Occidental Announces 3rd Quarter 2019 Results
- Completed acquisition of Anadarko on August 8
- Completed $3.9 billion sale of Mozambique and divested Plains interests for $650 million
- Repaid $4.9 billion of debt, including all 2020 debt maturities
- Returned $600 million to shareholders
- Achieved pre-tax income guidance for both OxyChem and Marketing and Other Midstream segments
- Achieved production from legacy Occidental operations of 737,000 BOE per day near the high end of guidance, with Permian Resources exceeding guidance at 300,000 BOE per day
- Reported third quarter combined production of 1,114,000 BOE per day from continuing operations, exceeding prior guidance midpoint by 32,000 BOE per day
HOUSTON – November 4, 2019 – Occidental Petroleum Corporation (NYSE:OXY) today announced a net loss attributable to common stockholders for the third quarter of 2019 of $912 million, or $1.08 per diluted share, and adjusted income attributable to common stockholders of $93 million, or $0.11 per diluted share. Third quarter pre-tax items affecting comparability mainly include Anadarko merger-related transaction costs and debt financing fees of $969 million, oil and gas impairment charges of $325 million and a gain on sale of $111 million related to Occidental’s sale of its interests in Plains All American Pipeline, L.P. and Plains GP Holdings, L.P. (together, Plains).
“I’m pleased to report that we are making significant progress with our integration of Anadarko. Our teams are working well together, and we continue to deliver outstanding operational results across our asset portfolio, positioning our company to fully execute on our value-capture initiatives,” said President and Chief Executive Officer Vicki Hollub. “We remain committed to the strategy we laid out to our investors, which focuses on deleveraging and returning excess free cash flow to shareholders, as evidenced by $4.9 billion of third quarter debt repayments, including all 2020 debt maturities, and returning $600 million to investors.”
Oil and Gas
Oil and gas pre-tax income for the third quarter of 2019 was $221 million, compared to $726 million for the prior quarter. The third quarter of 2019 results include a $285 million write-off of unproved domestic leases in areas where Occidental no longer plans to pursue exploration activities and a $40 million impairment charge related to the mutually agreed-upon early termination of the Idd El Shargi South Dome contract in Qatar. Third quarter results also include a mark-to-market gain of $75 million on crude oil hedges. Excluding impairment charges and the mark-to-market gain, the decrease in third quarter income reflects lower realized crude oil prices.
Total average daily production volume for the third quarter of 2019 was 1,155,000 barrels of oil equivalent (BOE), which included legacy Anadarko continuing operations of 377,000 BOE and discontinued Africa operations of 41,000 BOE. Production decreased for legacy Occidental operations, which produced 737,000 BOE for the third quarter of 2019, compared to average daily production of 741,000 BOE for the second quarter of 2019. Legacy Occidental Permian Resources average daily production volume of 300,000 BOE exceeded third quarter 2019 guidance, up 4 percent on a sequential quarter basis and 33 percent year-over-year, due to improved well performance and development activity. International average daily production volume was slightly below third quarter 2019 guidance at 279,000 BOE due to maintenance activities in the Middle East.
Total per BOE lease operating costs for the third quarter of 2019 decreased by 12 percent to $9.26, from $10.55 for the second quarter of 2019, due to lower plant and downhole maintenance costs.
For the third quarter of 2019, average WTI and Brent marker prices were $56.45 per barrel and $62.01 per barrel, respectively. Per barrel average worldwide realized crude oil prices decreased by 4 percent from the second quarter of 2019 to $56.26 for the third quarter of 2019. Per BOE average worldwide realized NGL prices decreased by 17 percent from the prior quarter to $14.96 per BOE for the third quarter of 2019. The increase in average domestic realized gas prices to $1.25 per Mcf during the third quarter of 2019 was due to higher realized prices from legacy Anadarko gas-producing operations.
OxyChem pre-tax income for the third quarter of 2019 was $207 million, compared to $208 million for second quarter of 2019, despite vinyl margins coming under pressure from increased ethylene costs as a result of industry-wide ethylene cracker downtime. Higher ethylene costs were offset by stronger sales and production across most product lines.
Midstream and Marketing
Marketing and Other Midstream pre-tax income for the third quarter of 2019 was $266 million, compared to $331 million for the second quarter of 2019. Third quarter of 2019 pre-tax income includes a pre-tax gain on sale of Plains for $111 million. Excluding the gain on sale, the decrease in third quarter of 2019 pre-tax income reflected lower marketing results due to narrowing of the Midland-to-Gulf Coast spread.
As a result of acquiring Anadarko, Occidental added a WES Midstream operating segment, which includes the operations of Western Midstream Partners, LP (WES), for the third quarter of 2019. WES Midstream pre-tax income for the third quarter of 2019 was $134 million and income attributable to noncontrolling interests was $42 million.
Supplemental Non-GAAP Measure
This press release refers to adjusted income, a supplemental measure not calculated in accordance with generally accepted accounting principles in the United States (GAAP). A definition of adjusted income and a reconciliation to net income, the comparable GAAP financial measure, is included in the financial schedules of this press release. Occidental’s definition of adjusted income may differ from similarly titled measures provided by other companies in our industry and as a result may not be comparable.
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 or business strategy; 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,” “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 any forward-looking statements as a result of new information, future events or otherwise.
Although Occidental believes that the expectations reflected in any of our forward-looking statements are reasonable, actual results may differ from anticipated results, sometimes materially. Factors that could cause results to differ from those projected or assumed in any forward-looking statement include, but are not limited to: the extent to which Occidental is able to successfully integrate Anadarko Petroleum Corporation (Anadarko), manage expanded operations, including WES, and realize the anticipated benefits of combining Occidental and Anadarko; Occidental’s ability to successfully complete the sale of the remaining assets, liabilities, businesses and operations of the Africa assets to Total S.A.; global commodity pricing fluctuations; supply and demand considerations for Occidental’s products; higher-than-expected costs; the regulatory approval environment; not successfully completing, or any material delay of, field developments, expansion projects, capital expenditures, efficiency projects, acquisitions or dispositions; uncertainties about the estimated quantities of oil and natural gas reserves; lower-than-expected production from development projects or acquisitions; exploration risks; disruptions to, capacity constraints in, or other limitations on the pipeline systems that deliver our oil and natural gas and other processing and transportation considerations; general economic slowdowns domestically or internationally; difficult and adverse conditions in the domestic and global capital and credit markets; the impact of potential changes in Occidental’s credit ratings; uncertainty from the expected discontinuance of LIBOR and transition to any other interest rate benchmark; political conditions and events; liability under environmental regulations, including remedial actions; litigation; disruption or interruption of production or manufacturing or facility damage due to accidents, chemical releases, labor unrest, weather, natural disasters, cyber attacks or insurgent activity; failure of risk management; changes in law or regulations; reorganization or restructuring of Occidental’s operations; changes in tax rates; actions by third parties that are beyond Occidental’s control; and the ability to generate cash to fund operations and repay indebtedness.
Additional information concerning these and other factors can be found in Occidental’s filings with the U.S. Securities and Exchange Commission, including Occidental’s Annual Report on Form 10-K for the year ended December 31, 2018, Quarterly Reports on Form 10-Q and Current Reports on Form 8-K.
Occidental is an international oil and gas exploration and production company with operations in the United States, Middle East and Latin America. We are the leading producer and largest acreage holder in the Permian Basin. Occidental is advancing a lower-carbon future with our subsidiary Oxy Low Carbon Ventures, which promotes innovative technologies that drive cost efficiencies and economically grow our business while reducing emissions. We also have a marketing and midstream business and WES Midstream, which includes Western Midstream Partners, LP. OxyChem, our chemical subsidiary, is among the top three U.S. producers for the principal products it manufactures and markets. Occidental posts or provides links to important information on our website at oxy.com.