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Why Is Occidental (OXY) Up 14.9% Since Last Earnings Report?

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It has been about a month since the last earnings report for Occidental Petroleum (OXY - Free Report) . Shares have added about 14.9% 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 its most recent earnings report in order to get a better handle on the important catalysts.

Occidental's Q1 Earnings and Revenues Beat Estimates

Occidental Petroleum Corporation reported first-quarter 2022 earnings of $2.12 per share, beating the Zacks Consensus Estimate of $1.97 by 7.6%. Earnings improved year over year due to an increase in operating efficiencies and commodity prices.

GAAP earnings of Occidental in first-quarter 2022 were $4.65 per share compared with $1.37 in the year-ago quarter.

Total Revenues

Occidental's total revenues were $8,533 million, which surpassed the Zacks Consensus Estimate of $7,960 million by 7.2%. The top line also improved 55.7% from the year-ago quarter. The year-over-year improvement was due to a rise in contribution from all its segments.

Segment Details

Oil and Gas revenues for the quarter were $6,075 million, up 65.8% year over year.

Chemical revenues for the quarter were $1,684 million, up 54.8% year over year.

Midstream & Marketing revenues for the quarter were $882 million, up 9.3% year over year.

Production & Sales

Occidental’s total production volume for the first quarter was 1,079 thousand barrels of oil equivalent per day (Mboe/d), which was within the guided range of 1,070-1,090 Mboe/d. Strong production volumes were attributed to higher volumes from the Rockies and Other Domestic assets. Permian Resources’ production for the first quarter was 472 Mboe/d, which was near the upper end of the guided range of 465-473 Mboe/d.

For the quarter under review, total sales volume was 1,074 Mboe/d, down 3.5% from 1,113 Mboe/d recorded in the year-ago period. The decline was due to a drop in U.S. and international sales volume.

Realized Prices

First-quarter realized prices of crude oil improved 72.1% year over year to $91.91 per barrel on a worldwide basis. Realized natural gas liquids prices also improved 68.9% from the prior-year quarter to $39.61 per barrel, worldwide.

Natural gas prices increased 55.1% from the year-ago quarter to $3.66 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 $5,774 million, up 1.6% year over year.

Occidental generated $3.3 billion free cash flow in the first quarter and repaid debts worth $3.3 billion, further strengthening the balance sheet.

Interest expenses for the reported quarter were down 6.1% to $371 million from $395 million in the year-ago period.

Financial Position

As of Mar 31, 2022, Occidental had cash and cash equivalents of $1,909 million compared with $2,764 million as of Dec 31, 2021.

As of Mar 31, 2022, the company had long-term debt (net of current portion) of $25,865 million compared with $29,431 million as of Dec 31, 2021. The decrease in debt-level was due to effective management of debt since the acquisition of Anadarko.

For first-quarter 2022, cash flow from operations was $4,178 million, up from $2,135 million in the prior-year period.

Occidental’s total capital expenditure for first-quarter 2022 was $858 million compared with $579 million invested in the year-ago period.

Guidance

For second-quarter 2022, OXY expects production in the range of 1,130-1,160 Mboe/d and output from Permian Resources in the band of 488-498 Mboe/d. Occidental expects exploration expenses of $50 million.

For 2022, OXY expects production in the range of 1,140-1,170 Mboe/d and output from Permian Resources in the band of 527-537 Mboe/d.

 

How Have Estimates Been Moving Since Then?

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

The consensus estimate has shifted 12.34% due to these changes.

VGM Scores

At this time, Occidental has a great 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 20% 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 is part of the Zacks Oil and Gas - Integrated - United States industry. Over the past month, Cactus, Inc. (WHD - Free Report) , a stock from the same industry, has gained 18.9%. The company reported its results for the quarter ended March 2022 more than a month ago.

Cactus, Inc. reported revenues of $145.9 million in the last reported quarter, representing a year-over-year change of +72.8%. EPS of $0.30 for the same period compares with $0.11 a year ago.

Cactus, Inc. is expected to post earnings of $0.38 per share for the current quarter, representing a year-over-year change of +137.5%. Over the last 30 days, the Zacks Consensus Estimate has changed +4.9%.

Cactus, Inc. has a Zacks Rank #3 (Hold) based on the overall direction and magnitude of estimate revisions. Additionally, the stock has a VGM Score of C.


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