News

A month has gone by since the last earnings report for Occidental Petroleum (OXY). Shares have lost about 8.2% in that time frame, underperforming the S&P 500.

Will the recent negative trend continue leading up to its next earnings release, or is Occidental due for a breakout? 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 drivers.

Occidental Q2 Earnings Surpass Estimates, Revenues Lag

Occidental Petroleum Corporation reported second-quarter 2024 earnings of $1.03 per share, which surpassed the Zacks Consensus Estimate of 77 cents by 33.8%.

In the year-ago quarter, the company recorded earnings of 68 cents. Strong production volumes and improvement in oil and NGL prices resulted in a strong performance.
GAAP earnings were $1.03 compared with 63 cents in the year-ago quarter.

Total Revenues

Total revenues came in at $6.88 billion, which lagged the Zacks Consensus Estimate of $7.18 billion by 4.1%. However, the top line increased 2.2% year over year.

Segmental Details

Oil and Gas revenues totaled $5.46 billion in the reported quarter, up 10.7% year over year.

Chemical revenues amounted to $1.27 billion, down 7.3% year over year.

Midstream & Marketing revenues of $282 million plunged 54.2% year over year.

Production & Sales

The total production volume was 1,258 thousand barrels of oil equivalent per day (Mboe/d). The metric was within the company’s production guidance of 1,232-1,272 Mboe/d. Permian and Gulf of Mexico volumes exceeded the midpoint of the guided range, which contributed toward strong average daily production volumes.

Total sales volume came in at 1,260 Mboe/d, up 3.1% from the year-ago period.

Realized Prices

Realized prices of crude oil increased 8.6% year over year to $79.89 per barrel on a worldwide basis. Realized natural gas liquids prices improved 11.3% year over year to $21.23 per barrel globally.

Natural gas prices declined 60.3% year over year to 54 cents per thousand cubic feet.

Highlights of the Release

Occidental benefited from new wells and the usage of new technology that drove capital efficiency.

Interest and debt expenses increased 9.6% to $252 million from $230 million in the year-ago quarter.

Financial Position

As of Jun 30, 2024, Occidental had cash and cash equivalents of $1.84 billion compared with $1.4 billion as of Dec 31, 2023.

As of Jun 30, 2024, the company had long-term debt (net of current portion) of $18.39 billion against $18.5 billion as of Dec 31, 2023. The company retired nearly $0.4 billion in debt in the year-to-date period. Another $1.9 billion debt is scheduled to be repaid by the end of August, which will further strengthen its balance sheet.

The company generated nearly $2.4 billion of operating cash flow in second-quarter 2024.

Total capital expenditure was $1.77 billion compared with $1.64 billion in the year-ago period.

Guidance

For the third quarter of 2024, the company expects production of 1,370-1,410 Mboe/d. Output from the Permian Resources segment is projected at 690-708 Mboe/d. Occidental expects production volumes for 2024 in the range of 1,290-1,340 Mboe/d with an expected contribution from Permian Resources in the band of 637-663 Mboe/d.

Exploration expenses are estimated to be $80 million for the third quarter and $325 million for 2024.

How Have Estimates Been Moving Since Then?

In the past month, investors have witnessed a downward trend in estimates revision.

The consensus estimate has shifted -5.62% due to these changes.

VGM Scores

Currently, Occidental has an average Growth Score of C, however its Momentum Score is doing a bit better with a B. Following the exact same course, the stock was allocated a grade of B on the value side, putting it in the second quintile for this investment strategy.

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

Outlook

Estimates have been broadly trending downward for the stock, and the magnitude of these revisions indicates a downward shift. 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, Antero Midstream Corporation (AM), has gained 3.7% over the past month. More than a month has passed since the company reported results for the quarter ended June 2024.

Antero Midstream reported revenues of $269.8 million in the last reported quarter, representing a year-over-year change of +4.5%. EPS of $0.18 for the same period compares with $0.22 a year ago.

Antero Midstream is expected to post earnings of $0.24 per share for the current quarter, representing a year-over-year change of +4.4%. Over the last 30 days, the Zacks Consensus Estimate has changed +0.8%.

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

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The views and opinions expressed herein are the views and opinions of the author and do not necessarily reflect those of Nasdaq, Inc.