Yahoo Finance Occidental (OXY) Up 5.6% Since Last Earnings Report: Can It Continue?
It has been about a month since the last earnings report for Occidental Petroleum (OXY). Shares have added about 5.6% in that time frame, outperforming the S&P 500.
Will the recent positive trend continue leading up to its next earnings release, or is Occidental due for a pullback? Before we dive into how investors and analysts have reacted as of late, let's take a quick look at the most recent earnings report in order to get a better handle on the important drivers.
Occidental Q1 Earnings and Revenues Lag Estimates
Occidental Petroleum Corporation reported first-quarter 2023 earnings of $1.09 per share, which missed the Zacks Consensus Estimate of $1.30 by 16.15%. In the year-ago quarter, the company recorded earnings of $2.12 per share.
GAAP earnings in the quarter were $1.00 per share compared with $4.65 in the prior-year period.
Total Revenues
Occidental's total revenues came in at $7,258 million, which missed the Zacks Consensus Estimate of $7,617 million by 3.7%. The top line also declined 14.9% from the year-ago quarter’s figure of $8,533 million.
Segmental Details
Oil and Gas revenues totaled $5,325 million for the reported quarter, down 12.3% year over year.
Chemical revenues amounted to $1,405 million, down 16.6% from that reported in the year-ago quarter.
Midstream & Marketing revenues came in at $751 million, down 14.8% year over year.
Production & Sales
Occidental’s total production volume was 1,220 thousand barrels of oil equivalent per day (Mboe/d), higher than the company’s guidance of 1,160-1,200 Mboe/d. Such an outperformance can be attributed to higher volumes from the Permian and Gulf of Mexico segments. Permian’s production for the first quarter totaled 579 Mboe/d, which exceeded the guided range of 555-575 Mboe/d.
Total sales volume came in at 1,214 Mboe/d, up 13% from 1,074 Mboe/d in the year-ago period. The improvement was due to an increase in U.S. sales volume. Out of the total sales volume, 1,014 Mboe/d came from domestic sales.
Realized Prices
Realized prices of crude oil decreased 19.2% year over year to $74.22 per barrel on a worldwide basis. Realized natural gas liquids prices fell 38.4% from the prior-year quarter’s level to $24.41 per barrel globally.
Natural gas prices declined 24.6% from the year-ago quarter’s number to $2.76 per thousand cubic feet worldwide.
Highlights of the Release
Occidental’s total expenses for the reported quarter were $5,624 million, down 2.6% from $5,774 million in the year-ago period.
The company generated $1.7 billion in free cash flow for the same time frame.
Interest expenses decreased 35.8% to $238 million from $371 million in the year-ago quarter. Occidental repurchased shares worth $752 million, which represents 25% of its $3 billion share repurchase program.
Financial Position
As of Mar 31, 2023, Occidental had cash and cash equivalents of $1,165 million compared with $984 million as of Dec 31, 2022.
As of Mar 31, 2023, the company had long-term debt (net of current portion) of $19,645 million compared with $19,670 million as of Dec 31, 2022. The decrease in the company’s debt level was due to its effective debt management since the acquisition of Anadarko.
Cash flow from operations amounted to $2,870 million in the first quarter compared with $3,239 million a year ago.
Total capital expenditure was $1,461 million compared with $858 million in the year-ago period.
Guidance
For the second quarter of 2023, OXY expects production of 1,156-1,196 Mboe/d. Output from the Permian Resources segment is projected at 558-578 Mboe/d. For 2023, OXY anticipates production of 1,170-1,220 Mboe/d. Output from Permian Resources is projected at 565-589 Mboe/d for the entire year.
Exploration expenses are estimated at $130 million for the second-quarter. The company expects exploration expenses of $420 million in 2023.
Occidental plans to invest $5.4-$6.2 billion through the year to further strengthen its operations.
How Have Estimates Been Moving Since Then?
It turns out, estimates revision have trended downward during the past month.
The consensus estimate has shifted -14.49% due to these changes.
VGM Scores
At this time, Occidental has an average Growth Score of C, though it is lagging a lot on the Momentum Score front with an F. However, the stock was allocated a grade of A on the value side, putting it in the top 20% for this investment strategy.
Overall, the stock has an aggregate VGM Score of B. If you aren't focused on one strategy, this score is the one you should be interested in.
Outlook
Estimates have been broadly trending downward for the stock, and the magnitude of these revisions indicates a downward shift. Notably, Occidental has a Zacks Rank #3 (Hold). We expect an in-line return from the stock in the next few months.
Performance of an Industry Player
Occidental belongs to the Zacks Oil and Gas - Integrated - United States industry. Another stock from the same industry, ConocoPhillips (COP), has gained 4.3% over the past month. More than a month has passed since the company reported results for the quarter ended March 2023.
ConocoPhillips reported revenues of $15.52 billion in the last reported quarter, representing a year-over-year change of -19.6%. EPS of $2.38 for the same period compares with $3.27 a year ago.
ConocoPhillips is expected to post earnings of $2.37 per share for the current quarter, representing a year-over-year change of -39.4%. Over the last 30 days, the Zacks Consensus Estimate has changed -2.1%.
The overall direction and magnitude of estimate revisions translate into a Zacks Rank #3 (Hold) for ConocoPhillips. Also, the stock has a VGM Score of A.
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