Did Occidental Petroleum Generate Positive Free Cash Flow in 2Q17?
Operating cash flow
For 2Q17, Occidental Petroleum (OXY) reported operating cash flow of ~$1.9 billion, which is ~29% higher than Wall Street analysts’ expectations for ~$1.4 billion in cash flow. On a year-over-year basis, OXY’s 2Q17 cash flow is ~64% higher than ~$1.1 billion in 2Q16.
Due to lower realized crude oil (USO) and natural gas (UNG) prices, Occidental Petroleum’s cash flow dropped steeply in 1Q15. In 1Q15, Occidental Petroleum reported its lowest-ever cash flow of $561.0 million since 2004. In 2015 and 2016, Occidental Petroleum reported lower cash flows when compared with the preceding years. In 2Q17, OXY reported its highest cash flow since 1Q15.
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Free cash flow
In 2Q17, Occidental Petroleum spent ~$1.1 billion in capital expenditures. OXY’s free cash flow is positive at ~$720.0 million (~$0.94 per share). At the end of 2Q17, Occidental Petroleum’s cash balance stood at ~$2.2 billion.
In 2Q17, Occidental Petroleum’s capital expenditures were ~$1.1 billion, ~78% higher than OXY’s capital expenditures of ~$636.0 million in 2Q16. OXY’s 2Q17 capital expenditures are higher due to the ~$358.0 million spent on asset purchases. Excluding the asset purchases, OXY spent ~$779.0 million on its business segments in 2Q17.
Out of this, OXY spent $298.0 million on Permian Resources, $87.0 million on Permian EOR (enhanced oil recovery), $135.0 million on Middle East operations, $73.0 million on its Chemical business, and $89.0 million on its Midstream and Marketing business.
For fiscal 2017, Occidental Petroleum expects higher capital expenditure in the range of $3.0 billion–$3.6 billion. OXY’s fiscal 2017 capital expenditure guidance is much higher when compared with OXY’s fiscal 2016 capital expenditures of $2.9 billion.
OXY plans to devote the majority of its fiscal 2017 capital budget to crude oil and natural gas development, with Permian resources receiving the largest increase in capital.