- Repaid $1.3 billion of debt during the third quarter, with year-to-date repayments of $9.6 billion through November 7, 2022, representing 34% reduction of total outstanding principal
- Repurchased over 28.4 million shares for $1.8 billion during the third quarter, with year-to-date repurchases of 41.8 million shares for $2.6 billion through November 7, 2022
- Earnings per diluted share of $2.52 and adjusted earnings per diluted share of $2.44
- Cash flow from continuing operations of $4.3 billion and cash flow from continuing operations before working capital of $4.7 billion
- Capital spending of $1.1 billion, resulting in quarterly free cash flow before working capital of $3.6 billion
- Exceeded production guidance midpoint by 25 Mboed, with production of 1,180 Mboed
- OxyChem and midstream and marketing segments exceeded guidance with pre-tax earnings of $580 million and $104 million, respectively
- Increased full-year guidance for all three segments on strong third quarter results and improved outlook for OxyChem and midstream and marketing
According to the company’s website news release on November 8, 2022, Occidental (NYSE: OXY) today announced net income attributable to common stockholders for the third quarter of 2022 of $2.5 billion, or $2.52 per diluted share, and adjusted income attributable to common stockholders of $2.5 billion, or $2.44 per diluted share. This is compared to net income attributable to common stockholders for the second quarter of 2022 of $3.6 billion, or $3.47 per diluted share, and adjusted income attributable to common stockholders of $3.2 billion, or $3.16 per diluted share. Third quarter after-tax items affecting comparability were $81 million.
“The excellent operational performance of our businesses in the third quarter was a key driver of our strong financial results, enabling us to raise our full-year guidance for all of our business segments and generate free cash flow to advance our shareholder returns and deleverage our balance sheet," said President and Chief Executive Officer Vicki Hollub. "We are close to completing our $3 billion share repurchase program and achieved another debt reduction milestone, with the face value of our debt now below $19 billion.”
QUARTERLY RESULTS
Oil and Gas
Oil and gas pre-tax income on continuing operations for the third quarter of 2022 was $3.3 billion, compared to pre-tax income of $4.1 billion for the second quarter of 2022. Excluding items affecting comparability, the decrease in third quarter of 2022 oil and gas income compared to the second quarter of 2022 was due to lower crude oil and natural gas liquids (NGL) prices, partially offset by higher sales volumes across all commodities, higher gas prices and lower DD&A rates. For the third quarter of 2022, average WTI and Brent marker prices were $91.55 per barrel and $97.59 per barrel, respectively. Average worldwide realized crude oil prices decreased by approximately 12 percent from the prior quarter to $94.89 per barrel. Average worldwide realized NGL prices decreased by approximately 16 percent from the prior quarter to $35.22 per barrel. Average domestic realized gas prices increased by approximately 13 percent from the prior quarter to $7.06 per Mcf.
Total average global production of 1,180 thousand of barrels of oil equivalent per day (Mboed) for the third quarter of 2022 exceeded the midpoint of guidance by 25 Mboed. Permian average production came within guidance with 523 Mboed. International average production came within the high-end of guidance with 236 Mboed. The Rockies and Gulf of Mexico both exceeded guidance with average production 270 Mboed and 151 Mboed, respectively.
OxyChem
Chemical pre-tax income of $580 million for the third quarter of 2022 exceeded guidance of $500 million. Compared to the second quarter of 2022 pre-tax income of $800 million, the decrease in the third quarter of 2022 income was driven primarily by weakening polyvinyl chloride (PVC) prices, lower volumes across most product lines and higher energy costs, partially offset by increased caustic soda prices.
Midstream and Marketing
Midstream and marketing pre-tax income was $104 million for the third quarter of 2022, and included net derivative losses of $84 million. WES equity income was $203 million, and included a gain on sale of WES shares of $62 million. Excluding items affecting comparability, third quarter of 2022 midstream and marketing pre-tax income exceeded the high-end of guidance, but decreased compared to the second quarter of 2022, primarily due to lower realized sulfur prices from the Al Hosn Gas plant, partially offset by the timing impact of crude sales in the marketing business.
Supplemental Non-GAAP Measures
This press release refers to adjusted income (loss), cash flow from continuing operations before working capital and free cash flow, which are supplemental measures not calculated in accordance with generally accepted accounting principles in the United States (GAAP). These Non-GAAP financial measures have limitations as analytical tools and should not be considered in isolation or as an alternative to the comparable GAAP financial measures. Definitions of adjusted income (loss) and a reconciliation to net income (loss), along with cash flow from continuing operations before working capital and free cash flow and a reconciliation to the comparable GAAP financial measures, are included in the financial schedules of this press release. Occidental’s definition of adjusted income (loss), cash flow from continuing operations before working capital and free cash flow 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 assets primarily in the United States, the Middle East and North Africa. Occidental is one of the largest oil producers in the U.S., including a leading producer in the Permian and DJ basins, and offshore Gulf of Mexico. Midstream and marketing segment provides flow assurance and maximizes the value of our oil and gas. Chemical subsidiary OxyChem manufactures the building blocks for life-enhancing products. The Oxy Low Carbon Ventures subsidiary is advancing leading-edge technologies and business solutions that economically grow our business while reducing emissions. The company is committed to using our global leadership in carbon management to advance a lower-carbon world. Visit oxy.com for more information.
Forward-Looking Statements
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, business strategy or financial position; 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,” "commit," "advance," “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, modify or withdraw any forward-looking statements as a result of new information, future events or otherwise.
Although Occidental believes that the expectations reflected in any of its forward-looking statements are reasonable, actual results may differ from anticipated results, sometimes materially. In addition, historical, current and forward-looking sustainability-related statements may be based on standards for measuring progress that are still developing, internal controls and processes that continue to evolve and assumptions that are subject to change in the future. Factors that could cause results to differ from those projected or assumed in any forward-looking statement include, but are not limited to: general economic conditions, including slowdowns, domestically or internationally; Occidental’s indebtedness and other payment obligations, including the need to generate sufficient cash flows to fund operations; Occidental’s ability to successfully monetize select assets and repay or refinance debt and the impact of changes in Occidental’s credit ratings; the scope and duration of the COVID-19 pandemic and ongoing actions taken by governmental authorities and other third parties in response to the pandemic; assumptions about energy markets; global and local commodity and commodity-futures pricing fluctuations and volatility; supply and demand considerations for, and the prices of, Occidental’s products and services; actions by the Organization of the Petroleum Exporting Countries (OPEC) and non-OPEC oil producing countries; results from operations and competitive conditions; future impairments of Occidental's proved and unproved oil and gas properties or equity investments, or write-downs of productive assets, causing charges to earnings; unexpected changes in costs; inflation and its impact on markets and economic activity; availability of capital resources, levels of capital expenditures and contractual obligations; the regulatory approval environment, including Occidental's ability to timely obtain or maintain permits or other governmental approvals, including those necessary for drilling and/or development projects; Occidental's ability to successfully complete, or any material delay of, field developments, expansion projects, capital expenditures, efficiency projects, acquisitions or dispositions; risks associated with acquisitions, mergers and joint ventures, such as difficulties integrating businesses, uncertainty associated with financial projections, projected synergies, restructuring, increased costs and adverse tax consequences; uncertainties and liabilities associated with acquired and divested properties and businesses; uncertainties about the estimated quantities of oil, NGL and natural gas reserves; lower-than-expected production from development projects or acquisitions; Occidental’s ability to realize the anticipated benefits from prior or future streamlining actions to reduce fixed costs, simplify or improve processes and improve Occidental’s competitiveness; exploration, drilling and other operational risks; disruptions to, capacity constraints in, or other limitations on the pipeline systems that deliver Occidental’s oil and natural gas and other processing and transportation considerations; volatility in the securities, capital or credit markets; governmental actions, war (including the Russia-Ukraine war) and political conditions and events; legislative or regulatory changes, including changes relating to hydraulic fracturing or other oil and natural gas operations, retroactive royalty or production tax regimes, deep-water and onshore drilling and permitting regulations and environmental regulations (including regulations related to climate change); environmental risks and liability under federal, regional, state, provincial, tribal, local and international environmental laws and regulations (including remedial actions); Occidental's ability to recognize intended benefits from its business strategies and initiatives, such as Occidental's low carbon ventures businesses or announced greenhouse gas emissions reduction targets or net-zero goals; potential liability resulting from pending or future litigation; disruption or interruption of production or manufacturing or facility damage due to accidents, chemical releases, labor unrest, weather, power outages, natural disasters, cyber attacks, terrorist acts or insurgent activity; the creditworthiness and performance of Occidental's counterparties, including financial institutions, operating partners and other parties; failure of risk management; Occidental’s ability to retain and hire key personnel; supply, transportation and labor constraints; reorganization or restructuring of Occidental’s operations; changes in state, federal or international tax rates; and actions by third parties that are beyond Occidental’s control.
Additional information concerning these and other factors that may cause Occidental's results of operations and financial position to differ from expectations can be found in Occidental’s other filings with the U.S. Securities and Exchange Commission, including Occidental’s Annual Report on Form 10-K for the year ended December 31, 2021, Quarterly Reports on Form 10-Q and Current Reports on Form 8-K.
