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Occidental (OXY) Beats Q2 Earnings Estimates on Solid Output

Zacks Equity Research

Occidental Petroleum Corporation OXY reported second-quarter 2019 earnings of 97 cents per share, surpassing the Zacks Consensus Estimate of 91 cents by 6.6%. However, the bottom line was lower than $1.10 per share recorded in the prior-year quarter.

Total Revenues

Occidental's total revenues were $4,476 million, beating the Zacks Consensus Estimate of $4,318 million by 3.7%. Also, the top line improved 8.4% from $4,131 million in the year-ago quarter.

This year-over-year improvement in total revenues resulted from an increase in production from Permian Resources, and revenue growth from its Midstream & Marketing segment.

Occidental Petroleum Corporation Price, Consensus and EPS Surprise

Occidental Petroleum Corporation Price, Consensus and EPS Surprise

Occidental Petroleum Corporation price-consensus-eps-surprise-chart | Occidental Petroleum Corporation Quote

Production & Sales

Occidental’s average daily net oil, liquids and gas production volume expanded to 741,000 barrels of oil equivalent per day (boe/d) from 639,000 boe/d in the prior-year quarter. Production during the quarter exceeded the guided range of 723,000-735,000 boe/d.

This improvement in production volume was backed by higher drilling activity and solid output from the Permian Resources region. Permian Resources production improved 44% year over year. International production also improved 15.9% year over year.

In the quarter under review, total sales volume was 744,000 boe/d compared with 622,000 boe/d recorded in the year-ago period.

Realized Prices

Realized prices for crude oil in the second quarter dropped 7.8% year over year to $58.91 per barrel on a worldwide basis. Worldwide realized NGL prices also decreased 33.8% from the prior-year quarter to $18 per barrel. Moreover, worldwide natural gas prices were down 34.8% from the year-ago quarter to $1.03 per thousand cubic feet.

The overall decline in realized prices of the commodities did not allow the company to realize full benefits of higher production and sales volumes in the reported quarter.

Highlights of the Release

Its acquisition deal with Anadarko Petroleum APC — which has been progressing per expectation — is expected to close post Anadarko shareholders’ vote, scheduled this month. This deal will expand and strengthen Occidental’s presence in this resource-rich region.

Selling, general and administrative, and other operating expenses in the second quarter were $423 million, up 5.2% from $402 million a year ago.

Interest expenses in the reported quarter were $153 million compared with $97 million in the year-ago period.

Occidental’s management, which continues to increase the value of its shareholders, returned $600 million in the second quarter through dividend payments.

Financial Position

As of Jun 30, 2019, Occidental had cash and cash equivalents of $1,751 million compared with $3,033 million on Dec 31, 2018.

As of Jun 30, 2019, the company had a long-term debt (net of current portion) of $10,155 million compared with $10,201 million on Dec 31, 2018.

In second-quarter 2019, cash from operations was $2,013 million, up from $1,756 million in the prior-year period.

In second-quarter 2019, Occidental’s total capital expenditure was $1,211 million, lower than $1,287 million invested in the year-ago period.

Guidance

Occidental expects third-quarter 2019 production in the range of 725,000-739,000 boe/d. Production from Permian Resources is expected in the range of 289,000-297,000 boe/d.

The company expects 2019 production in the range of 718,000-729,000 boe/d. Production from Permian Resources is expected in the range of 283,000-287,000 boe/d.

Zacks Rank

Currently, Occidental carries a Zacks Rank #3 (Hold). You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.

Oil & Energy Releases

Eni S.p.A. E reported second-quarter 2019 adjusted earnings per share of 36 cents, lagging the Zacks Consensus Estimate of 65 cents by 44.6%.

BP plc BP reported second-quarter earnings per share of 83 cents, surpassing the Zacks Consensus Estimate of 78 cents by 6.4%.

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