01—Abstract
Summary
Summary of the 8-K filed April 10, 2024. Cited figures are marked; the original filing is the authoritative source.
Occidental Petroleum (OXY) furnished a preliminary 'Earnings Considerations' document on April 10, 2024, previewing factors expected to affect its first quarter 2024 results.
The document is explicitly not a full earnings estimate and is subject to finalization of the company's Q1 2024 financial reporting process. The central item is an unplanned production disruption: on November 16, 2023, at the request of the Main Pass Oil Gathering system operator, Occidental temporarily halted certain eastern Gulf of Mexico operations. The company said it is awaiting restart instructions pending final regulatory approvals, with production start-up expected within days.
Management estimates Gulf of Mexico sales volumes of about 90 Mboed for the quarter and domestic operating costs of $10.31a/boe, reflecting the downtime. Management also said total company production should remain within guidance despite the third-party outage. Other key metrics for the quarter include total company production mix of 50.6% oil and 25.5% gas, an adjusted total effective tax rate of 28-30%, and an adjusted current effective tax rate of 32-34%.
Average diluted shares outstanding were 948.6 million. Realized prices were $76.04b/Bbl for oil worldwide (99% of average WTI at $76.96 and 93% of Brent at $81.83), $22.14/Bbl for NGLs, and $1.68/Mcf for natural gas, with domestic gas at 69% of NYMEX ($2.35/Mcf). For investors, the filing is mainly a pre-announcement of a modest operational headwind rather than a change in guidance.
The Gulf of Mexico outage is the main variable to watch, along with the timing of restart and whether the reduced volumes affect full-quarter results. The filing is furnished rather than filed under Section 18 of the Exchange Act, and it carries standard forward-looking-statement cautions.
02—Key points
Key Highlights
- Preliminary Q1 2024 'Earnings Considerations' furnished; the company states this is not a full earnings estimate and remains subject to finalization.
- Unplanned downtime in the eastern Gulf of Mexico since November 16, 2023, caused by a third-party Main Pass Oil Gathering system outage, with restart pending final regulatory approvals.
- Estimated Q1 2024 Gulf of Mexico oil and gas sales volumes of 90 Mboed, with domestic operating costs of $10.31/boe reflecting the disruption.
- Management expects total company production to remain within guidance for Q1 2024 despite the outage.
- Realized worldwide oil price of $76.04/Bbl (99% of WTI, 93% of Brent), worldwide NGL price of $22.14/Bbl, and natural gas price of $1.68/Mcf.
- Adjusted total effective tax rate guided at 28-30% and adjusted current effective tax rate at 32-34%.
- Average diluted shares outstanding of 948.6 million for Q1 2024; production mix was 50.6% oil and 25.5% gas.
03—Questions
Frequently Asked Questions
Why is Occidental flagging this information before its Q1 2024 earnings release?
The company is previewing factors it believes will affect first-quarter 2024 results, notably the Gulf of Mexico production halt. The information is preliminary, may not capture all adjustments, and is subject to finalization of the Q1 financial reporting process.
How significant is the Gulf of Mexico outage to total production?
The filing says total company production is expected to stay within guidance, so the outage appears to be manageable at the consolidated level. The estimated 90 Mboed Gulf of Mexico sales volume and higher domestic operating cost per boe indicate the impact is concentrated in that region.
When is production expected to resume in the eastern Gulf of Mexico?
Occidental said it completed successful pipeline testing and is waiting for instructions from the Main Pass system operator to restart. Restart is pending final regulatory approvals, and start-up is expected to begin in the coming days.
Does this filing change Occidental's guidance or financial outlook?
The filing does not announce a guidance change. It states that total company production is expected to remain within the guidance range and provides Q1 estimates for tax rates, realized prices, and share count, without restating full-year targets.
What do the realized prices suggest about Occidental's Q1 2024 revenue mix?
Worldwide realized oil averaged $76.04/Bbl, close to WTI. Domestic natural gas realized about 69% of NYMEX, and NGLs realized about 29% of WTI, which reflects the company's exposure to weaker domestic gas and NGL pricing relative to benchmarks.
04—Continue