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Chart in Focus: Occidental Petroleum’s Cash Flow Estimates

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Occidental Petroleum’s cash flow estimates

Wall Street analysts expect Occidental Petroleum (OXY) to report cash flow of ~$1.5 billion in 2Q17, higher than the ~$1.1 billion it reported in 2Q16 and ~$652 million it reported in 1Q17.

Occidental Petroleum’s cash flow dropped steeply at the start of 2015, mainly due to lower realized natural gas (UNG), natural gas liquid, and crude oil (USO) prices. In 1Q15, Occidental Petroleum reported cash flow of $561 million, its lowest since 2004. In fiscal 2015 and fiscal 2016, Occidental Petroleum reported much lower cash flow than it had in previous years. Wall Street analysts expect OXY’s 2Q17 capital expenditure to be around $906 million, meaning that OXY’s 2Q17 free cash flow will be positive.

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Occidental Petroleum’s capital expenditure guidance

In 2017, Occidental Petroleum expects higher capital expenditure of $3.0 billion–$3.6 billion. OXY’s fiscal 2017 capital expenditure guidance is much higher than its fiscal 2016 capital expenditure of $2.9 billion. OXY plans to devote most of its 2017 capital budget to crude oil and natural gas fields developments, with Permian resources receiving the largest increase in capital.

In 1Q17, OXY reported capital expenditure of $752 million, including $280 million on Permian Resources, $119 million on Permian EOR (enhanced oil recovery), $148 million on Middle East operations, $63 million on the chemical business, and $65 million on the midstream business.

Other upstream players

S&P 500 (SPY) energy companies Devon Energy (DVN) and Marathon Oil (MRO) are expected to report cash flow of $1.21 and $1.79, in 2Q17. According to the SPDR S&P 500 ETF’s prospectus, “the Trust seeks to provide investment results that, before expenses, correspond generally to the price and yield performance of the S&P 500 Index.”

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