10-QPeriod: Q2 FY2023

OCCIDENTAL PETROLEUM CORP /DE/ Quarterly Report for Q2 Ended Jun 30, 2023

Filed August 2, 2023For Securities:OXYOXY-WT

Summary

Occidental Petroleum Corporation (OXY) reported a significant decrease in net income and revenues for the three and six months ended June 30, 2023, compared to the same periods in the prior year. This decline is primarily attributed to lower commodity prices for oil and natural gas. Despite the revenue drop, the company generated substantial operating cash flow, enabling it to continue investing in its asset base and low-carbon initiatives. OXY also continued its commitment to shareholder returns through dividends and a significant share repurchase program. The company's balance sheet remains solid, with efforts focused on managing debt and optimizing financial leverage. Key developments include impairments in the Oil and Gas segment and positive progress on preferred stock redemptions.

Financial Highlights

45 data points
Beta

Revenue

$6.60B

88.0% Gross Margin

Net Income

$860.00M

13.0% Net Margin

EPS (Diluted)

$0.63

Total Assets

$71.20B

Cash & Equivalents

$486.00M

Free Cash Flow

$1.42B

Financial Statements
Beta
Revenue$6.60B
Cost of Revenue$791.00M
Gross Profit$5.81B
SG&A Expenses$277.00M
Net Income$860.00M
EPS (Basic)$0.68
EPS (Diluted)$0.63
Shares Outstanding (Basic)889.30M
Shares Outstanding (Diluted)958.80M

Key Highlights

  • 1Net income for the six months ended June 30, 2023, was $2.123 billion, a sharp decrease from $8.631 billion in the prior year, driven by lower commodity prices.
  • 2Total revenues for the six months ended June 30, 2023, were $13.927 billion, down from $19.025 billion in the prior year, reflecting softer energy markets.
  • 3The company generated $5.940 billion in net cash provided by operating activities for the six months ended June 30, 2023, demonstrating continued operational cash generation despite lower revenues.
  • 4Capital expenditures for the six months ended June 30, 2023, were $3.107 billion, reflecting ongoing investments in the oil and gas and chemical businesses, as well as low-carbon ventures.
  • 5Occidental repurchased approximately $1.2 billion of its common stock in the second quarter of 2023 under its $3.0 billion repurchase program, demonstrating a commitment to shareholder returns.
  • 6The company continued to redeem its preferred stock, triggering the redemption of $1.3 billion (face value) in the first six months of 2023, driven by common shareholder distributions exceeding $4.00 per share.
  • 7Asset impairments of $209 million were recorded in the Oil and Gas segment, primarily related to undeveloped acreage in the Powder River Basin and an equity investment.

Frequently Asked Questions

The primary reason for the decrease in net income and revenues is the significant decline in commodity prices for oil and natural gas during the first six months of 2023 compared to the same period in 2022. This led to lower realized prices across Occidental's oil and gas segment.

Occidental is focused on managing its debt through operating cash flow generation and strategic financial actions. While the company has substantial long-term debt, it has no remaining debt maturities in 2023 and is working to opportunistically reduce financial leverage. The company's credit ratings were also upgraded to investment grade by Moody's and Fitch in 2023.

Occidental is committed to shareholder returns through a framework that includes a sustainable and growing common share dividend and an active share buyback plan. The company repurchased a significant amount of its common stock in the first half of 2023 and is also actively redeeming its preferred stock, driven by distributions to common shareholders.

Occidental faces ongoing environmental liabilities and legal matters, notably the Diamond Alkali Superfund Site (DASS) litigation. The company is actively contesting a proposed EPA settlement that could significantly impact its financial position if OxyChem is deemed disproportionately responsible for remediation costs. Additionally, the company is involved in an arbitration with Andes regarding a share of an Ecuador arbitration award, which is proceeding through appeals.