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Occidental (OXY) Q2 Earnings and Revenues Beat Estimates

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Occidental Petroleum Corporation (OXY - Free Report) 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.

Zacks Rank

Currently, Occidental has a Zacks Rank #3 (Hold). You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.

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