10-QPeriod: Q3 FY2021

OCCIDENTAL PETROLEUM CORP /DE/ Quarterly Report for Q3 Ended Sep 30, 2021

Filed November 4, 2021For Securities:OXYOXY-WT

Summary

Occidental Petroleum Corporation (OXY) reported a significant financial turnaround in the nine months ended September 30, 2021, compared to the same period in 2020, driven by a substantial increase in net sales and a return to profitability. Net sales surged to $18.0 billion from $13.6 billion, reflecting higher commodity prices and improved chemical and midstream segment performance. The company generated a net income of $785 million, a stark contrast to the $13.7 billion net loss in the prior year, largely due to a significant reduction in asset impairments and other charges. Operationally, Occidental demonstrated strong cash flow generation from continuing operations, reaching $7.0 billion for the nine months ended September 30, 2021, up from $2.5 billion in the prior year, primarily fueled by higher commodity prices. The company also made substantial progress on its debt reduction strategy, repaying $4.5 billion of debt during the period and retiring $750 million in interest rate swaps, signaling a stronger focus on balance sheet improvement.

Financial Highlights

48 data points
Beta

Revenue

$6.88B

89.4% Gross Margin

Net Income

$828.00M

12.0% Net Margin

EPS (Diluted)

$0.65

Total Assets

$75.76B

Cash & Equivalents

$2.29B

Free Cash Flow

$2.46B

Financial Statements
Beta
Revenue$6.88B
Cost of Revenue$731.00M
Gross Profit$6.15B
SG&A Expenses$240.00M
Operating Income$1.23B
Net Income$828.00M
EPS (Basic)$0.67
EPS (Diluted)$0.65
Shares Outstanding (Basic)935.40M
Shares Outstanding (Diluted)957.70M

Key Highlights

  • 1Significant revenue increase: Net sales grew to $18.0 billion for the nine months ended September 30, 2021, up from $13.6 billion in the prior year, driven by higher commodity prices.
  • 2Return to profitability: Occidental reported a net income of $785 million for the nine months ended September 30, 2021, a substantial improvement from a net loss of $13.7 billion in the same period of 2020.
  • 3Stronger operating cash flow: Cash flow from continuing operations increased to $7.0 billion for the first nine months of 2021, up from $2.5 billion in 2020, reflecting improved market conditions.
  • 4Debt reduction progress: The company repaid $4.5 billion in debt and retired $750 million in interest rate swaps during the first nine months of 2021, strengthening its financial position.
  • 5Divestiture program completion: Occidental completed its large-scale asset divestiture program with the sale of its Ghana assets, as well as Permian Basin and DJ Basin assets earlier in the year.
  • 6Improved segment performance: Both the Oil and Gas and Chemical segments showed significant improvements in pre-tax income, while the Midstream and Marketing segment moved from a substantial loss to a profit.

Frequently Asked Questions

The primary driver for Occidental's improved financial performance was the significant increase in commodity prices, particularly for oil, NGLs, and natural gas. This led to higher net sales, improved realized prices across segments, and consequently, a return to profitability and stronger operating cash flow.

Occidental has actively managed its debt by repaying $4.5 billion during the first nine months of 2021, utilizing excess cash flow and proceeds from asset sales. The company also retired $750 million in interest rate swaps, contributing to annual interest and financing cost savings. The completion of its large-scale asset divestiture program, including the Ghana assets sale, further supports its deleveraging strategy.

Occidental's outlook is highly dependent on oil prices and broader energy market dynamics. While commodity prices have increased significantly in 2021, the company acknowledges potential impacts from the ongoing COVID-19 pandemic. Operational priorities include maximizing cash flow, maintaining cost savings, and continuing to strengthen the balance sheet through debt reduction. The company expects its cash on hand and credit facilities to be sufficient for near-term obligations.

The Oil and Gas segment saw a strong rebound in pre-tax income driven by higher commodity prices, despite lower sales volumes. The Chemical segment also improved significantly due to better realized prices. The Midstream and Marketing segment moved from a substantial loss to profitability, benefiting from higher crude oil prices and export sales. Key items affecting comparability included significant asset impairments in the prior year, derivative gains and losses, and acquisition-related costs.