Occidental Petroleum Q1 Earnings Down 48%, Misses Estimates

bank of america

Occidental Petroleum Corp, a US-based oil and gas producer, reported a steep 48% drop in its Q1 earnings, which fell significantly below the estimates provided by analysts. The decline in earnings was attributed to the economic growth concerns of the global market that resulted in the drop in oil prices in the quarter. Compared to last year’s peak owing to Russia’s invasion of Ukraine, the crude oil of Occidental Petroleum sold for 19% less, at an average of $74.22 per barrel. In spite of an increase in oil and gas daily output from 1.08 million to 1.22 million barrels, boosted by higher production from its Permian operations, earnings decreased.

The latest financial report from the company, in which Berkshire Hathaway Inc holds a 24% stake, showed a 48% year-on-year drop in adjusted income to $1.1 billion, reflecting increased investments and returns to shareholders. With adjusted earnings of $1.09 per share for the quarter, the company missed analysts’ expectations of $1.24 per share, according to Refinitiv. As a result, shares fell by 1.6% in after-hours trading, valued at $58.03. Capital spending for Occidental surged almost twofold to $1.5 billion in the quarter, while cash flow from operations before working capital decreased by 24% to $3.2 billion.

Occidental has raised its year-end production guidance to 1.22 million barrels of oil and gas per day, representing a rise of 20,000 barrels. The company also repurchased $752 million of common stock, accounting for over 25% of its annual $3 billion repurchase endeavor and triggered the redemption of $647 million of preferred stock. The average Brent crude stood at $82 a barrel during the quarter, marking a 20% dip from year-ago levels amid rising concerns over the health of the global economy due to the recent banking crisis in the U.S. and China’s weaker-than-anticipated economic recovery. Furthermore, the average domestic realized gas prices went down by 32% from the prior quarter, standing at $3.01 per million cubic feet. Despite this, Warren Buffett stated on Saturday that Berkshire Hathaway did not have plans to purchase Occidental, although he remained content with the company’s major investment in the oil company.