Financial Data and Key Metrics Changes - In Q3 2024, the company generated an adjusted profit of $1 per diluted share and a reported profit of $0.98 per diluted share, with a significant free cash flow of $1.5 billion before working capital [34][35] - The company finished the quarter with $1.8 billion of unrestricted cash, reflecting strong operational performance despite adverse weather conditions and commodity price volatility [35][36] - Domestic lease operating expenses were reported at $8.68 per barrel, the lowest since Q1 2022, indicating improved operational efficiency [37] Business Line Data and Key Metrics Changes - The Oil & Gas segment exceeded production guidance, achieving the highest quarterly U.S. production in the company's history, driven by strong new well performance and higher uptime in the Permian Basin [7][8] - The Chemicals and Midstream segments also outperformed, with the Midstream segment generating positive earnings approximately $145 million above the midpoint of guidance [15][38] - The company raised its full-year production guidance for the Permian, anticipating an additional 12,000 BOE per day in Q4, with 9,000 BOE from CrownRock assets [40][41] Market Data and Key Metrics Changes - The Delaware Basin continued to perform at an industry-leading level, with a notable well producing 1.2 million barrels of oil in the first 90 days [9] - The company reported a drop in the gas-oil ratio in the Permian, attributed to the growth in unconventional production and the integration of CrownRock assets [102][105] Company Strategy and Development Direction - The company is focused on maintaining activity levels in the CrownRock area while slightly lowering capital in other oil and gas areas, preparing for potential price declines [57][60] - The integration of CrownRock assets is expected to unlock operational efficiencies and enhance margins, with a commitment to leveraging shared infrastructure for cost savings [19][21][70] - The company is advancing its low-carbon initiatives, including the construction of the STRATOS direct air capture facility, which is on track for completion in mid-2025 [23][25] Management's Comments on Operating Environment and Future Outlook - Management acknowledged the volatility in oil prices and the potential for a softer commodity backdrop in 2025, emphasizing a conservative approach to capital allocation [54][56] - The leadership team is optimistic about the long-term potential of the Permian Basin, expecting continued efficiency improvements and production growth from secondary benches [81][82] - The company remains committed to debt reduction, having repaid $4 billion in Q3, nearly 90% of its near-term commitment [32][33] Other Important Information - The company is targeting a capital budget of approximately $450 million for low-carbon ventures in 2025, a decrease from 2024, while the chemicals capital budget is expected to increase to $900 million [44][45] - The company has identified nearly $10 million in expected savings from water integration across assets, enhancing operational efficiency [20] Q&A Session Summary Question: Concerns about commodity outlook and capital implications - Management reviews macroeconomic factors weekly and acknowledges risks to prices in 2025, planning to maintain activity levels in CrownRock while adjusting capital in other areas as needed [54][57] Question: Deleveraging capacity and options - Management highlighted various opportunities for deleveraging, including a strong portfolio in the Permian and ongoing divestitures [62][63] Question: Oil mix in the Permian and future drilling programs - Management indicated that the oil mix may fluctuate due to the integration of CrownRock and the development of secondary benches, with a focus on maintaining production efficiency [72][75] Question: Goals for debt reduction and balance sheet outlook - Management expressed confidence in continuing debt reduction efforts regardless of commodity prices, targeting further progress in 2025 [78] Question: Direct air capture project milestones and economics - The DAC project is progressing well, with significant completion milestones expected by mid-2025, and management remains optimistic about its long-term commercial viability [84][87]
OXY(OXY) - 2024 Q3 - Earnings Call Transcript