Sign in

    Occidental Petroleum Corp (OXY)

    You might also like

    Business Description

    Occidental Petroleum Corporation (OXY) is a multinational energy company engaged in the exploration, development, and production of oil, natural gas liquids (NGL), and natural gas, with operations in the United States, the Middle East, and North Africa . The company also manufactures and markets basic chemicals and vinyls through its chemical segment, Occidental Chemical Corporation (OxyChem) . Additionally, Occidental is involved in midstream and marketing activities, which include optimizing transportation and storage capacity and advancing low-carbon ventures .

    1. Oil and Gas - Engages in the exploration, development, and production of oil, natural gas liquids (NGL), and natural gas, with significant operations in the United States, the Middle East, and North Africa .
    2. Chemical - Manufactures and markets basic chemicals and vinyls, including chlorine, caustic soda, and polyvinyl chloride (PVC), through Occidental Chemical Corporation (OxyChem) .
    3. Midstream and Marketing - Supports the oil and gas and chemical businesses by optimizing transportation and storage capacity, and includes low-carbon ventures focused on carbon capture, utilization, and storage (CCUS) projects .
      • Low-Carbon Ventures - Focuses on reducing greenhouse gas emissions and developing new low-carbon technologies .

    Q3 2024 Summary

    Initial Price$63.26July 1, 2024
    Final Price$53.25October 1, 2024
    Price Change$-10.01
    % Change-15.82%

    What went well

    • Strong operational performance and synergies from CrownRock integration: Occidental has reported exceptional operational performance, particularly with the integration of CrownRock assets, which is driving production efficiencies and substantial synergies.
    • Advancement in Direct Air Capture (DAC) technology with significant funding: The company is making great progress on its DAC projects, expecting the first unit to be operational by mid-2025, and securing up to $500 million in funding from the U.S. Department of Energy. This positions Oxy as a leader in carbon capture technology, which could be a significant value creator and cash flow generator in the long term.
    • Flexible capital allocation and preparedness for market conditions: Occidental is ready to adjust its capital spending and has multiple options, including asset disposals, to manage its balance sheet effectively, demonstrating financial discipline in a volatile commodity environment.

    What went wrong

    • Dependence on Government Support for Direct Air Capture (DAC) Projects: The company's DAC projects, like STRATOS, rely heavily on government funding and subsidies, such as the up to $500 million awarded by the U.S. Department of Energy. Changes in political leadership or subsidy environments could impact the economics and progress of these projects.
    • Increasing Capital Expenditure Beyond Previous Guidance: The full-year CapEx is expected to be about $7.1 billion, approximately $200 million higher than previous midpoint guidance. This increase may strain financial resources or indicate cost overruns.
    • Acknowledgment of Potential Softening in Oil Prices and Conservative Outlook: The company recognizes the possibility of declining oil prices and is planning a conservative capital spend for 2025. This conservative stance may limit growth opportunities and reflects concerns about the macro environment.

    Q&A Summary

    1. Macro Outlook and Capital Plans
      Q: How will Oxy adjust capital plans amid macro uncertainty?
      A: CEO Vicki Hollub explained that the company regularly reviews macro factors, noting that 2026 will be better than 2025 due to expected declining growth rates in U.S. shale and Brazil. Oxy plans to recommend a conservative capital plan to the Board, maintaining activity levels in the CrownRock area while slightly lowering capital in other oil and gas areas. They are prepared to adjust activity levels based on price trends but will not increase capital expenditure even if prices rise.

    2. Debt Reduction and Deleveraging
      Q: What are Oxy's goals for debt reduction in the next 12–18 months?
      A: Vicki Hollub stated that Oxy believes they have already achieved significant success with over $4 billion in debt reduction. Even in a lower-price environment, they expect to generate cash flow and proceed with divestitures, continuing debt reduction efforts through 2025 regardless of oil prices.

    3. Permian Production Mix and Secondary Zones
      Q: Is the lower oil percentage in the Permian a structural change?
      A: Richard Jackson noted that the increase in development of secondary benches, especially in the Delaware Basin, led to a higher proportion of NGLs. The company increased secondary bench development from 20% in 2023 to 40% in 2024, adding value despite a lower oil cut. This strategy is expected to continue into next year, with the oil percentage leveling off in the second half of the year.

    4. Direct Air Capture (DAC) Project Progress
      Q: What is the status of the DAC project, and how might the election impact its economics?
      A: Vicki Hollub stated that the DAC project will be a value creator and cash flow generator, with ongoing cost curve improvements. Kenneth Dillon reported that the first phase is nearly 90% complete, with mechanical completion expected by the end of the year. Regarding the election, Hollub believes that support for DAC and related funding will continue regardless of the administration, highlighting bipartisan backing for initiatives like the 45Q tax credit.

    5. Capex Guidance and CrownRock Integration
      Q: What is the incremental Capex from CrownRock next year?
      A: Oxy expects to allocate approximately $900 million to $950 million in capital to CrownRock in 2025, maintaining a five-rig program. The increase in full-year Capex guidance for 2024 is entirely due to CrownRock.

    6. Divestitures in the Rockies
      Q: What are Oxy's plans for assets in the Powder River Basin?
      A: Vicki Hollub explained that Oxy sold the southern part of the Powder River Basin to focus on contiguous acreage where they can optimize value. The sold assets are better suited for development by the acquiring company, and Oxy will concentrate on the core part of the basin, which they believe will create significant future value.

    Key Metrics

    View all financials →

    Executive Team

    NamePositionStart DateShort Bio
    Peter J. BennettVice President, President, Commercial Development U.S. Onshore Resources and Carbon Management2017Peter J. Bennett is responsible for the strategic direction and capital placement for Occidental's U.S. Onshore Resources and Carbon Management business, including securing partnerships to enhance the company’s portfolio .
    Christopher O. ChampionVice President, Chief Accounting Officer, and ControllerAugust 2019Christopher O. Champion joined Occidental in August 2019, previously serving as Senior Vice President, Chief Accounting Officer, and Controller at Anadarko Petroleum Corporation .
    Kenneth DillonSenior Vice President, President – International Oil and Gas OperationsDecember 2016Kenneth Dillon oversees operations in the Middle East, North Africa, South America, and the Gulf of Mexico, managing major projects. He has been with Occidental for over 30 years .
    Vicki HollubPresident and Chief Executive OfficerApril 2016Vicki Hollub has been with Occidental for over 40 years, holding various management and technical positions across three continents. She has been a member of Occidental's Board of Directors since 2015 .
    Richard A. JacksonSenior Vice President, President Operations U.S. Onshore Resources and Carbon ManagementOctober 2020Richard A. Jackson leads the development and operations of Occidental's U.S. onshore oil and gas businesses and advances the company's low-carbon technologies and opportunities .
    Sylvia J. KerriganSenior Vice President and Chief Legal OfficerOctober 2022Sylvia J. Kerrigan joined Occidental in October 2022, previously serving as Executive Director of the Kay Bailey Hutchison Energy Center for Business, Law and Policy at The University of Texas .
    Sunil MathewSenior Vice President and Chief Financial OfficerAugust 2023Sunil Mathew oversees the Accounting, Tax, Treasury, Internal Audit, and Investor Relations functions, as well as Corporate Planning and Business Development. He joined the company in 2004 .
    Robert L. PetersonExecutive Vice President, Essential ChemistryAugust 2023Robert L. Peterson has been with Occidental for over 25 years, previously serving as Senior Vice President and Chief Financial Officer from April 2020 until August 2023 .
    Jeff F. SimmonsSenior Vice President and Chief Petrotechnical Officer2021Jeff F. Simmons directs exploration activities for Occidental's Gulf of Mexico and international assets and manages the corporate subsurface engineering and geoscience departments .

    Questions to Ask Management

    1. Given the current volatility in oil prices and a macro environment where oil demand may not increase significantly, how do you justify maintaining or increasing capital expenditure in your U.S. onshore portfolio, particularly with the integration of CrownRock assets?

    2. Can you provide more details on your deleveraging strategy, specifically how you plan to achieve your medium-term principal debt target of $15 billion while also investing heavily in projects like STRATOS and the OxyChem expansion?

    3. With the increased capital budget of approximately $900 million in 2025 for OxyChem, up from $200 million this year, what assurances can you offer that the expected $325 million uplift in earnings will materialize, especially given potential market uncertainties?

    4. The integration of CrownRock assets is expected to bring synergies and operational efficiencies; can you quantify these synergies and explain how they will impact your cost structure and production targets in the near term?

    5. Considering the substantial investment in your Direct Air Capture (DAC) projects like STRATOS, can you elaborate on the risks associated with the technological advancements and the phased construction approach, and how these might affect your timelines and returns?

    Share Repurchase Program

    Program DetailsProgram 1
    Approval DateFebruary 2023
    End Date/DurationN/A
    Total additional amount$3.0 billion
    Remaining authorization amount$1.2 billion
    DetailsEnhance shareholder value by reducing outstanding shares, aligned with cash flow priorities

    Past Guidance

    Q3 2024 Earnings Call

    • Issued Period: Q3 2024
    • Guided Period: Q4 2024 and FY 2024
    • Guidance:
      1. Production Guidance:
        • Raised to a midpoint of 1.45 million BOE per day for Q4 2024.
        • Additional 12,000 BOE per day expected in Q4, with 9,000 BOE per day from CrownRock assets.
      2. Full Year Production Guidance:
        • Increased due to outperformance from legacy unconventional business and CrownRock assets.
      3. Midstream and Marketing Segment Guidance:
        • Full year guidance raised due to strong Q3 performance.
      4. Capital Expenditure:
        • 2025 capital budget expected to be $450 million, down from $600 million in 2024.
      5. Chemical Capital Budget:
        • Anticipated to be $900 million in 2025, up by $200 million from 2024.
      6. Debt Reduction:
        • Committed to repaying over $4.5 billion of debt within 12 months of CrownRock acquisition.
      7. Operational Metrics:
        • Domestic lease operating expenses at $8.68 per barrel .

    Q2 2024 Earnings Call

    • Issued Period: Q2 2024
    • Guided Period: Q3 2024, Q4 2024, and FY 2024
    • Guidance:
      1. Production Guidance:
        • Increased to 1.32 million BOE per day, including CrownRock.
      2. OxyChem Guidance:
        • Revised down to $1 billion to $1.1 billion.
      3. Midstream and Marketing Guidance:
        • Raised by $220 million for the full year.
      4. Capital Expenditure Guidance:
        • Increased to $6.8 billion to $7 billion.
      5. Debt Reduction and Divestiture Program:
        • On track to return at least $4.5 billion of debt .

    Q1 2024 Earnings Call

    • Issued Period: Q1 2024
    • Guided Period: Q2 2024 and FY 2024
    • Guidance:
      1. Production Guidance:
        • Expected to increase to 1.23 million to 1.27 million BOE per day in Q2 2024.
      2. Operating Expenses (OpEx):
        • U.S. Lease Operating Expenses expected to be $10.10 in Q2.
      3. Midstream and OxyChem Segments:
        • Midstream guidance raised by $110 million.
      4. Capital Spending:
        • Weighted towards the first half of the year.
      5. CrownRock Acquisition:
        • Anticipated to close in Q3 2024.
      6. Debt and Divestiture Plans:
        • Plans to reduce principal debt to $15 billion or below .

    Q4 2023 Earnings Call

    • Issued Period: Q4 2023
    • Guided Period: FY 2024
    • Guidance:
      1. Production Guidance:
        • Expected to average 1.25 million BOE per day for FY 2024.
      2. OxyChem Guidance:
        • Midpoint of $1.1 billion of pretax income.
      3. Midstream Business:
        • Expected savings of $300 million to $400 million.
      4. Capital Investment:
        • Planned investment of $5.8 billion to $6 billion.
      5. Debt Reduction:
        • Intention to complete at least $4.5 billion in debt repayments.
      6. Low Carbon Ventures (LCV) Investment:
        • Planned $600 million investment.
      7. Operational Costs:
        • Expected decrease in domestic operating costs .

    Latest news

    Recent developments and announcements about OXY.

    Financial Reporting

      Earnings Report

      ·
      Jan 10, 2025, 9:39 PM

      Occidental Petroleum Corporation (OXY) has released its Fourth Quarter 2024 Earnings Considerations as of January 10, 2025. Below are the key highlights from the report:

      Earnings Considerations

      • Average Diluted Shares Outstanding: 983.9 million shares for Q4 2024.

      Realized Prices

      • Oil:
        • United States: $69.27 per barrel
        • International: $72.55 per barrel
        • Total Worldwide: $69.73 per barrel
      • Natural Gas Liquids (NGL):
        • United States: $21.14 per barrel
        • International: $27.11 per barrel
        • Total Worldwide: $21.80 per barrel
      • Natural Gas:
        • United States: $1.26 per Mcf
        • International: $1.88 per Mcf
        • Total Worldwide: $1.41 per Mcf.

      Comparison to Index Prices

      • Worldwide Oil:
        • Realized prices were 99% of WTI and 94% of Brent.
      • Worldwide NGL:
        • Realized prices were 31% of WTI.
      • Domestic Natural Gas:
        • Realized prices were 47% of NYMEX.

      Significant Trends

      • The report highlights that the earnings considerations are preliminary and subject to finalization. It does not provide a comprehensive view of all results or adjustments for Q4 2024.

      This information provides a snapshot of Occidental's financial performance and market realizations for the fourth quarter of 2024. For further details, refer to the full earnings considerations document.

      Earnings Report

      ·
      Nov 12, 2024, 12:00 AM

      Occidental Petroleum Corporation (OXY) Third Quarter 2024 Earnings Results

      Occidental Petroleum Corporation has released its financial results for the third quarter of 2024, showcasing strong operational performance across its segments. Here are the key highlights:

      • Net Income: The company reported a net income attributable to common stockholders of $964 million, or $0.98 per diluted share. Adjusted income was $977 million, or $1.00 per diluted share .

      • Operating Cash Flow: Occidental generated an operating cash flow of $3.8 billion, with operating cash flow before working capital adjustments at $3.1 billion .

      • Free Cash Flow: The company achieved a free cash flow before working capital of $1.5 billion, supported by capital spending of $1.7 billion and contributions from noncontrolling interests .

      • Production: Total company production was 1,412 thousand barrels of oil equivalent per day (Mboed), exceeding the mid-point of guidance by 22 Mboed. The Permian Basin led this performance with an average production of 729 Mboed .

      • Debt Reduction: Occidental repaid $4.0 billion of debt, reaching nearly 90% of its short-term debt reduction target .

      • Segment Performance:

        • Oil and Gas: Pre-tax income for this segment was $1.2 billion, with adjusted income increasing from the previous quarter due to higher sales volumes, despite lower realized commodity prices .
        • OxyChem: The chemical segment exceeded guidance with a pre-tax income of $304 million, maintaining flat income compared to the second quarter .
        • Midstream and Marketing: This segment reported a pre-tax income of $631 million, including significant gains from the sale of common units in Western Midstream Partners, LP .

      • Commodity Prices: The average worldwide realized crude oil price was $75.33 per barrel, a decrease of 6% from the prior quarter. Natural gas liquids prices also saw a decrease, while domestic gas prices fell significantly by 26% to $0.40 per Mcf .

      These results reflect Occidental's robust operational capabilities and strategic focus on debt reduction and efficient capital management, positioning the company well for future growth and stability in the energy sector.

    Financial Actions

      Strategic Assets

      ·
      Aug 1, 2024, 12:00 AM

      Occidental Petroleum Corporation Completes Acquisition of CrownRock

      On August 1, 2024, Occidental Petroleum Corporation (NYSE: OXY) announced the completion of its acquisition of CrownRock, L.P. The transaction was valued at approximately $12.4 billion, which included $9.4 billion in cash, 29,560,619 shares of Occidental's common stock, and the assumption of $1.2 billion of CrownRock's existing debt .

      Details of the Transaction

      • Cash Consideration: Approximately $9.4 billion, inclusive of working capital and other customary purchase price adjustments.
      • Stock Consideration: 29,560,619 shares of Occidental's common stock were issued to the sellers.
      • Debt Assumption: Occidental assumed $1.2 billion of existing debt from CrownRock and its subsidiaries .

      Potential Effects on Occidental's Financials and Operations

      • Strengthened Portfolio: The acquisition is expected to enhance Occidental's asset portfolio, making it more robust and differentiated, according to Vicki Hollub, President and CEO of Occidental .
      • Operational Synergies: The integration of CrownRock's assets and team members is anticipated to create a high-performing employee base focused on developing low-emission, low-cost energy .
      • Financial Impact: The transaction involves a significant cash outlay and stock issuance, which may affect Occidental's cash reserves and shareholder equity. The assumption of debt could also impact the company's leverage ratios .

      This acquisition aligns with Occidental's strategy to expand its presence in the energy sector, particularly in the U.S., and to advance its low-carbon initiatives .

      Dividend Policy

      ·
      Dec 12, 2023, 12:00 AM

      Occidental Petroleum Corporation (OXY) has announced an increase in its quarterly common stock dividend per share by $0.04, raising it to $0.22. This change will take effect beginning with the February 2024 declaration. This decision aligns with the company's shareholder return priorities and follows the acquisition of CrownRock's assets, which is expected to generate immediate free cash flow accretion and support the dividend increase .