10-QPeriod: Q3 FY2018

OCCIDENTAL PETROLEUM CORP /DE/ Quarterly Report for Q3 Ended Sep 30, 2018

Filed November 5, 2018For Securities:OXYOXY-WT

Summary

Occidental Petroleum Corporation (OXY) reported a significant increase in financial performance for the nine months ended September 30, 2018, compared to the same period in 2017. Net income surged to $3.4 billion from $814 million, driven by higher crude oil prices, increased domestic production volumes, and strategic asset sales. Notably, the company realized a substantial gain of $902 million from the divestiture of non-core domestic midstream assets in the third quarter of 2018, which significantly boosted its financial results. The company's liquidity position remains strong, with $3.0 billion in cash and cash equivalents at the end of the period. Operating cash flow improved year-over-year, reflecting the favorable commodity price environment and operational efficiencies. Occidental also demonstrated a commitment to returning value to shareholders through dividend payments and share repurchases, while managing its debt levels effectively, including the issuance of $1.0 billion in senior notes. Overall, the report indicates a robust operational and financial performance for Occidental during this period, largely benefiting from favorable market conditions and strategic capital allocation.

Financial Highlights

50 data points
Beta

Revenue

$4.26B

83.0% Gross Margin

Net Income

$1.86B

43.7% Net Margin

EPS (Diluted)

$2.44

Total Assets

$44.96B

Cash & Equivalents

$2.95B

Free Cash Flow

$1.08B

Financial Statements
Beta
Revenue$4.26B
Cost of Revenue$722.00M
Gross Profit$3.54B
Operating Income$3.42B
Net Income$1.86B
EPS (Basic)$2.44
EPS (Diluted)$2.44
Shares Outstanding (Basic)761.70M
Shares Outstanding (Diluted)763.30M

Key Highlights

  • 1Net income for the nine months ended September 30, 2018, increased significantly to $3.4 billion from $814 million in the prior year period.
  • 2Revenue for the nine months ended September 30, 2018, rose to $13.1 billion from $9.0 billion in the same period of 2017, driven by higher oil prices and increased domestic volumes.
  • 3The company recognized a significant pre-tax gain of $902 million from the sale of non-core domestic midstream assets in Q3 2018.
  • 4Cash and cash equivalents stood at $3.0 billion as of September 30, 2018, indicating a strong liquidity position.
  • 5Net cash provided by operating activities increased to $5.2 billion for the first nine months of 2018, up from $3.4 billion in the prior year.
  • 6Capital expenditures increased to $3.6 billion for the first nine months of 2018 from $2.4 billion in the prior year, with a significant portion allocated to the oil and gas segment.
  • 7Occidental issued $1.0 billion of 4.2-percent senior notes due 2048 during the period.

Frequently Asked Questions

The significant increase in net income was primarily driven by higher crude oil prices, increased domestic production volumes, and a substantial $902 million pre-tax gain from the sale of non-core domestic midstream assets in the third quarter of 2018. These factors, combined with improved marketing margins and chemical segment performance, led to a strong year-over-year financial performance.

Occidental Petroleum maintained a strong liquidity position with $3.0 billion in cash and cash equivalents as of September 30, 2018. Net cash provided by operating activities increased significantly due to higher oil prices and volumes. The company also managed its debt effectively, issuing $1.0 billion in senior notes and repaying existing debt, while remaining compliant with all financing agreement covenants and having substantial capacity for additional borrowings.

The most significant transaction was the sale of non-core domestic midstream assets for approximately $2.6 billion, resulting in a $902 million pre-tax gain. Additionally, Occidental acquired a previously leased power and steam cogeneration facility in Louisiana for $443 million and divested other non-core midstream assets for approximately $150 million.

All three segments showed improvement. The Oil and Gas segment benefited from higher crude oil prices and increased domestic volumes, despite an impairment charge related to an asset in Qatar. The Chemical segment saw improved earnings due to higher caustic soda prices and increased chlorovinyl demand. The Midstream and Marketing segment experienced a substantial earnings boost from the gain on asset sales, as well as higher marketing margins due to improved crude oil price spreads.