Yahoo Finance’s Ines Ferre joins the Live show to discuss the decline in stock for Occidental Petroleum following first-quarter earnings.
Video Transcript
BRAD SMITH: Shares of Occidental Petroleum, they are trading lower by about 4% after its Q1 earnings report. Q1 earnings report show a pullback in prices for the energy giant, and the earnings coming in under the Street's estimates as the global energy price riding a roller coaster triggered by Russia's invasion of Ukraine last year.
Yahoo Finance's own Ines Ferré, you saw her right there. She has more on this. Ines.
INES FERRÉ: Yeah, Brad, and let's pull up the results for you so you can see. Adjusted earnings per share coming in at $1.09. That was a miss, down 48% year over year. Revenue for the quarter at $7.23 billion, and that was-- 7.23. That was also a miss, and that was down 11% year over year.
So it's no surprise, really, that the price of oil has impacted results. The business in terms of profit is mostly focused on upstream. That would be exploration and drilling. And we have seen the price of oil coming down significantly from last year. And just to give you an idea, in the first quarter of this year, oil sold for about $74.22. So the company was able to sell at that price per barrel. Look, last year it was significantly higher, 19% higher. So that's a 19% draw down in that price of oil.
Now, the miss is overshadowing the production growth because production grew 13.7% year over year. And the Cowen analyst noting this with Cowen analyst David Deckelbaum. He has an outperform rating on the stock, $70 price target on the stock. And he highlighted the production beat and also noted that despite the miss, capital expenditure was well managed, coming in about 1% lower than consensus.
This company has been focusing on buying back shares, doling out a dividend. Oxy repurchased $752 million of common stock. That's about 25% of its $3 billion annual repurchase program, guys.
JULIE HYMAN: Ines, obviously Occidental has been in focus not just for its actual business but because Warren Buffett and his investment in the company. He's got just under 24% stake in Oxy, and he talked about his investment at the Berkshire Hathaway shareholders meeting on Saturday. That ended up sending the stock a little bit lower here, but how should we be thinking about that Buffett investment?
INES FERRÉ: Yeah, look, he likes this company, and he said so. I mean, he spoke quite a bit about Occidental Petroleum. He likes the company. He really likes and respects the leadership. Vicki Hollub is CEO of Occidental Petroleum. He's talked about her before and her leadership.
And about that original investment that was made in Occidental Petroleum back in 2019, he said that when the pandemic hit and you saw oil prices going negative, it seemed like it had been a terrible idea to invest in this company. But then it turned around, and it ended up being a great investment.
But as far as taking control of the company, he said that they have no plans to take control of the company, and he said, quote, "We're not going to buy control. We've got the right management running it. We wouldn't know what to do with it." He said but they do love the shares, and they may or may not buy more shares.
And Berkshire does have regulatory authority to-- regulatory approval to buy up to 50% of common stock of Occidental Petroleum. So they certainly could buy up more shares if they wanted to. They really like the company, but they're not looking at owning it full right or taking full control of it.
JULIE HYMAN: Right, at least not right now. Ines, thank you so much. Our own Ines Ferré there.
