01—Abstract
Summary
Summary of the 8-K filed January 10, 2024. Cited figures are marked; the original filing is the authoritative source.
Occidental Petroleum (OXY) furnished an 8-K on January 10, 2024 containing preliminary "Earnings Considerations" for the fourth quarter of 2023 rather than full results.
The company states that total company production is expected to remain within its guidance range despite an unplanned outage in the eastern Gulf of Mexico. The disruption followed a November 16, 2023 request from the Main Pass Oil Gathering (MPOG) system operator that led Occidental to temporarily halt certain operations there, with restart guidance expected in the coming weeks. The company's own estimates show Gulf of Mexico sales volumes of 127 Mboed and domestic operating costs of $10.96a/boe for the quarter, both reflecting the downtime.
Realized pricing was broadly in line with the commodity backdrop. Worldwide realized oil averaged $78.85b/Bbl, against WTI of $78.32 and Brent of $82.69, equal to roughly 101% of WTI and 95% of Brent. Worldwide NGL realizations were $20.93/Bbl, only about 27% of WTI, and domestic natural gas realized $1.88/Mcf, about 63% of NYMEX.
The adjusted effective tax rate is guided to 32-33%c, and average diluted shares were 950.1 million. The document is explicitly preliminary, is not a full earnings estimate, and may not capture all adjustments. Investors should treat the figures as directional inputs to the formal Q4 2023 earnings release rather than final results, and should watch for the MPOG restart timing and any further production or cost revisions.
02—Key points
Key Highlights
- Management says total company production is expected to remain within guidance despite the eastern Gulf of Mexico outage, citing strong operational performance.
- Operations were temporarily halted on November 16, 2023 at the request of the MPOG system operator; restart guidance is expected in the coming weeks.
- Gulf of Mexico oil and gas sales volumes were estimated at 127 Mboed for Q4 2023, and domestic operating costs at $10.96/boe, both affected by the downtime.
- Worldwide realized oil price of $78.85/Bbl was about 101% of average WTI ($78.32) and 95% of average Brent ($82.69).
- Worldwide NGL realizations were weak at about 27% of WTI, while domestic natural gas realized $1.88/Mcf, roughly 63% of NYMEX.
- Guidance for the adjusted effective tax rate is 32-33%, and average diluted shares outstanding were 950.1 million.
- The information is preliminary, is not a full Q4 earnings estimate, and is furnished under Item 2.02 rather than filed for Section 18 purposes.
03—Questions
Frequently Asked Questions
Does this 8-K mean Occidental's Q4 2023 production missed guidance?
Not according to management. The company states that total company production is expected to remain within its guidance range, having overcome the third-party outage in the eastern Gulf of Mexico through strong operational performance. Final figures will appear in the formal Q4 2023 earnings release.
What caused the Gulf of Mexico downtime?
On November 16, 2023, the operator of the Main Pass Oil Gathering (MPOG) system requested that Occidental temporarily halt certain operations in the eastern Gulf of Mexico. The disruption was a third-party outage, and the company expects guidance on restarting production in the coming weeks.
Are these figures final Q4 2023 results?
No. The document says the Earnings Considerations are preliminary, subject to finalization of the financial reporting process, and not comprehensive. They may not reflect all adjustments or charges, and they are not an estimate of Q4 2023 earnings.
How did realized prices compare with benchmarks in Q4 2023?
Worldwide realized oil was $78.85/Bbl, about 101% of WTI and 95% of Brent. Worldwide NGL realized about 27% of WTI, and domestic natural gas realized $1.88/Mcf, about 63% of NYMEX. Oil held up well relative to benchmarks, while NGL and gas realizations lagged.
What should investors watch next?
Investors should watch the timing of the MPOG-related production restart, the final Q4 2023 production and operating cost figures in the earnings release, and the final adjusted effective tax rate, which is guided at 32-33%.
04—Continue