OCCIDENTAL PETROLEUM CORP /DE/ (OXY) Q1 2025 Earnings Summary
Executive Summary
- Q1 2025 was operationally solid with production of 1,391 Mboed at the midpoint of guidance, adjusted EPS of $0.87 and reported EPS of $0.77; adjusted EPS beat S&P Global consensus ($0.76*) while revenue of $6.84B was slightly below consensus ($6.98B*) . Results rose year over year versus Q1 2024 revenue ($6.01B) and adjusted EPS ($0.63) .
Estimates note: Values marked with * retrieved from S&P Global. - Management lowered full‑year 2025 capex midpoint by $200M and cut domestic operating cost guidance to $8.65/BOE (from $9.00), citing sustainable efficiency gains; midstream full‑year guidance raised by $40M, with company production guidance maintained .
- Cash priorities remain deleveraging: $1.3B of asset sales closed in Q1 and $2.3B debt repaid YTD; total debt reduction over the last 10 months reached $6.8B, trimming annual interest by ~$370M .
- Strategic catalysts: operations-led cost/rig reductions with minimal production impact, Oman Block 53 extension negotiations and new North Oman discovery, and low‑carbon advances (STRATOS Class VI permits; CF Industries 25‑year sequestration offtake; crude transport recontracting adds ~$200M 2025 and ~$400M annual from 2026) .
What Went Well and What Went Wrong
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What Went Well
- Efficiency and cost wins: “operational excellence unlocked additional efficiencies,” enabling $3.0B operating cash flow before working capital and free cash flow before working capital of $1.16B; domestic operating costs came in below expectations at $9.05/BOE .
“Our teams’ sustained focus on operational excellence unlocked additional efficiencies and supported the delivery of resilient free cash flow.” — CEO Vicki Hollub . - Segments beat guidance on an adjusted basis: OxyChem adjusted pre‑tax income of $215M exceeded guidance; midstream exceeded midpoint guidance by $127M (despite GAAP derivative losses), helped by Permian gas marketing optimization and higher sulfur prices at Al Hosn .
- Balance sheet progress and line of sight to more cash: $2.3B YTD debt retired; crude transport recontracting uplift ~$200M in 2025 and ~$400M in 2026; chemicals Battleground project and STRATOS capex roll-off to support a ~$1B incremental pretax FCF uplift in 2026 from non‑E&P segments .
- Efficiency and cost wins: “operational excellence unlocked additional efficiencies,” enabling $3.0B operating cash flow before working capital and free cash flow before working capital of $1.16B; domestic operating costs came in below expectations at $9.05/BOE .
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What Went Wrong
- Revenue modestly below consensus: Q1 revenue of $6.84B versus $6.98B S&P consensus*; GAAP midstream pre‑tax loss of $77M included net derivative losses of $84M .
Estimates note: Values marked with * retrieved from S&P Global. - OxyChem down sequentially due to pricing/costs: Q1 pre‑tax income of $185M (GAAP) fell vs Q4 2024, reflecting lower caustic soda/PVC prices and higher ethylene and gas costs, though adjusted results exceeded guidance .
- Working capital headwinds and one‑time tax timing: Negative working capital change of $852M and $350M of 2024 taxes paid under federal disaster relief timing; an additional ~$110M tax payment expected in Q2 .
- Revenue modestly below consensus: Q1 revenue of $6.84B versus $6.98B S&P consensus*; GAAP midstream pre‑tax loss of $77M included net derivative losses of $84M .
Financial Results
Revenue and EPS vs prior periods and consensus
Estimates note: Values marked with * retrieved from S&P Global.
Margins (S&P Global)
Values retrieved from S&P Global.
Segment adjusted results (before tax allocations)
KPIs
Guidance Changes
Earnings Call Themes & Trends
Management Commentary
- “Maintaining steady operations continues to drive material capital efficiency improvements... Our focus remains on protecting and compounding value across cycles” — CEO Vicki Hollub .
- “We generated an adjusted profit of $0.87 per diluted share... strong operational execution enabled approximately $1.2 billion of free cash flow before working capital” — CFO Sunil Mathew .
- “We are in advanced negotiations with the Oman government to extend the current Block 53 contract by 15 years to 2050... potential to unlock more than 800 million gross barrels” — CEO Vicki Hollub .
- “In midstream... revised crude transportation contracts at lower rates will deliver a pretax cash flow uplift of approximately $200 million in 2025 and $400 million annually beginning in 2026” — CFO Sunil Mathew .
- “1PointFive signed a 25‑year carbon offtake agreement... ~2.3 million metric tons of CO2 annually at our Pelican Hub” — CEO Vicki Hollub ; corroborated by April 8 press release .
- “STRATOS... received EPA Class VI permits to sequester CO2 captured from DAC” — April 7 press release .
Q&A Highlights
- Capex/OpEx reductions and durability: Management emphasized sustainable efficiency (well cost and operating cost) rather than activity cuts; EOR OpEx levers include CO2 and downhole maintenance, with beam pump failure reductions lowering workover rigs by >30% over two years .
- Free cash flow inflection drivers: 2026 uplift from lower crude transport costs (
$400M), Battleground capex roll‑off ($600M year‑over‑year by 2027) and operating uplift ($160M), STRATOS capex roll‑off ($250M), and interest savings (assumed maturities paydown) . - Deleveraging and potential divestitures: Goal to accelerate payoff of 2026 maturities; evaluating options but not committing to specific asset categories .
- Gulf of America program: Some discretionary capital deferrals optimize waterflood design and capture deflation; one platform well deferred into 2026 without harming project value .
- Chemicals outlook: Domestic demand modestly improving; pressure from China PVC exports and new Gulf Coast capacity; potential 2H price support from capacity rationalization and lower ethylene/gas costs .
- Macro and U.S. supply: Potential for earlier U.S. production peak if industry activity cuts persist; Permian could plateau sooner under pressure .
Estimates Context
- EPS beat, revenue slight miss: Q1 2025 adjusted EPS $0.87 vs S&P consensus $0.76*; revenue $6.84B vs $6.98B* .
- Trailing quarters: Q4 2024 adjusted EPS $0.80 vs $0.67*; revenue $6.76B vs $7.14B*; Q3 2024 adjusted EPS $1.00 vs $0.75*; revenue $7.15B vs $7.12B* .
- Implications: Street likely to nudge up midstream 2025 contributions and lower unit OpEx assumptions; consolidated revenue outlook modestly tempered by production mix and OxyChem near‑term price pressure .
Estimates note: Values marked with * retrieved from S&P Global.
Key Takeaways for Investors
- Execution-driven cost down: Dropping two Delaware rigs and cutting OpEx to $8.65/BOE support higher capital efficiency without lowering 2025 production guidance — a constructive margin backdrop if prices stay rangebound .
- Cash flow visibility improving: Transport recontracting, chemicals project cadence, STRATOS roll‑off and lower interest underpin a step‑up in non‑E&P pretax FCF by ~$1B in 2026, with further expansion in 2027 .
- Deleveraging on track: $2.3B YTD debt reduction and $6.8B over 10 months reduce interest by ~$370M annually; 2025 maturities retired, 2026 runway manageable .
- International growth option: Oman Block 53 extension and North Oman discovery provide medium‑term growth diversification beyond U.S. shale, with favorable PSC resilience at lower prices .
- Low‑carbon momentum: STRATOS Class VI permits and CF Industries 25‑year sequestration offtake provide commercial and regulatory validation; additional DAC JV optionality with ADNOC’s XRG (post‑quarter) .
- Trading setup: Near‑term catalysts include cost/rig reductions with maintained volumes, midstream uplift crystallizing through 2025, and potential Oman contract signing; watch OxyChem pricing and working capital normalization in Q2 .
- Risk checks: Macro oil volatility (OPEC+ supply, tariffs) and OxyChem market pressure; however, flexible short‑cycle portfolio and efficiency lines mitigate downside .