Quarterly / Earnings Reports | Third Quarter (3Q) Update

Oxy Details Q3 2019 Results

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Occidental Petroleum 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.

Highlights:

• 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

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).

President & CEO Vicki Hollub said: “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. 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

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.

WES Midstream

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.