Occidental Petroleum Beats Q3 Profit Estimates
Strong U.S. Oil Production Drives Occidental Petroleum’s Q3 Profit
Occidental Petroleum (NYSE:) exceeded analysts’ expectations for third-quarter profits, largely driven by robust U.S. oil production. However, the company’s results were significantly lower compared to the previous year due to decreased energy prices and weaker chemical and pipeline performance.
Financial Performance Overview
The company reported a profit of $1.18 per share, surpassing Wall Street analysts’ average forecast of 84 cents per share. Adjusted earnings dropped by over 50% to $1.13 billion compared to the same period last year.
Industry Trends
Similar to other U.S. oil producers, Occidental faced challenges due to the decline in oil and gas prices from the previous year. However, the company witnessed an improvement in earnings compared to the second quarter, attributed to the rise in prices.
Impact of Oil Prices
Occidental’s average oil selling price in the third quarter was $80.70 per barrel, a downturn from $83.64 per barrel a year earlier. Nonetheless, it marked a 10% increase from the second quarter.
Strategic Investment Moves
Occidental repurchased $342 million of Berkshire Hathaway’s preferred shares, bringing this year’s redemptions to 15% of the initial $10 billion investment. Additionally, Berkshire recently acquired approximately $246 million in Occidental stock, elevating its stake to 25.8%.
Stock Performance
Shares of Occidental Petroleum experienced a 2.5% decline, closing at $60.20 apiece, but surged by 65 cents in late trading.
Production Milestones
The U.S. oil and gas producer exceeded its August forecast by pumping 1.22 million barrels of oil and gas per day, outperforming the projected 1.19 mboed midpoint.
Effect of Asset Sales
Asset sales contributed to Occidental’s financial results, generating $142 million in pre-tax proceeds.
Challenges in Chemical and Midstream Units
Occidental’s chemical and midstream unit earnings experienced a decline compared to the previous year. The midstream segment shifted from a $104 million profit to a $130 million loss, while the chemicals business profit decreased from $580 million to $373 million.
Partnership with BlackRock
Occidental announced a collaboration with investment firm BlackRock, which agreed to invest $550 million in a proposed direct air capture carbon project in Texas.
Devon Energy’s Performance
Rival oil producer Devon Energy (NYSE:) reported an adjusted profit of $1.65 per share, surpassing analysts’ estimates of $1.57 per share. However, the company’s shares declined in after-hours trading following the forecast of flat production for the fourth quarter and 2024, at approximately 650,000 barrels of oil and gas per day.
