Analysis of Revenues
Revenue Recognition Accounting Policy
Revenue is recognized from oil and gas production when title has passed to the customer, which occurs when the product is shipped. Where oil is shipped by tanker, title passes when the tanker is loaded or product is received by the customer, depending on the shipping terms. This process occasionally causes a difference between actual production in a reporting period and sales volumes that have been recognized as revenue. Revenues from the production of oil and gas properties in which Occidental has an interest with other producers are recognized on the basis of Occidental's net revenue interest.
Revenue from chemical product sales is recognized when the product is shipped and title has passed to the customer. Certain incentive programs may provide for payments or credits to be made to customers based on the volume of product purchased over a defined period. Total customer incentive payments over a given period are estimated and recorded as a reduction to revenue ratably over the contract period. Such estimates are evaluated and revised as warranted.
Revenue from marketing activities is recognized on net settled transactions upon completion of contract terms and, for physical deliveries, upon title transfer. For unsettled transactions, contracts are recorded at fair value and changes in fair value are reflected in net sales. Revenue from all marketing activities is reported on a net basis.
Occidental records revenue net of any taxes, such as sales taxes, that are assessed by governmental authorities on Occidental's customers.
Source: 10-K (filing date: 2018-02-23).
Revenues as Reported
Occidental Petroleum Corp., Income Statement, Revenues
USD $ in millions
|12 months ended||Dec 31, 2017||Dec 31, 2016||Dec 31, 2015||Dec 31, 2014||Dec 31, 2013|
|Oil and gas||7,870||6,377||8,304||13,887||19,132|
|Midstream and marketing||1,157||684||891||1,373||1,538|
|Corporate and eliminations||(874)||(727)||(660)||(765)||(888)|
|Net sales||Aggregate revenue recognized during the period (derived from goods sold, services rendered, insurance premiums, or other activities that constitute an entity's earning process). For financial services companies, also includes investment and interest income, and sales and trading gains.||Occidental Petroleum Corp.'s net sales declined from 2015 to 2016 but then increased from 2016 to 2017 exceeding 2015 level.|