Occidental Petroleum Corporation (OXY): Business Model Canvas [10-2024 Updated]

Occidental Petroleum Corporation (OXY) is not just another player in the oil and gas industry; it is a company on the cutting edge of innovation and sustainability. With a robust business model that integrates traditional energy production with low-carbon technologies, Occidental is redefining how energy is sourced and delivered. In this blog post, we will explore the Business Model Canvas of Occidental, highlighting its key partnerships, activities, and value propositions that position it as a leader in the evolving energy landscape. Discover how OXY is navigating the complexities of the market while remaining committed to sustainability and operational efficiency.

Occidental Petroleum Corporation (OXY) - Business Model: Key Partnerships

Joint ventures with companies like BlackRock for carbon capture

Occidental Petroleum has established significant joint ventures aimed at carbon capture and sequestration (CCS) technology. One notable partnership is with BlackRock, focusing on large-scale carbon capture projects. This collaboration aims to leverage BlackRock's investment capabilities to fund the development of Occidental's Direct Air Capture (DAC) technology. As of June 2024, Occidental has invested approximately $1.1 billion in its DAC operations, with plans to scale capacity significantly in the coming years.

Collaborations with suppliers for critical materials

Occidental maintains essential partnerships with various suppliers to secure critical materials necessary for its operations. For instance, they collaborate with suppliers of caustic soda and chlorine, crucial for their chemical segment. The chemical segment reported revenues of $2.458 billion for the six months ended June 30, 2024, a decrease from $2.776 billion in the same period of 2023. This collaboration ensures a steady supply chain, crucial for maintaining production efficiency.

Partnerships with third-party transport and storage entities

Occidental also partners with third-party transport and storage companies to optimize its logistics and supply chain operations. These partnerships are vital in managing the transportation of crude oil and natural gas. For example, Occidental reported a net increase in midstream and marketing segment earnings to $116 million for the three months ended June 30, 2024, compared to a loss of $33 million in the previous quarter. This improvement highlights the effectiveness of their strategic partnerships in enhancing operational efficiency and logistics management.

Partnership Type	Partner	Focus Area	Investment/Revenue Impact
Joint Venture	BlackRock	Carbon Capture	$1.1 billion invested in DAC technology
Supplier Collaboration	Various chemical suppliers	Critical materials (caustic soda, chlorine)	$2.458 billion revenue in chemical segment (H1 2024)
Transport & Storage	Third-party logistics firms	Logistics optimization	$116 million earnings in midstream & marketing (Q2 2024)

Occidental Petroleum Corporation (OXY) - Business Model: Key Activities

Exploration and production of oil and gas

Occidental Petroleum Corporation is heavily involved in the exploration and production (E&P) of oil and gas, which is a core part of its business model. For the first six months of 2024, the company reported net sales from its oil and gas segment of $10.384 billion, which marked a 7% increase compared to $9.736 billion for the same period in 2023. The oil segment alone generated approximately $8.893 billion from domestic and international sales. Average daily sales volumes in the oil and gas segment increased to 85 Mboe/d, primarily due to resumed production in the Eastern Gulf of Mexico. Additionally, the average realized price for West Texas Intermediate (WTI) crude oil was $80.56 per barrel for the second quarter of 2024.

Development of chemical manufacturing processes

Occidental's chemical segment is another significant area of focus, with net sales totaling $2.460 billion for the first half of 2024, down from $2.780 billion in the same timeframe in 2023. The chemical segment's earnings were reported at $550 million for the first six months of 2024, reflecting a 39% decrease compared to $908 million in the previous year. The decline is attributed to lower caustic soda prices despite improved product demand. Occidental continues to invest in expanding its chemical manufacturing capabilities, including the conversion of its Battleground chlor-alkali plant to membrane technology.

Implementation of low-carbon technologies

Occidental is actively pursuing low-carbon technologies as part of its strategic initiatives. The company is developing its first large-scale Direct Air Capture (DAC) facility, STRATOS, in Ector County, Texas, which is expected to play a significant role in its low-carbon business. In the first six months of 2024, Occidental's capital expenditures in low-carbon projects were approximately $3.6 billion, with a notable portion allocated to low-carbon ventures. The company aims to leverage its technology to drive sustainable practices while enhancing its operational efficiencies.

Key Activities	Segment Earnings (2024)	Net Sales (2024)	Average Realized Price (WTI)
Exploration and Production	$2.877 billion	$10.384 billion	$80.56 per barrel
Chemical Manufacturing	$550 million	$2.460 billion	N/A
Low-Carbon Technologies	N/A	N/A	N/A

Occidental Petroleum Corporation (OXY) - Business Model: Key Resources

Extensive oil and gas reserves in the Permian Basin

Occidental Petroleum Corporation (OXY) holds significant oil and gas reserves in the Permian Basin, one of the most productive oil regions in the United States. As of June 30, 2024, Occidental's total estimated proved reserves were approximately 3.4 billion barrels of oil equivalent (BOE), with the majority located in the Permian Basin. This region is characterized by its high recovery rates and low production costs, which provide a competitive advantage.

Category	Value
Proved Reserves (BOE)	3.4 billion
Permian Basin Contribution	Approximately 70%
Average Production Cost (per BOE)	$10-$15

Skilled workforce with technical expertise

Occidental's workforce is comprised of approximately 14,000 employees, including a significant number of engineers, geoscientists, and skilled technicians. This skilled workforce is crucial for maintaining operational efficiency and driving innovation in exploration and production activities. The company invests heavily in training and development programs to ensure that its workforce remains at the forefront of industry advancements.

Category	Value
Total Employees	14,000
Investment in Training (2024)	$120 million
Percentage of Workforce in Technical Roles	35%

Advanced chemical production facilities

Occidental operates advanced chemical production facilities, which are integral to its operations in the chemical segment. The company produces a variety of chemical products, including caustic soda and chlorine, with production facilities located across North America. For the six months ended June 30, 2024, the chemical segment generated $2.46 billion in net sales, reflecting the significance of this segment in Occidental's overall business model.

Category	Value
Net Sales from Chemical Segment (2024)	$2.46 billion
Major Chemical Products	Caustic Soda, Chlorine
Number of Chemical Facilities	5

Occidental Petroleum Corporation (OXY) - Business Model: Value Propositions

Reliable supply of energy and chemicals

Occidental Petroleum Corporation (OXY) provides a consistent and reliable supply of energy products, including oil, natural gas, and various chemicals. As of June 30, 2024, the company reported net sales of $12.79 billion, with the oil and gas segment contributing $10.38 billion. The average daily sales volumes for the three months ended June 30, 2024, were as follows:

Product	United States (Mbbl)	International (Mbbl)	Total (Mboe)
Oil	553	104	1,260
NGL	249	39	-
Natural Gas	1,371	518	-

In the domestic market, the average realized price for oil was $79.79 per barrel, while internationally it was $80.40 per barrel. Such competitive pricing and production capacity ensure a reliable supply of energy and chemical products to meet customer demands.

Commitment to sustainability and low-carbon initiatives

Occidental is committed to sustainability and reducing its carbon footprint through various initiatives. The company is actively developing carbon capture, utilization, and storage (CCUS) projects, including its large-scale direct air capture (DAC) facility, STRATOS, located in Ector County, Texas. As of June 30, 2024, Occidental's investment in low-carbon ventures is reflected in its operational strategy, which aims to significantly reduce greenhouse gas emissions.

In 2024, Occidental plans to allocate a portion of its capital expenditures towards low-carbon projects, with total capital expenditures amounting to approximately $3.6 billion. This focus on sustainability not only enhances the company's reputation but also aligns with the growing market demand for environmentally responsible energy solutions.

Strong track record of operational efficiency

Occidental has demonstrated a strong track record in operational efficiency, continually optimizing its production processes. For the six months ended June 30, 2024, the company reported oil and gas segment earnings of $2.9 billion, a 7% increase compared to the same period in 2023. The increase in earnings was primarily driven by higher domestic crude oil prices and enhanced production volumes, particularly in the Gulf of Mexico, which resumed operations after a third-party outage.

Furthermore, the company has maintained competitive average realized prices, achieving 99% of average WTI prices for oil. Operational efficiencies are further reflected in the reduction of depreciation, depletion, and amortization rates, contributing to improved profitability metrics across its segments. For instance, the midstream and marketing segment reported earnings of $116 million for Q2 2024, a significant recovery from a loss of $33 million in Q1 2024.

Occidental Petroleum Corporation (OXY) - Business Model: Customer Relationships

Long-term contracts with major industrial clients

Occidental Petroleum maintains long-term contracts with significant industrial clients, which is a cornerstone of its customer relationship strategy. As of June 30, 2024, the company reported net sales from its oil and gas segment at $10.384 billion for the first six months of 2024, compared to $10.266 billion for the same period in 2023. This stability in revenue reflects the reliability of long-term agreements in maintaining customer loyalty and ensuring consistent cash flow.

Additionally, Occidental's average realized prices for oil were approximately 99% of the average WTI price and 94% of the average Brent price during the second quarter of 2024. These favorable pricing structures are often tied to long-term contractual arrangements, contributing to both revenue predictability and customer satisfaction.

Focus on customer service and support

Occidental Petroleum emphasizes customer service and support as integral to its operational success. The company has invested in enhancing its customer engagement strategies, focusing on responsiveness and tailored solutions. For instance, the oil and gas segment achieved earnings of $2.877 billion for the first half of 2024, an increase from $2.699 billion in the same period in 2023. This growth can be attributed to improved customer relations and service quality, which have bolstered client retention and satisfaction.

Moreover, the company's operational adjustments, including the resumption of production in the Eastern Gulf of Mexico, have improved customer delivery timelines, further enhancing customer relations.

Engagement in community outreach and environmental stewardship

Occidental actively engages in community outreach and environmental stewardship, which strengthens its customer relationships. The company has committed to a substantial investment of $3.6 billion in capital expenditures for 2024, aimed at enhancing its low-carbon initiatives. This commitment not only aligns with customer values regarding sustainability but also positions Occidental as a responsible corporate citizen.

In 2024, Occidental is also focusing on the construction of its first large-scale Direct Air Capture (DAC) facility, which reflects its dedication to reducing carbon emissions and promoting sustainability. Such initiatives resonate positively with customers who prioritize environmental responsibility, thereby fostering stronger relationships and enhancing brand loyalty.

Customer Relationship Aspect	Key Data
Net Sales (Oil & Gas Segment)	$10.384 billion (H1 2024)
Average Realized Price (WTI)	99% of average WTI price (Q2 2024)
Oil & Gas Earnings	$2.877 billion (H1 2024)
Capital Expenditures for Low-Carbon Initiatives	$3.6 billion (2024)
Direct Air Capture Facility Investment	First large-scale facility under construction

Occidental Petroleum Corporation (OXY) - Business Model: Channels

Direct sales to industrial customers

Occidental Petroleum Corporation (OXY) engages in direct sales of oil and gas products to various industrial customers, including refineries and petrochemical companies. For the six months ended June 30, 2024, the net sales from the oil and gas segment amounted to approximately $10.384 billion, reflecting a steady demand from industrial clients. The company's strategy focuses on maintaining strong relationships with key customers to ensure consistent sales and pricing stability in a volatile market.

Online platforms for investor relations and information

Occidental utilizes its online platforms to communicate with investors and stakeholders effectively. The investor relations website provides comprehensive information, including financial reports, stock performance, and market updates. As of June 30, 2024, Occidental had approximately $1.8 billion in cash and cash equivalents, which underscores the company's liquidity and financial health presented on its online platforms. The online presence also allows for timely dissemination of information regarding operational updates and strategic initiatives, such as the recent CrownRock acquisition valued at approximately $12.4 billion.

Partnerships with distributors for chemical products

Occidental actively partners with distributors to enhance its chemical product sales. For the six months ending June 30, 2024, the chemical segment reported net sales of $2.460 billion, indicating a strong distribution network that supports product availability and market reach. These partnerships are crucial for maintaining efficiency in logistics and expanding market penetration, especially in the competitive chemical industry.

Channel Type	Description	Financial Impact (6M 2024)
Direct Sales	Sales to industrial customers for oil and gas products	$10.384 billion
Online Platforms	Investor relations and information dissemination	$1.8 billion in cash and equivalents
Partnerships	Distributors for chemical products	$2.460 billion

Occidental Petroleum Corporation (OXY) - Business Model: Customer Segments

Oil and Gas Companies

Occidental Petroleum Corporation (OXY) primarily serves other oil and gas companies as a significant customer segment. In the first half of 2024, OXY reported net sales of approximately $10.4 billion in its oil and gas segment, which includes crude oil, natural gas liquids (NGLs), and natural gas.

Parameter	Q2 2024	Q1 2024
Net Sales (Oil & Gas Segment)	$5.469 billion	$5.975 billion
Average Realized Oil Price (U.S.)	$79.79 per barrel	$75.54 per barrel
Average Realized Natural Gas Price (U.S.)	$0.54 per Mcf	$1.61 per Mcf
Domestic Oil Average Daily Sales Volume	85 Mboe/d	Resumed production after third-party outage

Chemical Manufacturers and Industrial Processors

OXY's chemical segment is another critical customer base, serving manufacturers and processors. For the six months ended June 30, 2024, the chemical segment generated approximately $2.46 billion in net sales. The segment focuses on producing essential chemicals, including caustic soda and PVC, which are in high demand across various industries.

Parameter	Q2 2024	Q1 2024
Net Sales (Chemical Segment)	$1.274 billion	$1.192 billion
Chemical Segment Earnings	$296 million	$254 million
Key Products	Caustic Soda, PVC	Caustic Soda, PVC
Market Drivers	Improved product demand, higher prices	Stable demand

Government and Regulatory Bodies Focused on Energy

Occidental also engages with government and regulatory bodies, which are crucial for compliance and operational sustainability. The company is impacted by energy policies and regulations that govern the oil and gas sector. In 2024, OXY has focused on aligning its operations with governmental initiatives aimed at promoting low-carbon technologies and sustainability.

Parameter	2024 Overview
Government Engagement	Active participation in energy policy discussions
Focus Areas	Low-carbon technologies, sustainability initiatives
Impact of Regulatory Changes	Potential adjustments in operational strategies and investments

Occidental Petroleum Corporation (OXY) - Business Model: Cost Structure

Significant capital expenditures for exploration and production

In 2024, Occidental Petroleum Corporation reported capital expenditures of approximately $3.6 billion for the first half of the year, which represents an increase from $3.1 billion in the same period of 2023 . The majority of these expenditures were directed towards the oil and gas segment, including investments in the construction of STRATOS, a large-scale direct air capture facility in Texas, and ongoing expansion activities in its chemical segment .

Operational costs related to chemical manufacturing

For the six months ended June 30, 2024, the chemical segment incurred operational costs totaling approximately $1.563 billion, with a significant portion attributed to the costs of sales. The earnings from this segment were reported at $550 million, down from $908 million in the previous year, primarily due to lower realized prices for caustic soda and increased ethylene costs .

Cost Type	Amount (in millions)
Capital Expenditures (2024)	$3,600
Chemical Operational Costs (2024)	$1,563
Chemical Segment Earnings (2024)	$550
Previous Year Chemical Earnings (2023)	$908

Administrative and compliance expenses

Occidental's selling, general, and administrative expenses for the first half of 2024 amounted to $518 million, consistent with the previous year. Additionally, the company incurred $26 million in acquisition-related costs associated with the CrownRock Acquisition. The total income tax expense for the six months ended June 30, 2024, was reported at $769 million, reflecting a worldwide effective tax rate of approximately 29% .

Expense Type	Amount (in millions)
Administrative Expenses (2024)	$518
Acquisition-Related Costs (2024)	$26
Income Tax Expense (2024)	$769

Occidental Petroleum Corporation (OXY) - Business Model: Revenue Streams

Sales from oil, natural gas, and NGL products

For the six months ended June 30, 2024, Occidental Petroleum Corporation reported net sales of $10,384 million from oil and gas operations. This includes:

• Oil: $8,893 million
• NGL (Natural Gas Liquids): $1,015 million
• Natural Gas: $432 million

Comparatively, for the six months ended June 30, 2023, net sales from oil and gas were $10,266 million, with the following breakdown:

• Oil: $8,609 million
• NGL: $987 million
• Natural Gas: $675 million

This indicates a year-over-year increase in oil sales, primarily driven by higher domestic crude oil prices and volumes, despite a decline in natural gas sales due to lower prices.

Revenue Source	H1 2024 (in millions)	H1 2023 (in millions)
Oil	$8,893	$8,609
NGL	$1,015	$987
Natural Gas	$432	$675
Total	$10,384	$10,266

Chemical product sales

Occidental's chemical segment generated net sales of $2,460 million for the six months ended June 30, 2024, compared to $2,780 million during the same period in 2023. This decline is attributed to lower caustic soda realized prices and reduced demand in certain markets. The earnings from this segment were $550 million for H1 2024, down from $908 million in H1 2023.

Segment	H1 2024 Sales (in millions)	H1 2023 Sales (in millions)	H1 2024 Earnings (in millions)	H1 2023 Earnings (in millions)
Chemical	$2,460	$2,780	$550	$908

Revenue from carbon capture and storage initiatives

Occidental is actively investing in carbon capture and storage (CCS) projects, which are expected to be significant revenue streams as the demand for low-carbon solutions increases. The company aims to leverage its expertise in carbon management to develop and commercialize direct air capture technologies. While specific revenue figures from these initiatives are not fully disclosed, the low-carbon ventures segment contributed to improved earnings in the midstream and marketing operations. For the six months ended June 30, 2024, the midstream and marketing segment reported earnings of $83 million, a significant increase from a loss of $28 million in the same period of 2023.

Initiative	H1 2024 Earnings (in millions)	H1 2023 Earnings (in millions)
Low-Carbon Ventures	$83	$(28)