Conclusion
The balance sheet suffered more debt pressure, and a large proportion of cash flow is used to repay debt.
The profitability is greatly affected by oil prices.
Cash flow is very strong.
We should see the amount of repurchasing stock and paying dividends to shareholders as actual return.
Occidental Petroleum’s stock price is $69.03 per share, which is equivalent to $61.17 billion in market capitalization.
We reckon that the reasonable valuation was $50 billion, and predict each year return on investment was about 10%.
Disclaimer: The content is for reference only and does not constitute investment advice.
Balance sheet analysis
Occidental Petroleum’s total assets were $74 billion and $72.6 billion as of December 31, 2023 and as of December 31, 2022, respectively.
Total current assets were $8.4 billion as of December 31, 2023, accounting for 11.4% of total assets.
Cash and cash equivalents were $1.4 billion as of December 31, 2023, consisting of 1.9% of total assets.
Total property, plant and equipment, net were $58.8 billion as of December 31, 2023, comprising 79.5% of total assets.
Total current liabilities were $9.1 billion as of December 31, 2023.
The current ratio was 0.92 times.
Total liabilities were $43.5 billion as of December 31, 2023.
The debt ratio was 58.8%.
Occidental Petroleum is not like other companies, such as ExxonMobil (XOM) and Chevron (CVX).
ExxonMobil’s property, plant and equipment, net accounted for 57% of total assets in 2023.
Chevron’s property, plant and equipment, net comprised 58.7% of total assets in 2023.
As you can see, Occidental Petroleum’s rate of property, plant and equipment to total assets is far more than ExxonMobil and Chevron’s rate.
Chevron’s debt ratio was 38.1% in 2023.
ExxonMobil’s debt ratio was 43.5% in 2023.
Occidental Petroleum’s debt ratio (58.8%) was more than Chevron and ExxonMobil’s debt ratio.
We think that Occidental Petroleum suffered more debt pressure, compared with Chevron and ExxonMobil.
Profitability analysis
Occidental Petroleum’s total revenues and other income were $28.9 billion, $37 billion and $26.3 billion in 2023, 2022 and 2021, respectively.
Net income attributable to common stockholders was $3.77 billion, $12.5 billion and $1.5 billion in 2023, 2022 and 2021, respectively.
The company’s net profit margin was 13%, 33.8% and 5.7% in 2023, 2022 and 2021, respectively.
Cash flow analysis
Net cash provided by operating activities was $12.3 billion, $16.8 billion and $10.4 billion in 2023, 2022 and 2021, respectively.
Free cash flow was $6 billion, $12.3 billion and $7.5 billion in 2023, 2022 and 2021, respectively.
Payments of long-term debt, net was $22 million, $9.5 billion and $6.8 billion in 2023, 2022 and 2021, respectively.
We could see that a large proportion of cash flow is used to repay debt.
Purchases of treasury stock were $1.8 billion, $3.1 billion and $8 million in 2023, 2022 and 2021, respectively.
Cash dividends paid on common and preferred stocks were $1.36 billion, $1.18 billion and $839 million in 2023, 2022 and 2021, respectively.
Introduction
Occidental’s principal businesses consist of three reporting segments: oil and gas, chemical and midstream and marketing. The oil and gas segment explores for, develops and produces oil (which includes condensate), NGL and natural gas. The chemical segment primarily manufactures and markets basic chemicals and vinyls. The midstream and marketing segment purchases, markets, gathers, processes, transports and stores oil, NGL, natural gas, CO2 and power. It also optimizes its transportation and storage capacity, and invests in entities that conduct similar activities, such as WES.
The midstream and marketing segment also includes OLCV. OLCV seeks to leverage Occidental’s legacy of carbon management expertise to develop CCUS projects, including the commercialization of DAC technology, and invests in other low-carbon technologies intended to reduce GHG emissions from its operations and strategically partner with other industries to help reduce their emissions.