Occidental Petroleum's Q3 2024 Earnings Recap: A Quarter of Resilient Performance

Overview of the Quarter

Occidental Petroleum, a dominant player in the oil and gas industry, has reported its third quarter results for 2024, highlighting a period of resilient performance despite volatility in commodity markets and weather disruptions. The company's strategic integration of CrownRock assets, ongoing advancements in carbon management, and disciplined capital allocation have all contributed to a standout quarter with impressive operational execution.

Key Financial Metrics

• Free Cash Flow (FCF): Occidental generated $1.5 billion in free cash flow, surpassing guidance across all segments.
• Earnings: The company reported an adjusted profit of $1 per diluted share, with a reported profit of $0.98 per diluted share.
• Production Records: The Oil & Gas segment achieved a new company record for U.S. production, despite disruptions from three hurricanes affecting the Gulf of Mexico.
• Cash Position and Debt Reduction: Occidental ended the quarter with $1.8 billion in unrestricted cash and repaid $4 billion of debt, nearly 90% of its commitment post-CrownRock acquisition, showcasing strong financial discipline.

Operational Highlights

• U.S. Onshore and CrownRock Integration: Exceptional well performance in the Permian Basin and seamless integration of CrownRock assets are underscoring the company's robust operations. The legacy Midland Basin assets and CrownRock continue to exceed production expectations, contributing to unprecedented levels of output.
• Production in the Rockies and Delaware Basin: Highlights include innovative drilling techniques and enhanced operational efficiency, with the Delaware Basin project producing 1.2 million barrels of oil in just 90 days. Improved drilling cycle times and cost reductions have accelerated time to market and boosted production.

Growth Through Innovation

Occidental's foray into low-carbon ventures is headlined by their direct air capture (DAC) strategy. The DAC project titled STRATOS is proceeding smoothly, positioning Occidental at the forefront of large-scale carbon capture and storage technology development. This initiative has garnered significant attention and backing, with the DOE awarding up to $500 million for the project's expansion in South Texas.

Forward Guidance and Strategic Plans

• Oil & Gas Outlook: Despite the macroeconomic challenges and potential risk of lower oil prices in 2025, Occidental plans to maintain its capital spending to sustain its production levels. The company is focusing on stable operations in the CrownRock area with a commitment to efficient resource allocation.
• Continued Deleveraging: With successful debt reduction efforts already in motion, Occidental remains committed to reducing its debt further, aiming for a principal debt target of $15 billion.
• Capital Deployment: A consistent capital plan is expected for 2025, with CrownRock continuing a five-drilling program and an anticipation of single-digit production growth.

Industry Position and Market Sentiment

Occidental Petroleum's robust performance amid market challenges reflects strong operational capabilities and prudent financial management. As the energy industry navigates a complex landscape, Occidental's emphasis on innovation through carbon management and a disciplined capital approach places it in a strategically advantageous position.

Retail investors should note the balance Occidental seeks to strike between leveraging opportunities for operational excellence and managing external market factors. While macro uncertainties linger, Occidental's forward-looking strategies and efficient integration of CrownRock assets could fortify its market position and deliver sustainable long-term value.