When will Occidental Petroleum announce its final fourth quarter and full-year 2019 results?

Occidental Petroleum will announce its final fourth quarter and full-year 2019 results on February 27, 2020. The figures provided in this 8-K are preliminary and subject to completion of customary closing and review procedures.

How will the change in accounting for Western Midstream Partners (WES) affect Occidental's financial statements?

As of December 31, 2019, Occidental will no longer consolidate WES. For Q4 2019, WES's results of operations and cash flows will be included, but the balance sheet as of December 31, 2019, will reflect Occidental's investment in WES using the equity method of accounting, rather than consolidated assets and liabilities.

What were the main drivers for exceeding production guidance in Q4 2019?

Production from continuing operations for Q4 2019 exceeded guidance due to reduced downtime, improved time-to-market, and strong base and new well performance. These positive factors were partially offset by adjustments for higher royalty/outside operated payments in the DJ Basin and the termination of production contracts in Qatar.

What are the significant charges impacting Occidental's reported income for Q4 2019?

Occidental expects significant pre-tax charges impacting Q4 reported income, primarily related to the Anadarko acquisition. These include an aggregate net gain on asset sales ($475 million), impairment and other charges related to the WES investment ($1 billion), acquisition-related costs like severance and integration costs ($655 million), and a positive mark-to-market adjustment on derivatives ($84 million).

OXY/OXY-WT 8-K: Earnings & Results

Summary

Occidental Petroleum (OXY) filed an 8-K on February 11, 2020, providing preliminary results for the fourth quarter and full year ended December 31, 2019. The report highlights that final results will be announced on February 27, 2020, and the preliminary figures are subject to customary closing procedures. A significant update includes the change in accounting for Western Midstream Partners, LP (WES), moving from consolidation to the equity method of accounting as of December 31, 2019. This shift will impact balance sheets and income statements going forward, with Q4 2019 results still reflecting WES's operational and cash flow data but the balance sheet showing an investment value. The preliminary data indicates higher-than-anticipated production for Q4 2019, exceeding guidance due to reduced downtime, improved time-to-market, and strong well performance, partially offset by specific adjustments related to royalty payments and contract terminations in Qatar. Capital spending for Q4 2019 was $1.95 billion, and full-year capital spending was $8.2 billion, which was $400 million below the budget. The company also outlined several significant pre-tax charges affecting Q4 reported income, primarily related to the Anadarko acquisition, including asset sales, impairments on the WES investment, integration costs, and derivative adjustments.

Key Highlights

1Occidental Petroleum (OXY) announced preliminary Q4 and full-year 2019 financial and operational results, with final results due February 27, 2020.
2The company will no longer consolidate Western Midstream Partners, LP (WES) as of December 31, 2019, shifting to the equity method of accounting.
3Q4 2019 production exceeded guidance at 1,402 MBOED (normalized 1,391 MBOED) due to operational improvements.
4Full-year 2019 capital spending was $8.2 billion, $400 million below the $8.6 billion pro forma budget.
5Q4 2019 reported income will be significantly impacted by pre-tax charges totaling over $2.1 billion related to the Anadarko acquisition, including asset sales, WES impairment, and integration costs.
6Occidental expects 2020 annual production to grow 2% with a capital budget of $5.2 - $5.4 billion.
7Domestic realized oil prices for Q4 2019 averaged $56.00/BBL.

OCCIDENTAL PETROLEUM CORP /DE/ 8-K Report, Financial Results (Feb 11, 2020)

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Key Highlights

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