, as well as improved caustic soda prices in the chemical segment. This robust performance translated into a substantial increase in diluted earnings per share to $0.92 from $0.15. Operationally, the company saw increased production volumes, particularly from its Permian Resources operations. Despite higher capital expenditures year-over-year, driven by investments in the oil and gas segment, Occidental generated strong operating cash flow of $1.0 billion. The company also executed strategic financing activities, including issuing $1.0 billion in senior notes and repaying $500 million in maturing debt, while maintaining a strong liquidity position. Management expects to fund future needs through operations, asset monetization, and potential borrowings.

Financial Highlights

46 data points
Beta

Revenue

$3.69B

63.5% Gross Margin

Net Income

$705.00M

19.1% Net Margin

EPS (Diluted)

$0.92

Total Assets

$42.81B

Cash & Equivalents

$1.61B

Free Cash Flow

-$23.00M

Financial Statements
Beta
Revenue$3.69B
Cost of Revenue$1.35B
Gross Profit$2.34B
Net Income$705.00M
EPS (Basic)$0.92
EPS (Diluted)$0.92
Shares Outstanding (Basic)765.60M
Shares Outstanding (Diluted)767.00M

Key Highlights

  • 1Net income increased significantly to $708 million in Q1 2018 from $117 million in Q1 2017, driven by improved commodity prices and segment performance.
  • 2Diluted EPS rose to $0.92 in Q1 2018 from $0.15 in Q1 2017, reflecting the strong earnings improvement.
  • 3Operating cash flow was robust at $1.0 billion for Q1 2018, up from $0.5 billion in Q1 2017.
  • 4Capital expenditures increased to $1.0 billion in Q1 2018, primarily focused on the oil and gas segment.
  • 5Occidental issued $1.0 billion in 4.2-percent senior notes due 2048 and repaid $500 million in maturing debt.
  • 6Total average daily production volumes increased to 609,000 BOE in Q1 2018 from 584,000 BOE in Q1 2017, largely due to Permian Resources.
  • 7The company reported a $40 million pre-tax gain from the divestiture of non-core midstream assets in March 2018.

Frequently Asked Questions

The primary drivers were higher crude oil prices and increased sales volumes in the oil and gas segment, coupled with significant improvements in realized caustic soda prices within the chemical segment. Higher marketing margins from improved crude oil price spreads and additional incremental margin from exporting crude oil also contributed.

Capital expenditures increased to $1.0 billion in the first quarter of 2018, up from $0.7 billion in the same period of 2017. The majority of these expenditures, approximately $0.9 billion, were directed towards the oil and gas segment, reflecting ongoing investments in exploration and production.

Occidental had $1.6 billion in cash at March 31, 2018. The company expects to fund its liquidity needs, including dividends, through cash on hand, operating cash flow, monetization of non-core assets, future borrowings, and potentially other capital issuances. They also confirmed compliance with all debt covenants and substantial capacity for additional borrowings.

Yes, Occidental issued $1.0 billion of 4.2-percent senior notes due 2048, receiving net proceeds of approximately $985 million. These proceeds were used to refinance the repayment of $500 million of maturing senior notes, with the remainder for general corporate purposes. The company also entered into a new $3.0 billion revolving credit facility.