Did Occidental beat its own production and earnings expectations in Q3 2024?

Production beat: total output of 1,412 Mboed exceeded the guidance midpoint by 22 Mboed, and Midstream & Marketing exceeded its guidance midpoint by $145 million on an adjusted pre-tax basis. OxyChem was also modestly above guidance at $304 million of pre-tax income. Adjusted EPS of $1.00 was reported, though the press release does not restate a specific EPS consensus comparison.

Why was reported EPS ($0.98) lower than adjusted EPS ($1.00)?

Reported results included a $572 million pre-tax loss on asset sales and other, primarily from the sale of non-core U.S. onshore assets. The loss was partly offset by a $490 million gain on sale of WES common units in Midstream & Marketing, and the net effect reduced reported EPS by about $0.02 relative to adjusted EPS.

How is Occidental managing its debt after the CrownRock acquisition?

The company repaid $4.0 billion of debt in the quarter, reaching nearly 90% of its short-term debt reduction target. However, it also raised about $9.6 billion of new debt, and long-term debt, net, rose to $25.5 billion at September 30, 2024, from $18.4 billion at June 30, 2024. Investors should track the pace of further paydown and the company's leverage metrics in future filings.

What are the main headwinds to Occidental's Q3 2024 results?

Lower realized commodity prices were the main headwind. Worldwide oil realizations fell 6% from the prior quarter to $75.33/bbl, and domestic gas fell 26% to $0.40/Mcf. Gulf of Mexico production was slightly below guidance due to weather. Integration risk from CrownRock and the higher share count (diluted shares of 975.7 million) also weigh on per-share economics.

What does the free cash flow figure tell investors?

Free cash flow before working capital was $1.5 billion in Q3 2024, calculated as operating cash flow before working capital of $3.1 billion less capital spending net of noncontrolling interest of $1.6 billion. This is a non-GAAP measure, and the press release notes it may not be comparable with similarly titled measures from other companies.

OXY/OXY-WT 8-K: Earnings & Results

01—Abstract

Summary

Summary of the 8-K filed November 12, 2024. Cited figures are marked; the original filing is the authoritative source.

Occidental Petroleum (OXY) reported third-quarter 2024 results on November 12, 2024, with reported net income attributable to common stockholders of $964 million^a, or $0.98 per diluted share, and adjusted income of $977 million, or $1.00 per diluted share.

Results were driven by strong operations: total company production of 1,412 Mboed beat the guidance midpoint by 22 Mboed, largely on Permian output of 729 Mboed, and operating cash flow reached $3.8 billion^b, the highest quarterly level of 2024 at that point. Operating cash flow before working capital was $3.1 billion, and after $1.6 billion of capital spending net of noncontrolling interest, free cash flow before working capital was $1.5 billion. The quarter was also the first full period reflecting the integration of CrownRock, which increased Permian volumes and the balance sheet footprint.

Reported EPS was held back by a $572 million^c pre-tax loss on asset sales and other items, mainly from the sale of non-core U.S. onshore assets, partly offset by a $490 million gain on sale of Western Midstream Partners (WES) units in Midstream & Marketing. Realized prices declined sequentially: worldwide oil fell 6% to $75.33 per barrel and domestic gas fell 26% to $0.40 per Mcf, reflecting weaker domestic gas markets. OxyChem contributed $304 million of pre-tax income, modestly above guidance, and Midstream & Marketing exceeded its guidance midpoint by $145 million on an adjusted basis.

The balance sheet and debt reduction were a central focus. Occidental repaid $4.0 billion^d of debt and reached nearly 90% of its short-term debt reduction target, while total debt rose on the back of roughly $9.6 billion of new issuance tied to the CrownRock acquisition, with long-term debt, net, at $25.5 billion at quarter-end. Investors should weigh the operational beat and deleveraging progress against lower realized gas prices, the ongoing dilution from the higher share count (diluted shares rose to 975.7 million), and the execution risk of integrating CrownRock.

02—Key points

Key Highlights

Adjusted EPS of $1.00 versus reported EPS of $0.98; adjusted income attributable to common stockholders was $977 million.
Operating cash flow of $3.8 billion, the highest quarterly level in 2024 per management; operating cash flow before working capital was $3.1 billion.
Free cash flow before working capital of $1.5 billion after $1.6 billion of capital spending net of noncontrolling interest.
Total production of 1,412 Mboed beat guidance midpoint by 22 Mboed, led by Permian at 729 Mboed, up from roughly 587 Mboed in Q2 2024 following CrownRock.
Repaid $4.0 billion of debt, reaching nearly 90% of the short-term debt reduction target, while issuing about $9.6 billion of new debt in the quarter.
$572 million pre-tax loss on asset sales and other, mainly from non-core U.S. onshore asset sales, partly offset by a $490 million gain on sale of WES common units.
Realized prices fell: worldwide oil to $75.33/bbl (down 6% QoQ) and domestic gas to $0.40/Mcf (down 26% QoQ); OxyChem pre-tax income of $304 million.

03—Questions

Frequently Asked Questions

Did Occidental beat its own production and earnings expectations in Q3 2024?
Production beat: total output of 1,412 Mboed exceeded the guidance midpoint by 22 Mboed, and Midstream & Marketing exceeded its guidance midpoint by $145 million on an adjusted pre-tax basis. OxyChem was also modestly above guidance at $304 million of pre-tax income. Adjusted EPS of $1.00 was reported, though the press release does not restate a specific EPS consensus comparison.
Why was reported EPS ($0.98) lower than adjusted EPS ($1.00)?
Reported results included a $572 million pre-tax loss on asset sales and other, primarily from the sale of non-core U.S. onshore assets. The loss was partly offset by a $490 million gain on sale of WES common units in Midstream & Marketing, and the net effect reduced reported EPS by about $0.02 relative to adjusted EPS.
How is Occidental managing its debt after the CrownRock acquisition?
The company repaid $4.0 billion of debt in the quarter, reaching nearly 90% of its short-term debt reduction target. However, it also raised about $9.6 billion of new debt, and long-term debt, net, rose to $25.5 billion at September 30, 2024, from $18.4 billion at June 30, 2024. Investors should track the pace of further paydown and the company's leverage metrics in future filings.
What are the main headwinds to Occidental's Q3 2024 results?
Lower realized commodity prices were the main headwind. Worldwide oil realizations fell 6% from the prior quarter to $75.33/bbl, and domestic gas fell 26% to $0.40/Mcf. Gulf of Mexico production was slightly below guidance due to weather. Integration risk from CrownRock and the higher share count (diluted shares of 975.7 million) also weigh on per-share economics.
What does the free cash flow figure tell investors?
Free cash flow before working capital was $1.5 billion in Q3 2024, calculated as operating cash flow before working capital of $3.1 billion less capital spending net of noncontrolling interest of $1.6 billion. This is a non-GAAP measure, and the press release notes it may not be comparable with similarly titled measures from other companies.

04—Continue

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