Occidental Petroleum (NYSE:OXY), a prominent U.S. oil producer, outperformed expectations for fourth-quarter profit on Wednesday, achieving its highest quarterly output in three years while reducing spending.
The surge in U.S. oil and gas production reflects the industry’s efforts to cut costs and enhance drilling efficiency in longer horizontal wells, meeting the demands for strong returns from oil stock investors.
Earlier this month, Occidental raised its quarterly dividend payments by 22% to 22 cents per share and anticipated capital expenditures of approximately $4.9 billion in 2024, slightly lower than the previous year’s $5 billion.
“We are committed to delivering sustainable long-term value for our shareholders,” stated Chief Executive Vicki Hollub in a release.
The Houston-based company projected a slight increase in oil and gas production this year to 1.25 million barrels of oil equivalent per day (boepd), anticipating enhanced productivity in the U.S. Permian basin and the Rocky Mountains, albeit with a minor volume decrease from the Gulf of Mexico.
These estimates exclude the expected production of approximately 170,000 boepd from the pending $12 billion acquisition of shale producer CrownRock, awaiting regulatory approvals.
Occidental reported fourth-quarter production of 1.234 million boepd, surpassing the year-earlier quarter by 7,000 boepd.
The uptick in production helped offset the decline in prices, with the average realized price for oil dropping around 2% from the previous quarter to $78.85 per barrel.
However, the company faced challenges such as higher lease operating expenses in its oil business and increased costs of raw materials for its chemical operations.
Production from the Permian basin, spanning Texas and New Mexico, increased by 4.1% to 588,000 boepd during the fourth quarter. Occidental anticipates first-quarter production in the range of 1.16 to 1.20 million boepd.
The company maintained its low carbon business budget at $600 million, utilizing its oil operations to finance a strategy aimed at constructing numerous plants across the U.S. capable of capturing carbon emissions from the air and sequestering them underground.
For the quarter ended Dec. 31, Occidental reported adjusted earnings of 74 cents per share, exceeding analysts’ estimates of 71 cents per share, according to LSEG data.
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Author Faith Yakubu 
