10-QPeriod: Q1 FY2019

OCCIDENTAL PETROLEUM CORP /DE/ Quarterly Report for Q1 Ended Mar 31, 2019

Filed May 6, 2019For Securities:OXYOXY-WT

Summary

Occidental Petroleum Corporation's first quarter 2019 results show a decrease in net income to $631 million from $708 million in the prior year, reflecting lower commodity prices. Net sales increased to $4.0 billion from $3.8 billion, driven by higher marketing margins and crude oil volumes, partially offset by price declines. The company's financial position remains solid, with total assets of $44.4 billion and total liabilities of $23.1 billion, though stockholders' equity saw a slight decrease. The company is actively navigating a dynamic market environment characterized by fluctuating commodity prices. While operational performance in the oil and gas segment was impacted by lower realized prices, the midstream and marketing segment showed strong improvement. A significant development is Occidental's ongoing pursuit of acquiring Anadarko Petroleum Corporation, with multiple revised proposals and significant financing arrangements, including a $10 billion commitment from Berkshire Hathaway, indicating a strategic focus on growth through acquisition despite market pressures.

Financial Highlights

50 data points
Beta

Revenue

$4.00B

83.3% Gross Margin

Net Income

$628.00M

15.7% Net Margin

EPS (Diluted)

$0.84

Total Assets

$44.38B

Cash & Equivalents

$1.75B

Free Cash Flow

-$311.00M

Financial Statements
Beta
Revenue$4.00B
Cost of Revenue$669.00M
Gross Profit$3.33B
SG&A Expenses$140.00M
Operating Income$631.00M
Net Income$628.00M
EPS (Basic)$0.84
EPS (Diluted)$0.84
Shares Outstanding (Basic)748.90M
Shares Outstanding (Diluted)750.50M

Key Highlights

  • 1Net income decreased to $631 million for Q1 2019 from $708 million in Q1 2018, primarily due to lower commodity prices.
  • 2Net sales increased to $4.0 billion in Q1 2019 from $3.8 billion in Q1 2018, driven by improved midstream marketing margins and higher crude oil volumes.
  • 3Total assets grew to $44.4 billion as of March 31, 2019, from $43.9 billion at year-end 2018.
  • 4Stockholders' equity slightly decreased to $21.2 billion from $21.3 billion, mainly due to treasury stock repurchases.
  • 5Cash flow from operating activities was $948 million in Q1 2019, a slight decrease from $1.0 billion in Q1 2018.
  • 6Occidental is actively pursuing the acquisition of Anadarko Petroleum Corporation, with substantial financing arrangements, including a $10 billion investment from Berkshire Hathaway.
  • 7The company adopted new lease accounting standards (ASC 842) in January 2019, resulting in the recognition of operating lease assets and liabilities on the balance sheet.

Frequently Asked Questions

The primary driver for the decrease in net income to $631 million from $708 million was lower commodity prices, including crude oil, NGL, and domestic natural gas, as well as lower realized caustic soda prices.

Occidental is actively pursuing the acquisition of Anadarko Petroleum Corporation, having delivered multiple revised proposals. This strategic initiative is supported by significant financing commitments, including a $10 billion investment from Berkshire Hathaway and committed financing for the cash portion of the acquisition, demonstrating a clear focus on growth through this potential transaction.

The adoption of ASC 842 on January 1, 2019, required Occidental to recognize most leases, including operating leases, on the balance sheet. This resulted in the recognition of operating lease assets and lease liabilities, totaling $772 million each at the adoption date, without a material impact on net income, cash flows, or stockholders' equity.

Net sales increased to $4.0 billion from $3.8 billion primarily due to higher marketing margins in the midstream and marketing segment, driven by improved crude oil price spreads, and an increase in domestic crude oil sales volumes. These factors offset the negative impact of lower realized prices for crude oil, NGL, and domestic natural gas.