Summary
Occidental Petroleum Corporation's (OXY) Q2 2019 10-Q filing reveals a company navigating significant strategic shifts alongside its operational performance. Financially, the company reported a decline in net income and earnings per share for both the quarter and the year-to-date periods compared to 2018, primarily driven by lower realized prices for crude oil and caustic soda. Despite these headwinds, net sales saw an increase driven by higher crude oil volumes and improved marketing margins. The most impactful development disclosed is the proposed acquisition of Anadarko Petroleum Corporation, announced in May 2019. This transaction, if completed, will be financed through a combination of debt, a substantial investment from Berkshire Hathaway, and equity issuances, significantly altering Occidental's capital structure. The company also announced an agreement to sell Anadarko's international assets to Total S.A. to help finance the Anadarko acquisition. This period underscores OXY's strategic pivot towards a transformative acquisition, with significant financial implications and associated risks that investors must carefully consider.
Financial Highlights
50 data points| Revenue | $4.42B |
| Cost of Revenue | $636.00M |
| Gross Profit | $3.78B |
| SG&A Expenses | $163.00M |
| Operating Income | $1.27B |
| Net Income | $632.00M |
| EPS (Basic) | $0.84 |
| EPS (Diluted) | $0.84 |
| Shares Outstanding (Basic) | 748.30M |
| Shares Outstanding (Diluted) | 749.50M |
Key Highlights
- 1Net income for Q2 2019 was $635 million, a decrease from $848 million in Q2 2018. Diluted EPS was $0.84 versus $1.10.
- 2Year-to-date net income was $1.266 billion, down from $1.556 billion in the same period of 2018. Diluted EPS was $1.68 versus $2.02.
- 3Net sales increased to $4.42 billion in Q2 2019 from $4.083 billion in Q2 2018, driven by higher crude oil sales volumes and marketing margins, partially offset by lower commodity prices.
- 4The company announced a proposed merger with Anadarko Petroleum Corporation for $59.00 cash and 0.2934 shares of Occidental common stock per Anadarko share.
- 5To finance the Anadarko acquisition, Occidental entered into a $10 billion investment agreement with Berkshire Hathaway (8% cumulative perpetual preferred stock and a warrant) and secured $8.8 billion in term loan financing.
- 6Occidental agreed to sell Anadarko's international assets (Algeria, Ghana, Mozambique, South Africa) to Total S.A. for $8.8 billion, contingent on the Anadarko merger closing.
- 7The company reported $2.47 billion in capital expenditures for the first six months of 2019, primarily in the oil and gas segment.