It has been about a month since the last earnings report for Occidental Petroleum (OXY Quick QuoteOXY - Free Report) . Shares have added about 16.4% in that time frame, outperforming the S&P 500.

Will the recent positive trend continue leading up to its next earnings release, or is Occidental due for a pullback? Before we dive into how investors and analysts have reacted as of late, let's take a quick look at the most recent earnings report in order to get a better handle on the important drivers.

Occidental Q2 Earnings and Revenues Beat Estimates

Occidental Petroleum Corporation reported second-quarter 2022 earnings of $3.16 per share, beating the Zacks Consensus Estimate of $2.93 by 7.9%. Earnings in the second quarter were better than our estimate of $2.46 per share. In the year-ago quarter, the company reported earnings of 32 cents. Earnings improved year over year due to an increase in operating efficiencies and commodity prices.

GAAP earnings of Occidental in second-quarter 2022 were $3.47 per share against a loss of 10 cents in the year-ago quarter.

Total Revenues

Occidental's total revenues were $10,735 million, which surpassed the Zacks Consensus Estimate of $9,779 million by 10.2%. The top line also improved 78.6% from the year-ago quarter. The year-over-year improvement was due to a rise in contribution from all its segments. Total revenues were higher than our estimate of $8,812.2 million.

Segmental Details

Oil and Gas revenues for the quarter were $7,696 million, up 70.8% year over year.

Chemical revenues for the quarter were $1,909 million, up 60.8% year over year.

Midstream & Marketing revenues for the quarter were $1,474 million, up 196.6% year over year.

Production & Sales

Occidental’s total production volume for the second quarter was 1,147 thousand barrels of oil equivalent per day (Mboe/d), which was within the company’s guidance of 1,130-1,160 Mboe/d. Strong production volumes were attributed to higher volumes from the Rockies and Other Domestic assets. Permian Resources’ production for the second quarter was 493 Mboe/d, which was near the upper end of the guidance of 488-498 Mboe/d.

For the quarter under review, total sales volume was 1,150 Mboe/d, down 4.1% from 1,199 Mboe/d recorded in the year-ago period. The decline was due to a drop in U.S. and international sales volume.

Realized Prices

Second-quarter realized prices of crude oil improved 67.8% year over year to $107.72 per barrel on a worldwide basis. Realized natural gas liquids’ prices also improved 67.8% from the prior-year quarter to $42.04 per barrel worldwide.

Natural gas prices increased 114.9% from the year-ago quarter to $5.03 per thousand cubic feet worldwide. The company benefited from a worldwide improvement in commodity prices.

Highlights of the Release

Occidental’s total expenses for the reported quarter were $6,077 million, up 4.4% year over year.

The company generated $4.2 billion in free cash flow in the second quarter and repaid debts of $4.8 billion, further strengthening the balance sheet.

Interest expenses for the reported quarter were down 70.4% to $114 million from $385 million in the year-ago period.

Occidental repurchased more than 18 million shares for $1.1 billion through Aug 1, 2022.

Financial Position

As of Jun 30, 2022, Occidental had cash and cash equivalents of $1,362 million compared with $2,764 million as of Dec 31, 2021.

As of Jun 30, 2022, the company had long-term debt (net of current portion) of $21,743 million compared with $29,431 million as of Dec 31, 2021. The decrease in the debt level was due to the effective management of debt since the acquisition of Anadarko.

For second-quarter 2022, cash flow from operations was $5,148 million, up from $2,710 million in the prior-year period.

Occidental’s total capital expenditure for second-quarter 2022 was $972 million compared with $698 million invested in the year-ago period.

Guidance

For third-quarter 2022, OXY expects production of 1,140-1,170 Mboe/d and output from Permian Resources of 523-533 Mboe/d. Occidental expects third-quarter exploration expenses of $75 million.

For 2022, OXY expects production of 1,140-1,170 Mboe/d and output from Permian Resources of 516-526 Mboe/d. Occidental expects 2022 exploration expenses of $215 million.

Occidental has plans to invest $3.9-$4.3 billion in 2022 to further strengthen its operation.

 

How Have Estimates Been Moving Since Then?

It turns out, estimates review have trended upward during the past month.

VGM Scores

At this time, Occidental has a strong Growth Score of A, a grade with the same score on the momentum front. Following the exact same course, the stock was allocated a grade of A on the value side, putting it in the top quintile for this investment strategy.

Overall, the stock has an aggregate VGM Score of A. If you aren't focused on one strategy, this score is the one you should be interested in.

Outlook

Estimates have been broadly trending upward for the stock, and the magnitude of these revisions looks promising. Notably, Occidental has a Zacks Rank #3 (Hold). We expect an in-line return from the stock in the next few months.

Performance of an Industry Player

Occidental belongs to the Zacks Oil and Gas - Integrated - United States industry. Another stock from the same industry, Hess (HES Quick QuoteHES - Free Report) , has gained 14.3% over the past month. More than a month has passed since the company reported results for the quarter ended June 2022.

Hess reported revenues of $2.99 billion in the last reported quarter, representing a year-over-year change of +87%. EPS of $2.15 for the same period compares with $0.24 a year ago.

For the current quarter, Hess is expected to post earnings of $2.97 per share, indicating a change of +960.7% from the year-ago quarter. The Zacks Consensus Estimate has changed -1.2% over the last 30 days.

The overall direction and magnitude of estimate revisions translate into a Zacks Rank #3 (Hold) for Hess. Also, the stock has a VGM Score of B.