Tuesday, August 2, 2022 4:15 PM ET
Occidental Announces 2nd Quarter 2022 Results
- Repaid $4.8 billion of debt, representing 19% of total outstanding principal
- Repurchased over 18 million shares for approximately $1.1 billion through August 1, 2022
- Earnings per diluted share of $3.47 and adjusted earnings per diluted share of $3.16
- Cash flow from continuing operations of $5.3 billion and cash flow from continuing operations before working capital of $5.1 billion
- Capital spending of $972 million, resulting in record quarterly free cash flow before working capital of $4.2 billion
- OxyChem generated record quarterly pre-tax earnings of $800 million; adjusted mid-point total year pre-tax earnings guidance to $2.3 billion
HOUSTON — August 2, 2022 — Occidental (NYSE: OXY) today announced net income attributable to common stockholders for the second quarter of 2022 of $3.6 billion, or $3.47 per diluted share, and adjusted income attributable to common stockholders of $3.2 billion, or $3.16 per diluted share. This is compared to net income attributable to common stockholders for the first quarter of 2022 of $4.7 billion, or $4.65 per diluted share, and adjusted income attributable to common stockholders of $2.1 billion, or $2.12 per diluted share. Second quarter after-tax items affecting comparability of $315 million included $174 million of derivative gains and $140 million of gains on early debt extinguishment.
“Oxy completed another quarter with strong operational and financial performance across all of our businesses. We generated $4.2 billion of free cash flow before working capital in the second quarter, our highest quarterly free cash flow to date. We also achieved a significant milestone as we surpassed our near-term debt reduction goal and activated our share repurchase program," said President and Chief Executive Officer Vicki Hollub. "Our ongoing efforts to improve the balance sheet remain in place, but we are pleased that our deleveraging progress has reached a stage where our focus can expand to additional cash flow priorities.”
Oil and Gas
Oil and gas pre-tax income on continuing operations for the second quarter of 2022 was $4.1 billion, compared to pre-tax income of $2.9 billion for the first quarter of 2022. Excluding items affecting comparability, second quarter of 2022 oil and gas income improved over the first quarter of 2022 due to higher crude oil and domestic natural gas prices and higher crude oil and NGL volumes, partially offset by higher lease operating expenses. For the second quarter of 2022, average WTI and Brent marker prices were $108.41 per barrel and $111.69 per barrel, respectively. Average worldwide realized crude oil prices increased by approximately 17 percent from the prior quarter to $107.72 per barrel. Average worldwide realized natural gas liquids (NGL) prices increased by approximately 6 percent from the prior quarter to $42.04 per barrel. Average domestic realized gas prices increased by approximately 50 percent from the prior quarter to $6.25 per Mcf.
Total average global production of 1,147 thousand of barrels of oil equivalent per day (Mboed) for the second quarter of 2022 was within the mid-point of guidance. Permian, Rockies and International came within guidance, with average production of 493 Mboed, 279 Mboed and 228 Mboed, respectively. Gulf of Mexico average production of 147 Mboed exceeded the high-end of guidance.
Chemical pre-tax income of $800 million for the second quarter of 2022 exceeded guidance of $775 million, and represented the fourth consecutive quarter of record earnings. Compared to the first quarter of 2022 pre-tax income of $671 million, the increase in the second quarter of 2022 income was driven primarily by higher realized pricing and improved demand across most product lines, partially offset by higher energy costs.
Midstream and Marketing
Midstream and marketing pre-tax income was $264 million for the second quarter of 2022, and included net derivative gains of $96 million. WES equity income was $159 million. Excluding items affecting comparability, second quarter of 2022 midstream and marketing pre-tax income came within guidance and increased, compared to the first quarter of 2022, primarily due to higher realized sulfur prices and sales volumes at Al Hosn Gas and higher Dolphin Energy pipeline equity income, resulting from the completion of the first quarter planned maintenance, and partially offset by the timing impact of crude sales.
Supplemental Non-GAAP Measures
This press release refers to adjusted income (loss), cash flow from continuing operations before working capital and free cash flow, which are supplemental measures not calculated in accordance with generally accepted accounting principles in the United States (GAAP). These Non-GAAP financial measures have limitations as analytical tools and should not be considered in isolation or as an alternative to the comparable GAAP financial measures. Definitions of adjusted income (loss) and a reconciliation to net income (loss), along with cash flow from continuing operations before working capital and free cash flow and a reconciliation to the comparable GAAP financial measures, are included in the financial schedules of this press release. Occidental’s definition of adjusted income (loss), cash flow from continuing operations before working capital and free cash flow may differ from similarly titled measures provided by other companies in our industry and as a result may not be comparable.
Occidental is an international energy company with assets primarily in the United States, the Middle East and North Africa. We are one of the largest oil producers in the U.S., including a leading producer in the Permian and DJ basins, and offshore Gulf of Mexico. Our midstream and marketing segment provides flow assurance and maximizes the value of our oil and gas. Our chemical subsidiary OxyChem manufactures the building blocks for life-enhancing products. Our Oxy Low Carbon Ventures subsidiary is advancing leading-edge technologies and business solutions that economically grow our business while reducing emissions. We are committed to using our global leadership in carbon management to advance a lower-carbon world. Visit oxy.com for more information.
This press release contains “forward-looking statements” within the meaning of the “safe harbor” provisions of the Private Securities Litigation Reform Act of 1995, including but not limited to statements about Occidental’s expectations, beliefs, plans or forecasts. All statements other than statements of historical fact are “forward-looking statements” for purposes of federal and state securities laws, and they include, but are not limited to: any projections of earnings, revenue or other financial items or future financial position or sources of financing; any statements of the plans, strategies and objectives of management for future operations, business strategy or financial position; any statements regarding future economic conditions or performance; any statements of belief; and any statements of assumptions underlying any of the foregoing. Words such as “estimate,” “project,” “predict,” “will,” “would,” “should,” “could,” “may,” “might,” “anticipate,” “plan,” “intend,” “believe,” “expect,” “aim,” “goal,” “target,” “objective,” "commit," "advance," “likely” or similar expressions that convey the prospective nature of events or outcomes are generally indicative of forward-looking statements. You should not place undue reliance on these forward-looking statements, which speak only as of the date of this press release. Unless legally required, Occidental does not undertake any obligation to update, modify or withdraw any forward-looking statements as a result of new information, future events or otherwise.
Although Occidental believes that the expectations reflected in any of its forward-looking statements are reasonable, actual results may differ from anticipated results, sometimes materially. In addition, historical, current and forward-looking sustainability-related statements may be based on standards for measuring progress that are still developing, internal controls and processes that continue to evolve and assumptions that are subject to change in the future. Factors that could cause results to differ from those projected or assumed in any forward-looking statement include, but are not limited to: general economic conditions, including slowdowns, domestically or internationally; Occidental’s indebtedness and other payment obligations, including the need to generate sufficient cash flows to fund operations; Occidental’s ability to successfully monetize select assets and repay or refinance debt and the impact of changes in Occidental’s credit ratings; the scope and duration of the COVID-19 pandemic and ongoing actions taken by governmental authorities and other third parties in response to the pandemic; assumptions about energy markets; global and local commodity and commodity-futures pricing fluctuations and volatility; supply and demand considerations for, and the prices of, Occidental’s products and services; actions by the Organization of the Petroleum Exporting Countries (OPEC) and non-OPEC oil producing countries; results from operations and competitive conditions; future impairments of our proved and unproved oil and gas properties or equity investments, or write-downs of productive assets, causing charges to earnings; unexpected changes in costs; inflation and its impact on markets and economic activity; availability of capital resources, levels of capital expenditures and contractual obligations; the regulatory approval environment, including Occidental's ability to timely obtain or maintain permits or other governmental approvals, including those necessary for drilling and/or development projects; Occidental's ability to successfully complete, or any material delay of, field developments, expansion projects, capital expenditures, efficiency projects, acquisitions or dispositions; risks associated with acquisitions, mergers and joint ventures, such as difficulties integrating businesses, uncertainty associated with financial projections, projected synergies, restructuring, increased costs and adverse tax consequences; uncertainties and liabilities associated with acquired and divested properties and businesses; uncertainties about the estimated quantities of oil, NGL and natural gas reserves; lower-than-expected production from development projects or acquisitions; Occidental’s ability to realize the anticipated benefits from prior or future streamlining actions to reduce fixed costs, simplify or improve processes and improve Occidental’s competitiveness; exploration, drilling and other operational risks; disruptions to, capacity constraints in, or other limitations on the pipeline systems that deliver Occidental’s oil and natural gas and other processing and transportation considerations; volatility in the securities, capital or credit markets; governmental actions, war (including the Russia-Ukraine war) and political conditions and events; legislative or regulatory changes, including changes relating to hydraulic fracturing or other oil and natural gas operations, retroactive royalty or production tax regimes, deep-water and onshore drilling and permitting regulations and environmental regulation (including regulations related to climate change); environmental risks and liability under federal, regional, state, provincial, tribal, local and international environmental laws and regulations (including remedial actions); Occidental's ability to recognize intended benefits from its business strategies and initiatives, such as Occidental's low carbon ventures businesses or announced greenhouse gas emissions reduction targets or net-zero goals; potential liability resulting from pending or future litigation; disruption or interruption of production or manufacturing or facility damage due to accidents, chemical releases, labor unrest, weather, power outages, natural disasters, cyber-attacks or insurgent activity; the creditworthiness and performance of Occidental's counterparties, including financial institutions, operating partners and other parties; failure of risk management; Occidental’s ability to retain and hire key personnel; supply, transportation and labor constraints; reorganization or restructuring of Occidental’s operations; changes in state, federal or international tax rates; and actions by third parties that are beyond Occidental’s control.
Additional information concerning these and other factors that may cause Occidental's results of operations and financial position to differ from expectations can be found in Occidental’s other filings with the U.S. Securities and Exchange Commission, including Occidental’s Annual Report on Form 10-K for the year ended December 31, 2021, Quarterly Reports on Form 10-Q and Current Reports on Form 8-K.
View the news release and financial schedules here.