Occidental Petroleum reported better-than-expected third-quarter earnings late Tuesday. The Permian Basin oil producer announced it has paid off 90% of its short-term debt reduction target as it continues to clean up its balance sheet. Occidental Petroleum saw Q3 earnings of $1.00 per share, down 7% compared to $1.08 a year ago.
Revenue totaled $7.17 billion, running flat compared to Q3 2023. Prior to Tuesday, analysts predicted Q3 EPS falling 37% to 74 cents per share with sales totaling $7.12 billion. The company added Tuesday that it repaid $4 billion of debt, achieving about 90% of its short-term debt reduction target.
In August, Occidental executives said they hoped to pay off about 85% of its near-term $4.5 billion debt reduction commitment by the end of Q3. Occidental ended the quarter with operating cash flow of $3.8 billion and operating cash flow before working capital totaling $3.1 billion. The company also produced 1.412 million barrels of oil equivalent per day in Q3, slightly exceeding the mid-point of its guidance.
Strong operational performance across all segments has resulted in our highest quarterly operating cash flow this year,” Chief Executive Vicki Hollub said in the earnings release late Tuesday.
Occidental surpasses Q3 earnings expectations
“The integration of CrownRock is off to a great start in terms of personnel and operations, and we have made significant progress in our deleveraging efforts, achieving nearly 90% of our short-term debt reduction target.”
Occidental Petroleum’s better-than-expected third quarter follows a big expectations beat in Q2, when it saw a surprise 51% profit increase, breaking a string of five consecutive quarterly earnings declines.
The Q3 financial report arrives as U.S. oil prices traded around $68 per barrel Tuesday, influenced by concerns over the conflict between Israel and Iran along with weak demand from China. U.S. oil prices since July have ranged between $65 and $78. Occidental Petroleum stock advanced 0.4% on Wednesday after falling 1% to $50.29 on Tuesday.
Warren Buffett, through Berkshire Hathaway, holds a 28.2% stake in Houston-based Occidental Petroleum, according to FactSet. Berkshire Hathaway also owns $10 billion of Occidental preferred stock and has warrants to buy another 83.9 million common shares for $5 billion. In August 2022, the Federal Energy Regulatory Commission granted Berkshire Hathaway approval to purchase up to 50% of available OXY stock.
However, Warren Buffett told shareholders in early 2023 he has no intention of taking over the company. In December 2023, Buffett spent $588.7 million on more than 10 million shares of OXY stock, increasing his investment following Occidental’s acquisition of CrownRock. Meanwhile, OPEC on Tuesday lowered its forecast for global oil demand growth in 2024 for the fourth straight month, estimating an increase of 1.82 million barrels per day, down from last month’s 1.93 million, primarily due to weaker-than-expected data from major consumers like China.
Occidental Petroleum stock currently stands with a performance rating of 31 out of a best-possible 99.
