Occidental Announces 4th Quarter and Full-Year 2019 Results
- Fourth quarter company-wide production of 1,402,000 BOEPD; exceeded mid-point of guidance by 78,000 BOEPD
- Permian Resources production of 476,000 BOEPD exceeded mid-point of guidance by 22,000 BOEPD
- Industry-leading Permian Resources capital intensity
- 2020 plan of $21,000 per BOEPD added, 33% improvement from 2019
- Strengthening balance sheet; repaid 32% of debt raised for Anadarko acquisition within five months of closing
- Total debt repayments of $7.0 billion in the second half of 2019
- Capturing the $900 million overhead synergy target one year ahead of schedule
- Announced divestitures totaling $10.2 billion against target of $15.0 billion
- Returned $0.7 billion to common stockholders in the fourth quarter
- Announced 182nd consecutive quarterly dividend payment
HOUSTON – February 27, 2020 – Occidental Petroleum Corporation (NYSE:OXY) today announced a net loss attributable to common stockholders for the fourth quarter of 2019 of $1.3 billion, or $1.50 per diluted share, and adjusted loss attributable to common stockholders of $269 million, or $0.30 per diluted share. Fourth quarter pre-tax items affecting comparability included a charge of approximately $1.0 billion to reflect Occidental’s investment in Western Midstream Partners, LP (WES) at fair value as of December 31, 2019, upon applying the equity method of accounting, Anadarko acquisition-related transaction costs of $656 million, and net gains on sale of $475 million related to Occidental’s Midland Basin joint venture with Ecopetrol and a sale of real estate assets.
"The integration of our combined businesses is progressing extremely well and faster than expected as evidenced by our outstanding operational performance and we are ahead of schedule in capturing value from our $2 billion synergy program,” said President and Chief Executive Officer Vicki Hollub. “We are advancing toward achieving our divestiture target of $15 billion and repaid $7 billion of debt within five months of closing the Anadarko acquisition. Deleveraging and returning excess free cash flow to shareholders remain key priorities, and we are highly confident in our ability to achieve both."
Oil and Gas
Oil and gas pre-tax income for the fourth quarter of 2019 was $921 million, compared to $221 million for the prior quarter. The fourth quarter results included $475 million in net gains on sale related to Occidental’s Midland Basin joint venture with Ecopetrol and a sale of real estate assets and a mark-to-market loss of $182 million on crude oil hedges. Excluding gains on sales and the mark-to-market loss, the increase in fourth quarter income reflected higher domestic crude oil volumes from a full quarter of production from the Anadarko acquisition, partially offset by lower international crude oil volumes.
Total average daily production volume for the fourth quarter of 2019 exceeded guidance at 1,402,000 barrels of oil equivalent per day (BOED) with Permian Resources production of 476,000 BOED due to continued improvement in well performance and reduction in downtime. International average daily production volumes also came in above guidance for the fourth quarter at 257,000 BOED.
For the fourth quarter of 2019, average WTI and Brent marker prices were $56.96 per barrel and $62.50 per barrel, respectively. Average worldwide realized crude oil prices for the fourth quarter were $56.21, flat compared to the third quarter of 2019. Average worldwide realized NGL prices increased by 19 percent from the prior quarter to $17.78 per BOE. The increase in average domestic realized gas prices to $1.61 per Mcf during the fourth quarter of 2019 was due to a full quarter of production from legacy Anadarko gas-producing operations, which have higher realized prices.
Chemical pre-tax income for the fourth quarter exceeded guidance at $119 million. Compared to the prior quarter, the decline in fourth quarter income was primarily due to scheduled plant outages combined with softer overall demand, resulting in lower production and sales volumes across many product lines.
Occidental combined the operations of WES into the Marketing and Midstream operating segment. Marketing and Midstream pre-tax loss for the fourth quarter was $769 million, compared to income of $400 million for the third quarter of 2019. Fourth quarter pre-tax income included a $1.0 billion charge to reflect Occidental’s investment in WES at fair value as of December 31, 2019, upon applying the equity method of accounting. Excluding these charges, the decrease in fourth quarter pre-tax income reflected lower marketing results due to non-cash mark-to-market losses, the tightening of the Midland to MEH differential, and lower equity investment income due to the sale of the equity interests in Plains in the third quarter of 2019.
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.
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. Occidental’s Marketing and Midstream segment provides flow assurance for our oil and gas segment, while maximizing the value of our products. 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.
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 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 Occidental’s Africa assets and other planned divestitures; global commodity pricing fluctuations; world health events; 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, 2019, Quarterly Reports on Form 10-Q and Current Reports on Form 8-K.