Occidental Petroleum earnings top estimates despite fall in oil and gas profit

November 13, 2024 09:49 PM AEDT | By Investing

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Occidental Petroleum earnings top estimates despite fall in oil and gas profit

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Investing.com - Occidental Petroleum posted a decline in profit from its key oil and gas business in the third quarter, but sentiment was still bolstered by stronger-than-anticipated group-wide earnings.

Like its peers, Occidental (NYSE:OXY) has been grappling with the impact of a slump in oil and gas prices. The company said average worldwide realized crude oil prices during the quarter ended on Sept. 30 decreased by 6% from the prior three-month period to $75.33 per barrel, while average natural gas liquids prices dropped by 4% to $20.47 a barrel.

The Texas-based firm was also dented by losses from asset sales that amounted to $572 million. Earlier this year, it offloaded properties to Permian Resources and an unnamed buyer, in moves that were worth a combined $970 million.

The proceeds from the sales were used to help bring down Occidental's debt pile that has been fueled in part by a $12 billion purchase of shale producer CrownRock. Long-term debt at the end of the quarter was reduced to $25.46 billion, a fall of $4 billion -- or nearly 90% of Occidental's near-term repayment target.

However, operating profit from pumping oil and gas decreased by 25% versus the previous quarter to $1.2 billion.

Income from Occidental's chemicals unit also fell by $304 million, compared with $373 million in the year-ago period. But this was somewhat offset by its midstream division, which was boosted by derivatives and a $490 million sale of shares in pipeline firm Western Midstream Partners (NYSE:WES).

Oil output also increased by 15.7% to 1.4 million barrels of oil and gas per day, thanks in part to its CrownRock acquisition. For its 2024 fiscal year, Occidental expects oil production to rise to 661,000 barrels of oil and gas a day, versus 588,000 in the prior year.

Adjusted profit for the third quarter came in at $977 million, translating to $1.00 per share. Analysts cited by Reuters had anticipated adjusted per-share income of $0.74.

"[The] [s]trong [third-quarter] earnings underlines Occidental's capacity for deleveraging from one of the most capital efficient portfolios in the industry," analysts at Wolfe Research led by Doug Leggate said in a note.

Shares in Occidental edged slightly higher in premarket US trading on Wednesday.

(Yasin Ebrahim and Reuters contributed reporting.)

This article first appeared in Investing.com

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