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Occidental Petroleum Corp OXY

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Morningstar’s Analysis

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Occidental Buoyed by Permian Outperformance in Third Quarter

Analyst Note

| Dave Meats, CFA |

Occidental delivered production of 1,237 mboe/d in the third quarter, which was 12% lower sequentially and about 25% lower year over year on a divestiture-adjusted basis. This compares with the previously guided range of 1,200–1,250 mboe/d. The declines reflect a drastic dip in capital spending in response to the COVID-19 pandemic. The 2020 budget was unchanged at $2.4–$2.6 billion, less than half of the original spending plan. However, the brunt of the decline may have passed--after a few months at skeleton activity levels, management is cautiously adding rigs again in Texas, New Mexico, and Colorado. But we do not expect a dramatic rebound in production while the firm is still prioritizing the balance sheet. In fact, on the conference call, management noted that the high case next year would be keeping production flat, which it could do with a sustaining budget of $2.9 billion.

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Company Profile

Business Description

Occidental Petroleum is an independent exploration and production company with operations in the United States, Latin America, and the Middle East. At the end of 2019, the company reported net proven reserves of 3.8 billion barrels of oil equivalent. Net production averaged 996 thousand barrels of oil equivalent per day in 2019 at a ratio of 76% oil and natural gas liquids and 24% natural gas.

Contact
5 Greenway Plaza, Suite 110
Houston, TX, 77046-0521
T +1 713 215-7000
Sector Energy
Industry Oil & Gas E&P
Most Recent Earnings Sep 30, 2020
Fiscal Year End Dec 31, 2020
Stock Type Hard Assets
Employees 14,400

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