Occidental Petroleum reported robust financial results for the second quarter, beating analysts’ forecasts.
The company posted adjusted earnings of $1.03 per share, well above the average estimate of $0.77 per share, according to LSEG data.
This performance was driven by a significant increase in production to 1.26 million barrels of oil equivalent per day (boepd), exceeding expectations of 1.24 million boepd. The recent acquisition of CrownRock, completed for $12 billion, played a crucial role in this increase in production.
This strategic investment strengthened Occidental Petroleum’s presence in the Permian Basin, one of the most prolific regions for oil production in the United States. Crude oil prices, up a slight 5% on the previous year, also contributed to these positive financial results.
Debt Management and Associated Challenges
However, the CrownRock acquisition also led to a substantial increase in Occidental’s long-term debt, which now stands at around $28 billion.
This is reminiscent of the heavy financial burden left by the Anadarko acquisition in 2019, which had already tested the company’s debt management capabilities.
To cope with this new financial pressure, Occidental plans to draw on the cash generated by CrownRock’s assets, as well as to make asset sales to the tune of $6 billion by 2026.
Despite this increase in debt, Occidental is maintaining its short-term liability reduction targets, aiming for a repayment of $4.5 billion by August 2025.
In addition, the company has raised its capital expenditure forecast for 2024, adding a further $400 million, bringing total investment to $6.9 billion.
Chemicals and Operational Perspectives Division
Meanwhile, Occidental Petroleum’s chemicals division suffered a setback, with pre-tax income down 32% to $296 million for the quarter.
This was mainly due to lower prices in the chemical market.
Nevertheless, this division continues to play a strategic role in the company’s diversified portfolio.
For the third quarter, Occidental Petroleum anticipates a further increase in production, with a target of 1.39 million boepd.
This increase is expected thanks to stable and optimized production in the Permian Basin and the Gulf of Mexico, areas where Occidental Petroleum continues to maximize returns.
