Occidental Petroleum (NYSE: OXY ) was the large bet that Warren Buffett famously made in 2022, adding onto an already existing position since 2019. The market reacted by rallying behind OXY. Since the performance has been very solidMy name is Maxime and I like to write about finances and share my views on various companies and their potential as an investment opportunity. My preferred sector is industrial. I live and work in Europe and we have a very long and proud history of being an industrial superpower ...

Company Overview - Occidental Petroleum Corporation is an integrated oil and gas company based in Houston, TX, founded in 1920, with significant exploration and production exposure [12] - The company operates through three segments: Oil and Gas, Chemical, and Midstream and Marketing [12] Reserves and Production - As of the end of 2024, Occidental's preliminary worldwide proved reserves totaled 4.6 billion barrels of oil equivalent (BOE), an increase from 3.98 billion BOE at the end of 2023 [12] - The company achieved a reserve replacement rate of 112% in 2024 [12] Investment Ratings and Performance - Occidental is currently rated 3 (Hold) on the Zacks Rank, with a VGM Score of A [13] - The stock has a Momentum Style Score of A, with shares increasing by 3.5% over the past four weeks [13] - Nine analysts have revised their earnings estimates upwards for fiscal 2025, with the Zacks Consensus Estimate increasing by $0.35 to $3.58 per share [13] - The company boasts an average earnings surprise of 23.6% [13] Investment Considerations - With a solid Zacks Rank and top-tier Momentum and VGM Style Scores, Occidental should be considered for investors' short lists [14]

Core Viewpoint - Warren Buffett's investment strategy continues to show resilience, with Berkshire Hathaway's recent activities indicating a cautious yet opportunistic approach in the current market environment [2][3]. Group 1: Berkshire Hathaway's Investment Strategy - As of December 31, 2024, Berkshire Hathaway has been a net seller of stocks, holding a record-breaking cash position, suggesting preparation for a potential market pullback [2]. - Despite a bearish outlook on banks and indices, Buffett added Constellation Brands stock to his portfolio and increased stakes in several long-term favorites [3]. Group 2: Occidental Petroleum's Performance - Occidental Petroleum's stock (NYSE: OXY) has seen a significant recovery, with a 7.56% increase over the past week, trading at $52.07 after hitting a 2.5-year low [4]. - The company's Q4 2024 earnings report showed mixed results, with EPS at $0.80, surpassing the $0.67 consensus, while revenues of $6.83 billion fell short of the $7.14 billion forecast [6]. Group 3: Analyst Ratings and Future Outlook - Occidental Petroleum completed a $4.5 billion debt repayment plan and increased its quarterly dividend by 9% to $0.24 per share, boosting investor confidence [7]. - Analyst Mike Scialla maintained an 'Overweight' rating with a price target of $71, indicating a potential upside of 36.35% from current prices [7]. - UBS analyst Josh Silverstein raised the price forecast for OXY stock from $54 to $56 while keeping a 'Neutral' rating [9]. Group 4: Historical Context and Dividend Yield - Warren Buffett's initial investment in Occidental Petroleum in 2019 was valued at $10 billion, aimed at supporting the acquisition of Anadarko Petroleum, providing preferred stock with an 8% annual dividend yield [10]. - The common stock of Occidental Petroleum offers a dividend yield of 1.69% with a forward price-to-earnings (PE) ratio of 16.48, making it attractive for dividend investors [11].

Core Insights - Occidental Petroleum Corporation (OXY) reported fourth-quarter 2024 earnings of 80 cents per share, exceeding the Zacks Consensus Estimate of 67 cents by 19.4% and up from 74 cents per share in the same quarter last year [1][2] Financial Performance - Total revenues for the fourth quarter were $6.83 billion, falling short of the Zacks Consensus Estimate of $7.14 billion by 4.2% and down 9.2% year over year [3] - For the full year 2024, total revenues were $26.88 billion, a decrease of 7% from $28.91 billion in 2023 [3] - Oil and Gas revenues in Q4 totaled $5.62 billion, an increase of 3.7% year over year, while Chemical revenues were $1.21 billion, down 1.2% year over year, and Midstream & Marketing revenues plummeted 77.7% year over year to $141 million [4] Production and Sales - Total production volume was 1,463 thousand barrels of oil equivalent per day (Mboe/d), near the upper end of the company's guidance of 1,430-1,470 Mboe/d, with total sales volume also at 1,463 Mboe/d, reflecting a 19.7% increase from the previous year [5] - The average daily production from Permian assets and Rockies & Other Domestic segments contributed significantly to the strong production figures [7] Pricing and Costs - Realized prices for crude oil decreased by 11.6% year over year to $69.73 per barrel, while realized natural gas liquids prices increased by 4.15% to $21.80 per barrel; however, natural gas prices fell 32.9% to $1.26 per thousand cubic feet [6] - Interest and debt expenses rose by 32.4% to $327 million from $247 million in the year-ago quarter [8] Financial Position - As of December 31, 2024, cash and cash equivalents stood at $2.13 billion, up from $1.4 billion a year earlier, while long-term debt increased to $24.97 billion from $18.5 billion [10] - The company generated nearly $11.7 billion in operating cash flow in 2024, slightly up from $11.65 billion in 2023 [10] - Total capital expenditure for 2024 was $7.01 billion, compared to $6.27 billion in the previous year [11] Guidance - For Q1 2025, OXY expects production to be in the range of 1,370-1,410 Mboe/d, with Permian Resources segment output anticipated at 745-765 Mboe/d [12]

Core Insights - Occidental Petroleum has attracted significant investment from Berkshire Hathaway, with the latter increasing its stake to 28.8% of Occidental's outstanding shares, making it the sixth largest holding in Berkshire's portfolio at 4.3% [1][2] Financial Performance - In the fourth quarter, Occidental produced an average of nearly 1.5 million barrels of oil equivalent per day, exceeding production guidance by 13,000 BOE/d, driven by record U.S. production in the Permian Basin and Rockies [3] - The oil and gas segment reported a pretax income of $1.2 billion, remaining flat compared to the third quarter despite a 7% decline in average oil prices [3] - The chemicals business, OxyChem, generated $270 million in pretax income, surpassing guidance, while the midstream and marketing segment also exceeded expectations [4] - The company achieved robust cash flow of $3.1 billion, with free cash flow of $1.4 billion after $1.8 billion in capital spending [4] Debt Management - Occidental utilized free cash flow to pay dividends and repay $4.5 billion in debt ahead of schedule, following a $12 billion acquisition of CrownRock [5] - The company plans to sell $1.2 billion in assets as part of its strategy to divest $4.5 billion to $6 billion in assets to strengthen its balance sheet [6] - Cash from asset sales will be used to repay the remaining $1 billion of maturing debt this year, with plans to build cash for future debt maturities [7] Capital Expenditure and Growth Strategy - Capital spending is projected to be between $7.4 billion and $7.6 billion, aimed at developing oil and gas resources primarily in the Permian and Rockies [8] - Major projects include the Stratos carbon capture and storage hub, expected to start operations this year, with a capacity of 250,000 tonnes [9] - The OxyChem Battleground modernization project is anticipated to enhance annual earnings by approximately $325 million starting in 2026 [10] Strategic Outlook - Occidental's operational efficiency is driving record production and strong free cash flow, enabling debt reduction and shareholder returns through a growing dividend [12] - The company's investments in chemicals and carbon capture are expected to enhance cash flow resilience in the future [12] - Berkshire Hathaway's continued investment reflects confidence in Occidental's strategic execution and future value, especially as shares have declined about 30% from recent peaks [13]

Core Viewpoint - Occidental Petroleum's stock price struggles are expected to end, with a strong rebound anticipated due to various factors including financial results, balance sheet improvements, and Warren Buffett's investment activity [1] Financial Performance - Occidental's Q4 results show a consolidated revenue of $6.48 billion, down over 9% year-over-year and missing consensus estimates by 500 basis points, despite increased production [2] - Adjusted earnings improved by over 500 basis points due to operational enhancements and debt reduction, indicating stronger margins moving forward [3] Cash Flow and Balance Sheet - The company reported $3.6 billion in operating cash, which constitutes more than 55% of revenue, with free cash flow at 21.6%, enabling significant debt reduction and achieving a near-term target of $4.5 billion [4] - The balance sheet reflects increased cash, property, and total assets, leading to a 12% rise in equity, with expectations for further equity gains in 2025 [5] Dividend Outlook - Occidental's dividend yield is nearly 2% at a stock price of $49, with expectations for robust growth, including a projected 9% increase in 2025, representing only 30% of earnings [6] - The company is anticipated to accelerate dividend increases to pre-pandemic levels, potentially exceeding 100% of the 2025 payment [7] Market Conditions - Oil prices are currently a headwind, with WTI trading at the lower end of its range, but signs suggest a potential price rebound that could positively impact Occidental's revenue and cash flow [8] Analyst Sentiment - Analysts have reset their sentiment, predicting a 25% upside from critical support levels, with a consensus rating of Hold and a bullish bias due to a high percentage of Buy ratings [9][10] - The critical support target is around $49, which aligns with previous resistance levels when Berkshire Hathaway began purchasing shares [10] Technical Indicators - Technical signals, including MACD and stochastic indicators, suggest a strong bottom and potential for substantial upward movement, with a critical resistance target near $51.85 expected to be reached before the FQ1 2025 earnings release [11][12]

Core Insights - Warren Buffett's investment activities during Q4 2024 were disclosed in Berkshire Hathaway's 13F filing, revealing purchases and sales of stocks [1] - Buffett has continued to invest in Occidental Petroleum and SiriusXM Holdings, both of which have seen significant declines in their stock prices [2][4] Group 1: Investment Details - Occidental Petroleum is now Berkshire's sixth-largest holding, with Buffett increasing his stake nearly every quarter since initiating a position in Q1 2022 [2] - SiriusXM has been a part of Buffett's portfolio since 2016, with a steady increase in stake due to its merger with Liberty Media [3][6] Group 2: Stock Performance - Occidental's shares are approximately 35% below their peak in late 2022 and have fallen nearly 20% over the past year [3] - SiriusXM's stock has decreased over 40% in the last 12 months and remains over 60% below its mid-2023 high [4] Group 3: Investment Rationale - Valuation is a key factor, with Occidental trading at a forward price-to-earnings ratio of around 13, lower than the S&P 500 energy sector average of 14.7, while SiriusXM trades at under nine times forward earnings [5] - Both companies generate significant free cash flow, with Occidental exceeding $3.7 billion and SiriusXM over $1 billion in the last year [6] Group 4: Business Model Appeal - Buffett appreciates Occidental's vast oil and gas holdings and its leadership in carbon-capture initiatives, despite the economic feasibility being unproven [7] - SiriusXM's monopoly-like position in the satellite radio market and its subscription model, which generates recurring revenue, are also attractive to Buffett [7] Group 5: Future Outlook - There is an expectation that Buffett will continue to add to Berkshire's positions in both Occidental and SiriusXM, with a preference for Occidental as the better pick [9] - While volatility in oil prices may impact Occidental's stock in the short term, its long-term prospects are considered strong, especially with advancements in carbon capture technology [10]

Core Insights - Occidental Petroleum reported strong Q4 earnings, beating EPS estimates by approximately 11% and generating around $4.4 billion in annualized free cash flow, which represents a 27% year-over-year increase [1] Financial Performance - The company achieved record production levels in the US, contributing to its operational momentum since the CrownRock acquisition [1] - The annualized free cash flow of $4.4 billion indicates robust financial health and operational efficiency [1]

Occidental Petroleum Corporation (NYSE:OXY) Q4 2024 Earnings Conference Call February 19, 2025 1:00 PM ET Company Participants Jordan Tanner - VP, IR Vicki Hollub - President & CEO Sunil Mathew - SVP & CFO Ken Dillon - SVP & President, International Oil and Gas Operations Richard Jackson - President, Operations, U.S. Onshore Resources and Carbon Management Conference Call Participants Arun Jayaram - JP Morgan Betty Jiang - Barclays Neal Dingmann - Truist Securities Paul Cheng - Scotiabank Roger Read - Wells ...

Financial Data and Key Metrics Changes - In 2024, Occidental Petroleum Corporation generated $4.9 billion of free cash flow and paid approximately $800 million in common dividends, achieving its near-term debt repayment target of $4.5 billion seven months ahead of schedule [7][8] - The company reported an adjusted profit of $0.80 per diluted share and a reported loss of $0.32 per diluted share due to an increase in long-term environmental remediation liability [40][41] - The company ended 2024 with over $2.1 billion of unrestricted cash after repaying $500 million of debt [45] Business Line Data and Key Metrics Changes - The OxyChem business generated over $1.1 billion in pre-tax income in 2024, exceeding original guidance [15] - The midstream segment outperformed, with adjusted pre-tax income surpassing the midpoint of the original full-year guidance by approximately $600 million [57] - The Oil and Gas segment achieved record production of 1.33 million BOE per day in 2024, exceeding the upper end of full-year guidance [10][12] Market Data and Key Metrics Changes - The company’s US onshore production was driven by strong performance in the Delaware, TJ, Midland, and Powder River Basins, contributing to record production levels [10][11] - The company expects full-year production in 2025 to average approximately 1.42 million BOE per day, representing mid-single-digit growth from 2024 [47] Company Strategy and Development Direction - The company aims to maximize cash flow by investing primarily in short-cycle, high-return assets while advancing mid-cycle projects for future cash flow resilience [34] - The company plans to continue deleveraging and has authorized a 9% increase in its common dividend [24] - Major projects like Stratos and Battleground are expected to enhance cash flow and improve market position [25][27] Management's Comments on Operating Environment and Future Outlook - Management expressed confidence in achieving the $15 billion net debt target by early 2027, despite commodity price fluctuations [92] - The company highlighted a commitment to operational excellence and innovation, with a focus on safety and sustainability [65] - Management noted that 2025 will be an exciting year with improved technical capabilities and asset portfolio [66] Other Important Information - The company achieved a reserves replacement ratio of 230% for 2024, with a year-end proved reserve balance of 4.6 billion BOE, the highest in its history [12] - The company is advancing its direct air capture (DAC) technology, which is expected to deliver long-term value and contribute to US energy security [18][20] Q&A Session Summary Question: Gulf of Mexico outlook for 2025 - Management indicated a busy year ahead with maintenance and drilling activities expected to add significant production [74][75] Question: Extension of the Echo Patrol JV in the Midland Basin - Management confirmed similar terms to previous agreements and plans to drill about 23 wells [80] Question: Rockies program in 2025 and its evolution - Management acknowledged lower activity levels but highlighted embedded efficiencies and infrastructure investments in the Rockies [86][89] Question: Debt reduction trajectory towards $15 billion target - Management remains comfortable with the timeline, projecting early 2027 for achieving the target [92] Question: 2025 guidance on production and service costs - Management expects a 7% improvement in drilling and completion costs, driven by operational efficiencies [99] Question: International M&A considerations - Management expressed satisfaction with current international assets and plans for growth in existing operations [103] Question: Permian oil cut increase in 2025 - Management confirmed an increase in oil cut due to unconventional growth and contributions from Crown Rock [112][116]