Financial Statement Analysis: Occidental Petroleum Corporation
University of Texas of the Permian Basin
a. Major issues/problems facing the firm
b. Objective of paper
c. Summary of findings
II. Firm, Industry, and environment
a. Description of the firm and its management
Occidental Petroleum Corporation is a Delaware corporation. Its businesses consist of three segments: oil and gas, chemical, & midstream, marketing and other subsidiaries. The oil and gas segment explores, develops, produces and markets crude oil, which includes natural gas. The chemical segment manufactures and markets basic chemicals. The midstream, marketing and other segment gather, treat, process, transport, store, purchase and market crude oil, natural gas, carbon dioxide and power. It also trades around its assets, including pipelines and storage capacity, and trades commodities and securities. Occidental's domestic oil and gas operations are located in Texas, New Mexico, California, Kansas, Oklahoma, Utah and Colorado. International operations are located in Argentina, Bahrain, Bolivia, Colombia, Libya, Oman, Qatar, the United Arab Emirates and Yemen.
b. Discussion of competitive environment
As a producer of oil and natural gas, Occidental competes with numerous other domestic and foreign private and government producers. Occidental competes by developing and producing its worldwide oil and gas reserves cost-effectively and acquiring rights to explore and develop in areas with known oil and gas deposits. The Company's operations are subject to stringent federal, state, local and foreign laws and regulations relating to improving or maintaining environmental quality.
c. Economic climate and outlook:
Occidental Petroleum is no stranger to volatile markets, but stronger commodity prices and increased production have helped Occidental Petroleum lift revenues and income in 2010 and early 2011. “Worldwide oil and natural gas production increased 5 percent to average 753,000 barrels of oil equivalent per day in 2010. This is the highest in the company’s history. The company looks to continue this production increase by 5 to 8 percent every year for the next five years. Additionally, Oxy plans to increase capital expenditures by approximately 56 percent in 2011. Most of capital spending will be directed to the oil and gas segments, primarily in the United States.” (Irani, 2010)
According to a report, The Oil & Gas Exploration & Production (E&P) Market 2011-2021, published in March of 2011, “Soaring oil prices and a perpetually increasing global demand for energy are creating a ripe environment for the oil and gas exploration and production industry to increase its spending. Historically, the E&P market has experienced relative underinvestment, but as growing global energy demand puts pressure on supply capacity, new capital will be needed to find more oil and gas, and to boost production.”
d. Other factors:
According to Hoovers Company Records (2011), “Occidental Petroleum is investing heavily in the Middle East and North Africa. In 2008, Occidental, commonly known as Oxy, began to import Libyan oil. It also has assets in Qatar and Yemen, and is developing fields in Oman and Abu Dhabi. Oxy signed a deal to develop an oil field in Iraq in 2010, and in 2011, it teamed up with ADNOC, Abu Dhabi National Oil Company, to develop the major Shah gas field in the United Arab Emirates. However, the unrest across the Arab world in 2011, particularly in Bahrain, Libya, and Yemen, has confronted the company with a great deal of uncertainty about the short-term protection of its assets and its long-term strategy in the region.”
Another important change within Occidental Permian is the shift in management structure and new Chief Executive Officer. In May of 2011, Dr. Ray R. Irani transitioned from CEO to Executive Chairman. He relinquished his position to former...
References: 1. Occidental Petroleum Corporation. (1 July). Hoover 's Company Records, 11110. Retrieved July 13, 2011, from Hoover 's Company Records. (Document ID: 168145271).
2. Irani, R. and Chazen, S. (2010, December). 2010 Annual Report. Occidental Petroleum Corporation. Retrieved July 13, 2011, from http://www.oxy.com/annualreport/ChairmansLetter/LookingAhead.aspx
3. Bombourg, N. (2011, March). The Oil & Gas Exploration & Production (E&P) Market 2011-2021. ReportLinker. Retrieved July 13, 2011, from http://africabusiness.com/2011/03/26/reportlinker-adds-the-oil-gas-exploration-production-ep-market-2011-2021/
4. Occidental petroleum corp.. (2011). Retrieved from http://www.stock-analysis-on.net/NYSE/Company/Occidental-Petroleum-Corp
5. Occidental petroleum corp.. (2011). Retrieved from http://www.marketwatch.com/investing/stock/oxy
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