Quarterly / Earnings Reports | Second Quarter (2Q) Update | Financial Results | Capital Markets

Occidental Petroleum Second Quarter 2020 Results

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   |    Tuesday,August 11,2020

Occidental Petroleum reported its Q2 2020 results.

Highlights:

• All business segments exceeded guidance and continued to deliver operational excellence
• Combined production of 1,406 Mboed from continuing operations, exceeding midpoint of guidance by 36 Mboed
• Permian Resources exceeded high-end of guidance by 5 percent, producing 465 Mboed
• OxyChem and Gulf of Mexico achieved all-time safety records
• Significantly lowered cost structure by fully delivering acquisition cost synergies and additional cost savings
• Achieved 2020 annualized run rate of $1.5 billion of total overhead savings, including $900 million of synergies and $600 million of additional cost reductions
• Achieved 2020 annualized run rate of $800 million of operating cost reductions, including realizing $200 million in synergies and $600 million of additional cost savings
• Extensive cost management coupled with strong production resulted in second quarter domestic operating expenses to come in below guidance at $4.69 per BOE
• In July, raised $2.0 billion in senior unsecured debt and completed debt tender offer to retire $2.0 billion of 2021 debt maturities

Oxy announced a net loss attributable to common stockholders for the second quarter of 2020 of $8.4 billion, or $9.12 per diluted share, and an adjusted loss attributable to common stockholders of $1.6 billion, or $1.76 per diluted share. Second quarter after-tax items affecting comparability included impairment charges of approximately $5.2 billion on oil and gas continuing operations and $1.4 billion in discontinued operations for total impairment charges of $6.6 billion.

CEO Vicki Hollub commented: "We continue to make progress on our debt structure and have significantly exceeded our cost savings targets while delivering operational excellence across our business. These decisive financial and operational actions reflect our leadership as a low-cost operator, positioning us for success when market conditions improve."

Oil and Gas

Oil and gas pre-tax loss on continuing operations for the second quarter was $7.7 billion, compared to income of $236 million for the first quarter of 2020. The second quarter results included pre-tax impairment charges on continuing operations of approximately $4.3 billion for unproved domestic onshore acreage, $1.2 billion for proved domestic onshore and Gulf of Mexico oil and gas properties and $0.9 billion for international assets. On an after-tax basis, oil and gas impairments on continuing operations in the second quarter of 2020 were $5.2 billion. In addition, second quarter results were impacted by the steep decline in oil prices due to the continued significant drop in oil demand as governments around the world implemented measures to contain the spread of COVID-19. For the second quarter of 2020, average WTI and Brent marker prices were $27.85 per barrel and $33.26 per barrel, respectively. Average worldwide realized crude oil prices decreased by 51 percent from the prior quarter to $23.17 per barrel. Average worldwide realized NGL prices decreased by 40 percent from the prior quarter to $7.79 per BOE. Average domestic realized gas prices decreased by 24 percent from the prior quarter to $0.90 per Mcf.

Total average daily production volume of 1,406 thousands of barrels of oil equivalent per day (Mboed) for the second quarter exceeded the midpoint of guidance by 36 Mboed. Permian Resources produced 465 Mboed, exceeding the high-end of guidance by 5 percent. International average daily production volumes of 290 Mboed came within the guidance range.

OxyChem

Chemical pre-tax income for the second quarter of $108 million exceeded guidance by 35 percent. Compared to prior quarter income of $186 million, the decline in income resulted primarily from the negative impact of the COVID-19 pandemic on product demand. Operational spending at various facilities was lower in the second quarter offset by softening realized domestic and export PVC prices and volumes.

Midstream and Marketing

Midstream and marketing pre-tax loss for the second quarter was $7 million, compared to a loss of $1.3 billion for the first quarter of 2020. Excluding the WES goodwill charges from the first quarter of 2020, the decrease reflected mark-to-market gains in the marketing business, partially offset by higher equity investment income from WES. Excluding WES equity income, midstream and marketing pre-tax loss for the second quarter was $147 million.