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Cover and table of contents
UNITED STATES SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
Form 10-K
| ☑ | Annual Report Pursuant to Section 13 or 15(d) of the Securities Exchange Act of 1934 | ☐ | Transition Report Pursuant to Section 13 or 15(d) of the Securities Exchange Act of 1934 | ||
| For the fiscal year ended | December 31, 2019 | For the transition period from to |
Commission File Number 1-9210
Occidental Petroleum Corporation
(Exact name of registrant as specified in its charter)
| State or other jurisdiction of incorporation or organization | Delaware | ||||
| I.R.S. Employer Identification No. | 95-4035997 | ||||
| Address of principal executive offices | 5 Greenway Plaza, Suite 110 | Houston, | Texas | ||
| Zip Code | 77046 | ||||
| Registrant’s telephone number, including area code | (713) | 215-7000 |
Securities registered pursuant to Section 12(b) of the Act:
| Title of Each Class | Trading Symbol | Name of Each Exchange on Which Registered |
| Common Stock, $0.20 par value | OXY | New York Stock Exchange |
Securities registered pursuant to Section 12(g) of the Act: None
Indicate by check mark if the registrant is a well-known seasoned issuer, as defined in Rule 405 of the Securities Act. Yes ☑ No ☐
Indicate by check mark if the registrant is not required to file reports pursuant to Section 13 or Section 15(d) of the Act. Yes ☐ No ☑
Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days. Yes ☑ No ☐
Indicate by check mark whether the registrant has submitted electronically every Interactive Data File required to be submitted pursuant to Rule 405 of Regulation S-T (§232.405 of this chapter) during the preceding 12 months (or for such shorter period that the registrant was required to submit such files). Yes ☑ No ☐
Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, a smaller reporting company, or an emerging growth company. See the definitions of “large accelerated filer,” “accelerated filer,” “smaller reporting company” and “emerging growth company” in Rule 12b-2 of the Exchange Act.
| Large Accelerated Filer | ☑ | Accelerated Filer | ☐ | Emerging Growth Company | ☐ |
| Non-Accelerated Filer | ☐ | Smaller Reporting Company | ☐ |
If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act. ☐
Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Act). Yes ☐ No ☑
The aggregate market value of the registrant’s Common Stock held by nonaffiliates of the registrant was approximately $45.0 billion, computed by reference to the closing price on the New York Stock Exchange composite tape of $50.28 per share of Common Stock on June 28, 2019.
At January 31, 2020, there were 895,224,961 shares of Common Stock outstanding, par value $0.20 per share.
DOCUMENTS INCORPORATED BY REFERENCE
Portions of the registrant’s definitive Proxy Statement, relating to its 2020 Annual Meeting of Stockholders, are incorporated by reference into Part III of this Form 10-K.
 | BUSINESS AND PROPERTIES |
Part I
ITEMS 1 AND 2. BUSINESS AND PROPERTIES
In this report, “Occidental” means Occidental Petroleum Corporation, a Delaware corporation (OPC) incorporated in 1986, or OPC and one or more entities in which it owns a controlling interest (subsidiaries). Occidental conducts its operations through its various subsidiaries and affiliates. Occidental’s executive offices are located at 5 Greenway Plaza, Suite 110, Houston, Texas 77046; telephone (713) 215-7000.
On August 8, 2019, pursuant to the Agreement and Plan of Merger, dated as of May 9, 2019, among Occidental, Baseball Merger Sub 1, Inc., a Delaware corporation and an indirect, wholly owned subsidiary of Occidental (Merger Subsidiary), and Anadarko Petroleum Corporation (Anadarko), Occidental acquired all of the outstanding shares of Anadarko through a transaction in which Merger Subsidiary merged with and into Anadarko (the Acquisition), with Anadarko continuing as the surviving entity and as an indirect, wholly owned subsidiary of Occidental.
| GENERAL |
Occidental’s principal businesses consist of three reporting segments: oil and gas, chemical, and marketing and midstream. The oil and gas segment explores for, develops and produces oil and condensate, natural gas liquids (NGL) and natural gas. The chemical segment (OxyChem) mainly manufactures and markets basic chemicals and vinyls. The marketing and midstream segment purchases, markets, gathers, processes, transports and stores oil, condensate, NGL, natural gas, carbon dioxide (CO2) and power. It also trades around its assets, including transportation and storage capacity, and invests in entities that conduct similar activities such as Western Midstream Partners, L.P. (WES).
The marketing and midstream segment also includes Oxy Low Carbon Ventures (OLCV). OLCV seeks to capitalize on Occidental’s enhanced oil recovery (EOR) leadership by developing carbon capture, utilization and storage projects that source anthropogenic CO2 and promote innovative technologies that drive cost efficiencies and economically grow Occidental’s business while reducing emissions.
For further information regarding Occidental’s segments, geographic areas of operation and current developments, see the “Management’s Discussion and Analysis of Financial Condition and Results of Operations” (MD&A) section of this report and Note 18 - Industry Segments and Geographic Areas in the Notes to Consolidated Financial Statements.
| EMPLOYEES |
Occidental employed approximately 14,400 people at December 31, 2019, which included approximately 1,000 employees who have been seconded to WES. Occidental has 10,000 employees located in the United States. Occidental employed approximately 10,400 people in the oil and gas and marketing and midstream segments and 3,000 people in the chemical segment. An additional 1,000 people were employed in administrative and corporate functions. Approximately 500 U.S.-based employees and 900 international-based employees are represented by labor unions.
| AVAILABLE INFORMATION |
Occidental’s annual reports on Form 10-K, quarterly reports on Form 10-Q, current reports on Form 8-K, and any amendments to those reports are available free of charge on its website, www.oxy.com, as soon as reasonably practicable after Occidental electronically files the material with, or furnishes it to, the Securities and Exchange Commission (SEC). In addition, copies of our annual report will be made available, free of charge, upon written request.
Information contained on Occidental’s website is not part of this report or any other filings with the SEC.
| 2 | OXY 2019 FORM 10-K |
| BUSINESS AND PROPERTIES |
| OIL AND GAS OPERATIONS |
GENERAL
Occidental’s oil and gas assets are located in some of the world’s highest-margin basins and are characterized by an advantaged mix of short- and long-cycle high-return development opportunities. Occidental conducts its ongoing exploration and production activities in the United States, the Middle East and Latin America. Within the United States, Occidental has operations in Texas, New Mexico, Colorado, Wyoming and Utah, as well as offshore operations in the Gulf of Mexico. Internationally, Occidental conducts operations in Oman, United Arab Emirates (UAE), Qatar and Colombia. Refer to the Supplemental Oil and Gas Information - Oil and Gas Acreage under Item 8 of this Form 10-K for further disclosure of Occidental’s holdings of developed and undeveloped oil and gas acreage.
In connection with the Acquisition, Occidental agreed to sell to TOTAL S.A. (Total) all of the assets, liabilities, businesses and operations of Anadarko’s operations in Algeria, Ghana, Mozambique and South Africa (collectively, the Africa Assets). Occidental completed the sale of Mozambique LNG assets for approximately $4.2 billion in September 2019. The remaining Africa Assets are classified as held-for-sale and not considered part of Occidental’s ongoing international operations as of December 31, 2019. In January 2020, Occidental completed the sale of South Africa assets to Total. The closing of the sale of the remaining Africa Assets is conditioned on the receipt of required regulatory and government approvals, as well as other customary closing conditions.
COMPETITION
As a producer of oil, condensate, NGL and natural gas, Occidental competes with numerous other domestic and international public, private and government producers. Oil, NGL and natural gas are sensitive to prevailing global and local, current and anticipated market conditions. Occidental competes for capacity and infrastructure for the gathering, processing, transportation, storage and delivery of its products, which are sold at current market prices or on a forward basis to refiners, end users and other market participants. Occidental’s competitive strategy relies on increasing production through developing conventional and unconventional fields, utilizing primary and EOR techniques and strategic acquisitions in areas where Occidental has a competitive advantage as a result of its successful operations or investments in shared infrastructure. Occidental also competes to develop and produce its worldwide oil and gas reserves safely and cost-effectively, maintain a skilled workforce and obtain quality services.
PROVED RESERVES AND SALES VOLUMES
The table below shows Occidental’s year-end oil, NGL and natural gas proved reserves, including reserves acquired in the Acquisition, but excluding reserves related to the Africa Assets. Year-to-date sales volumes exclude Anadarko sales prior to the date of the Acquisition and all sales related to the Africa Assets. See “MD&A — Oil and Gas Segment,” and the information under the caption “Supplemental Oil and Gas Information” for details regarding Occidental’s proved reserves, the reserves estimation process, sales and production volumes, production costs and other reserves-related data.
COMPARATIVE OIL AND GAS PROVED RESERVES AND SALES VOLUMES
Oil (which includes condensate) and NGL are in millions of barrels; natural gas is in billions of cubic feet (Bcf); barrels of oil equivalent (BOE) are in millions.
| 2019 | 2018 | 2017 | |||||||||||||||||||||||||
| Oil | NGL | Gas | BOE | (a) | Oil | NGL | Gas | BOE | (a) | Oil | NGL | Gas | BOE | (a) | |||||||||||||
| Proved Reserves (b) | |||||||||||||||||||||||||||
| United States | 1,570 | 540 | 4,128 | 2,798 | 1,186 | 284 | 1,445 | 1,711 | 1,107 | 247 | 1,205 | 1,555 | |||||||||||||||
| International (c) | 400 | 200 | 2,572 | 1,029 | 397 | 202 | 2,650 | 1,041 | 408 | 198 | 2,626 | 1,043 | |||||||||||||||
| Total | 1,970 | 740 | 6,700 | 3,827 | 1,583 | 486 | 4,095 | 2,752 | 1,515 | 445 | 3,831 | 2,598 | |||||||||||||||
| Sales Volumes | |||||||||||||||||||||||||||
| United States | 155 | 52 | 326 | 261 | 91 | 25 | 119 | 136 | 73 | 20 | 108 | 111 | |||||||||||||||
| International (c) | 56 | 12 | 204 | 102 | 62 | 11 | 189 | 104 | 66 | 11 | 188 | 109 | |||||||||||||||
| Total | 211 | 64 | 530 | 363 | 153 | 36 | 308 | 240 | 139 | 31 | 296 | 220 |
| (a) | Natural gas volumes are converted to barrels of oil equivalence (BOE) at six thousand cubic feet (Mcf) of gas per one barrel of oil. Barrels of oil equivalence does not necessarily result in price equivalence. |
| (b) | The detailed proved reserves information presented in accordance with Item 1202(a)(2) to Regulation S-K under the Securities Exchange Act of 1934 (Exchange Act) is provided under the heading “Supplemental Oil and Gas Information”. Proved reserves are stated on a net basis after applicable royalties. |
| (c) | Excluded reserves of 125 MMBOE and sales of 12 MMBOE related to the Africa Assets. |
| OXY 2019 FORM 10-K | 3 |
| BUSINESS AND PROPERTIES |
| CHEMICAL OPERATIONS |
GENERAL
OxyChem owns and operates manufacturing plants at 22 domestic sites in Alabama, Georgia, Illinois, Kansas, Louisiana, Michigan, New Jersey, New York, Ohio, Tennessee and Texas and at two international sites in Canada and Chile.
COMPETITION
OxyChem competes with numerous other domestic and international chemical producers. OxyChem’s market position was first or second in the United States in 2019 for the principal basic chemical products it manufactures and markets as well as for vinyl chloride monomer (VCM). OxyChem ranks in the top three producers of polyvinyl chloride (PVC) in the United States. OxyChem’s competitive strategy is to be a low-cost producer of its products in order to compete on price.
OxyChem produces the following products:
| Principal Products | Major Uses | Annual Capacity |
| Basic Chemicals | ||
| Chlorine | Raw material for ethylene dichloride (EDC), water treatment and pharmaceuticals | 3.4 million tons |
| Caustic soda | Pulp, paper and aluminum production | 3.5 million tons |
| Chlorinated organics | Refrigerants(a), silicones and pharmaceuticals | 1.0 billion pounds |
| Potassium chemicals | Fertilizers, batteries, soaps, detergents and specialty glass | 0.4 million tons |
| EDC | Raw material for VCM | 2.1 billion pounds |
| Chlorinated isocyanurates | Swimming pool sanitation and disinfecting products | 131 million pounds |
| Sodium silicates | Catalysts, soaps, detergents and paint pigments | 0.6 million tons |
| Calcium chloride | Ice melting, dust control, road stabilization and oil field services | 0.7 million tons |
| Vinyls | ||
| VCM | Precursor for PVC | 6.2 billion pounds |
| PVC | Piping, building materials and automotive and medical products | 3.7 billion pounds |
| Ethylene | Raw material for VCM | 1.2 billion pounds (b) |
| (a) | Includes 4CPe, a raw material used in making next-generation, climate-friendly refrigerants with low global-warming and zero ozone-depletion potential. |
| (b) | Amount is gross production capacity for 50/50 joint venture with Orbia (formerly Mexichem). |
| 4 | OXY 2019 FORM 10-K |
| BUSINESS AND PROPERTIES |
| MARKETING AND MIDSTREAM OPERATIONS |
GENERAL
Occidental’s marketing and midstream operations primarily support and enhance its oil and gas and chemical businesses and also provide similar services for third parties. The marketing and midstream segment strives to maximize realized value by optimizing the use of its gathering, processing, transportation, storage and terminal commitments and by providing access to domestic and international markets. To generate returns, the segment evaluates opportunities across the value chain and uses its assets to provide services to Occidental subsidiaries, as well as third parties. The marketing and midstream segment operates gathering systems, gas plants, co-generation facilities and storage facilities and invests in entities that conduct similar activities. Also included in the marketing and midstream segment is OLCV.
Included in the marketing and midstream segment is Occidental’s equity method investment in WES. WES owns gathering systems, plants and pipelines and earns revenue from fee-based and service-based contracts with Occidental and third parties.
COMPETITION
Occidental’s marketing and midstream businesses operate in competitive and highly regulated markets. From the date of the Acquisition to December 31, 2019, WES was a consolidated subsidiary in Occidental’s financial statements. Occidental’s marketing business competes with other market participants on exchange platforms and through other bilateral transactions with direct counterparties.
Occidental’s marketing and midstream operations are conducted in the locations described below as of December 31, 2019:
| Location | Description | Capacity |
| Gas Plants | ||
| Texas, New Mexico and Colorado | Occidental and third-party-operated natural gas gathering, compression and processing systems, and CO2 processing and capturing | 2.7 Bcf per day |
| Rocky Mountains, Pennsylvania, Texas and New Mexico | Equity investment in WES - gas processing facilities | 5.7 Bcf per day |
| UAE | Natural gas processing facilities for Al Hosn Gas | 1.3 Bcf of natural gas per day |
| Pipelines and Gathering Systems | ||
| Texas, New Mexico and Colorado | CO2 fields and pipeline systems transporting CO2 to oil and gas producing locations | 2.8 Bcf per day |
| Qatar, UAE and Oman | Equity investment in the Dolphin Energy Ltd natural gas pipeline | 3.2 Bcf of natural gas per day |
| United States | Equity investment in WES involved in gathering and transportation | 15,819 miles of pipeline(a) |
| Power Generation | ||
| Texas and Louisiana | Occidental-operated power and steam generation facilities | 1,218 megawatts of electricity and 1.6 million pounds of steam per hour |
| (a) | Amounts are gross, including interests held by third parties. |
| ENVIRONMENTAL REGULATION |
For environmental regulation information, including associated costs, see the information under the heading “Environmental Liabilities and Expenditures” in the MD&A section of this report and “Risk Factors.”
| OXY 2019 FORM 10-K | 5 |
| RISK FACTORS |