Occidental Announces 2nd Quarter 2020 Results
- 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 $1.5B of total overhead savings, including $900M of synergies and $600M of additional cost reductions
- Achieved 2020 annualized run rate of $800M of operating cost reductions, including realizing $20M in synergies and $600M 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 $2.0B in senior unsecured debt and completed debt tender offer to retire $2.0B of 2021 debt maturities
Occidental Petroleum Corporation today announced a net loss attributable to common stockholders for the second quarter of 2020 of $8.4B, or $9.12 per diluted share, and an adjusted loss attributable to common stockholders of $1.6B, or $1.76 per diluted share. Second quarter after-tax items affecting comparability included impairment charges of approximately $5.2B on oil and gas continuing operations and $1.4B in discontinued operations for total impairment charges of $6.6B.
"We continue to make progress on our debt structure and have significantly exceeded our cost savings targets while delivering operational excellence across our business," said President and Chief Executive Officer Vicki Hollub. "These decisive financial and operational actions reflect our leadership as a low-cost operator, positioning us for success when market conditions improve."
Quarterly Results
Oil and Gas
Oil and gas pre-tax loss on continuing operations for the second quarter was $7.7B, compared to income of $236M for the first quarter of 2020. The second quarter results included pre-tax impairment charges on continuing operations of approximately $4.3B for unproved domestic onshore acreage, $1.2B for proved domestic onshore and Gulf of Mexico oil and gas properties and $0.9B for international assets. On an after-tax basis, oil and gas impairments on continuing operations in the second quarter of 2020 were $5.2B. 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 $108M exceeded guidance by 35 percent. Compared to prior quarter income of $186M, 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 $7M, compared to a loss of $1.3B 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 $147M.
Supplemental Non-GAAP Measure
This press release refers to adjusted income (loss), a supplemental measure not calculated in accordance with generally accepted accounting principles in the United States (GAAP). A definition of adjusted income (loss) and a reconciliation to net income (loss), the comparable GAAP financial measure, is included in the financial schedules of this press release. Occidental’s definition of adjusted income (loss) may differ from similarly titled measures provided by other companies in our industry and as a result may not be comparable.
About Occidental
Occidental is an international energy company with operations in the United States, Middle East, Africa and Latin America. We are the largest onshore oil producer in the U.S., including in the Permian Basin, and a leading offshore producer in the 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 dioxide management to advance a lower-carbon world. For more information, visit oxy.com.
Source: Occidental Petroleum Corporation