Occidental Petroleum Corporation
's (
OXY
) fourth-quarter 2012 pro forma earnings were $1.83, beating the
Zacks Consensus Estimate of $1.66. Quarterly earnings were lower
than the prior-year earnings of $2.02 per share.
Including a charge of $1.41 per share related to the impairment
of gas assets in the Midcontinent, GAAP earnings per share were
42 cents, down from $2.01 in the year-ago quarter.
Occidental's pro forma earnings for full-year 2012 of $7.09 per
share surpassed the Zacks Consensus Estimate of $6.93. The
company's earnings fell 18.3% from the 2011 figure of $8.39 per
share.
Including a one-time charge of $1.42 per share, GAAP earnings
during 2012 were $5.67 per share versus $8.32 per share reported
last year.
Total Revenue
Occidental's quarterly revenue increased 2.3% year over year to
$6.2 billion. Total revenue increased on the back of higher
contributions from all of its segments. Quarterly top line was
ahead of the Zacks Consensus Estimate of $5.8 billion.
Occidental's full-year 2012 revenue was $24.2 billion, up 1% from
$24 billion in the prior year. Annual revenues missed the Zacks
Consensus Estimate by $17 million.
Full-year 2012 Production, Sales and Realized
Price
Occidental's full-year 2012 average daily production volumes were
766 thousand barrels of oil equivalents (MBoe), up 4.5% from 733
MBoe a year-ago primarily due to a 11% year-over-year rise in
domestic production.
The company's daily oil and gas sales volumes during the year
were 764 MBoe, up 4.5% year over year.
Occidental's overall realized price for crude oil increased 2% to
$99.87 per barrel from the prior-year level of $97.92 per barrel.
However, full-year 2012 realized natural gas liquids (NGL) prices
dropped 19% year over year to $45.18 per barrel and realized gas
prices decreased 35% to $2.62 per thousand cubic feet (Mcf).
Segment Earnings
In 2012, Occidental's segmental earnings were $8.3 billion versus
$11.6 billion in 2011.
Oil and Gas:
Earnings from this segment were $7.1 billion in 2012, down 30.4%
year over year due to higher operating costs, exploration
expenses, and depreciation, depletion and amortization (DD&A)
rates, and lower NGL and natural gas prices. These were partially
offset by a rise in oil prices and higher domestic volumes.
Chemicals:
In 2012, earnings were $720 million versus $861 million in 2011.
The 16.4% year-over-year decrease was primarily due to lower
margins stemming from weaker macro conditions in Europe and Asia.
Midstream, Marketing and Other:
Segmental earnings were $439 million in 2012, down by $9 million
from the year-ago level.
Financial Update
Occidental's cash from operations during the year totaled $11.3
billion compared with $12.3 billion in the year-ago comparable
period.
Capital expenditure for 2012 was $10.2 billion compared with $7.5
billion in 2011. The majority of the expenditure was directed
toward the development of its Oil and Gas, and Midstream,
Marketing and Other segments.
Total long-term debt as of Dec 31, 2012, was $7.6 billion
compared with $5.9 billion a year ago. The company's total
debt-to-capitalization ratio at quarter end was 16%, up from the
prior-year ratio of 13%.
Our Take
The results of Occidental Petroleum were primarily driven by
higher sales contributions from all of its segments and higher
realized crude oil prices. However, the decrease in the realized
natural gas prices in 2012 remains a cause of concern. Given the
present market scenario, we believe the company will continue to
benefit from rising oil prices given its oil-heavy production and
reserve base.
In addition, Occidental Petroleum continues to take several
cost-cutting measures like production curtailment and planned
shutdowns of a few plants, which may improve its operating as
well as financial performance in the forthcoming quarters.
However, Occidental Petroleum's over-reliance on crude oil prices
movement is a threat to its future financial performance. We are
also skeptical about natural calamities, political instability
and risks related to oil exploration and production
infrastructure damages, which might restrict the company's
operations.
Occidental Petroleum Corporation currently has a short-term Zacks
Rank #3 (Hold).
Los Angeles, California-based Occidental Petroleum along with its
subsidiaries operates as an oil and gas exploration and
production company. Other players from the sector -
Cabot Oil and Gas Corporation
(
COG
),
Penn Virginia Corporation
(
PVA
) and
Total SA
(
TOT
) - are yet to announce their quarterly results.
CABOT OIL & GAS (COG): Free Stock Analysis
Report
OCCIDENTAL PET (OXY): Free Stock Analysis
Report
PENN VIRGINIA (PVA): Free Stock Analysis
Report
TOTAL FINA SA (TOT): Free Stock Analysis
Report
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