10-QPeriod: Q3 FY2019

OCCIDENTAL PETROLEUM CORP /DE/ Quarterly Report for Q3 Ended Sep 30, 2019

Filed November 4, 2019For Securities:OXYOXY-WT

Summary

Occidental Petroleum Corporation (OXY) reported a net loss attributable to common stockholders of $912 million for the third quarter of 2019, a significant decrease from a net income of $1.87 billion in the prior year's quarter. This downturn is largely attributed to the substantial costs associated with the acquisition of Anadarko Petroleum Corporation, which closed on August 8, 2019. Merger-related costs amounted to $924 million in the third quarter, heavily impacting profitability. Despite the loss, revenues saw an increase due to higher oil production volumes following the Anadarko acquisition. The balance sheet reflects a substantial increase in total assets, from $43.9 billion at the end of 2018 to $125.4 billion as of September 30, 2019, driven by the acquisition. This is mirrored by a significant rise in total liabilities and equity. The company also completed the sale of Anadarko's Mozambique LNG assets for $4.2 billion in September 2019 as part of its strategy to divest non-core assets acquired in the Anadarko deal. Investors should monitor the integration progress of Anadarko, the execution of asset divestitures, and the management of the increased debt load.

Financial Highlights

51 data points
Beta

Revenue

$5.86B

87.4% Gross Margin

Net Income

-$912.00M

-15.6% Net Margin

EPS (Diluted)

$-1.08

Total Assets

$125.44B

Cash & Equivalents

$4.84B

Free Cash Flow

$688.00M

Financial Statements
Beta
Revenue$5.86B
Cost of Revenue$741.00M
Gross Profit$5.12B
SG&A Expenses$245.00M
Operating Income$529.00M
Net Income-$912.00M
EPS (Basic)$-1.08
EPS (Diluted)$-1.08
Shares Outstanding (Basic)845.70M
Shares Outstanding (Diluted)845.70M

Key Highlights

  • 1Reported a net loss attributable to common stockholders of $912 million for Q3 2019, compared to net income of $1.87 billion in Q3 2018, heavily influenced by Anadarko merger costs.
  • 2Total assets surged to $125.4 billion as of September 30, 2019, from $43.9 billion at year-end 2018, reflecting the significant impact of the Anadarko acquisition.
  • 3The company incurred $924 million in Anadarko merger-related costs during the third quarter of 2019.
  • 4Completed the sale of Anadarko's Mozambique LNG assets to Total S.A. for $4.2 billion in September 2019, as part of strategic divestitures.
  • 5Net sales increased to $5.7 billion in Q3 2019 from $5.2 billion in Q3 2018, primarily due to higher oil production volumes from the acquired Anadarko assets.
  • 6Long-term debt significantly increased to $47.6 billion from $10.2 billion, reflecting debt issued and assumed for the Anadarko acquisition.
  • 7Introduced Western Midstream Partners, LP (WES) as a new reporting segment following the Anadarko merger.

Frequently Asked Questions

The primary driver was the acquisition of Anadarko Petroleum Corporation, which closed on August 8, 2019. While it significantly increased assets and revenues due to higher production, it also led to substantial merger-related costs ($924 million in Q3) and a significant increase in debt, resulting in a net loss attributable to common stockholders for the quarter.

The acquisition dramatically increased Occidental's total assets, which grew from $43.9 billion at the end of 2018 to $125.4 billion by September 30, 2019. This expansion was financed by significant new debt issuance and the assumption of Anadarko's debt, leading to a corresponding increase in total liabilities and equity.

Occidental is implementing a strategy that includes asset divestitures, such as the sale of Anadarko's Mozambique LNG assets for $4.2 billion, and proceeds from other planned divestitures to help reduce its debt load. The company also completed an offer to exchange a significant portion of the Anadarko senior notes it assumed. Management expects to fund liquidity needs through cash on hand, operational cash flow, asset monetization, and potentially other capital issuances.

Western Midstream Partners, LP (WES) is now a consolidated subsidiary of Occidental following the Anadarko acquisition. Its operations, which include gathering systems, plants, and pipelines, are reported as a new segment (WES Midstream) from August 8, 2019, onwards. This provides transparency into this specific midstream business line within the broader Occidental structure.