Warren Buffett-backed Occidental Petroleum reported better-than-expected first-quarter earnings late Wednesday, marking four consecutive quarters the oil producer has surprised analysts' profit expectations. Meanwhile, Chief Executive Vicki Hollub warned Permian Basin output could "plateau sooner than we expected." OXY shares soared Thursday.
Occidental Petroleum announced Wednesday Q1 EPS growing 38% to 87 cents with sales totaling $6.84 billion, up 14% vs. a year ago. Prior to the report late Wednesday, analysts expected Occidental Petroleum Q1 earnings per share of 78 cents with revenue coming in at $6.83 billion, according to FactSet.
Occidental Petroleum also produced 1.391 million barrels of oil equivalent per day in Q1, up 19% compared to a year ago.
OXY has now delivered better-than-expected earnings in the last four quarters, starting it off with a bang in Q2 when it saw a surprise 51% profit increase, breaking a string of five consecutive quarterly earnings declines.
"In the first quarter, our teams' sustained focus on operational excellence unlocked additional efficiencies and supported the delivery of resilient free cash flow," Hollub said in the earnings release. "We continue to rapidly advance towards our debt reduction goals, and we believe our deep, diverse portfolio of high-quality assets positions us for success in any market environment."
Buffett-backed Occidental Petroleum has been focused on cleaning up its balance sheet and reducing debt in recent quarters. The Permian Basin oil producer reported at the end of Q4 it reached its near-term debt reduction target.
OXY Forecasts Oil Production
Now, crude oil is trading around four-year lows. Diamondback Energy, a Permian Basin pure play, on Monday trimmed its full-year production forecast and said it expects onshore oil rigs in the oil industry to fall around 10% by the end of Q2.
Occidental on Wednesday reduced the mid-point of its 2025 capital guidance by $200 million and domestic operating costs by $150 million. This was driven by "continued operational efficiency gains and schedule optimization" in the Permian Basin and Gulf of America.
For the second quarter, OXY said Wednesday it expects to produce between 1.377-1.417 million barrels of oil equivalent per day, with 760-780 thousand barrels of oil equivalent per day in the Permian Basin. For the full year, Occidental Petroleum forecasts production of 1.39-1.44 million barrels of oil equivalent per day. The company expects 760-786 thousand barrels of oil equivalent per day from the Permian. OXY produced 1.327 million barrels of oil equivalent per day in 2024.
Hollub said Thursday that OXY had expected the Permian to continue growth through 2027 with overall U.S. production peaking between 2027 and 2030.
"It's looking like with the current headwinds or at least volatility and uncertainty around pricing in the economy and recessions and all of that, it's looking like that peak could come sooner. So, I'm thinking right now the Permian is – if it grows at all through the rest of the year, it's going to be very little," Hollub said.
"The Permian, I believe, is – if companies continue to talk about dropping activity levels – I think the Permian could plateau sooner than we expected," she added.
OPEC Raises Production Quota
Meanwhile, the Saudi Arabia-led Organization of Petroleum Exporting Countries announced Saturday it would boost its production quota. The move marks the third straight monthly increase, placing the global oil industry on price war footing.
Fellow Buffett-backed energy play Chevron reported better-than-expected first quarter profit on Friday. Notably, Chevron reported that in Q1 it acquired $2.2 billion of Hess stock, saying that this reflects "continuing confidence in the consummation of the pending acquisition of Hess."
Chevron awaits a court decision on its Hess deal. Exxon, which operates the offshore Guyana project upon which Chevron's Hess deal hinges, claims it has the right of first refusal.
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Warren Buffett: Occidental Petroleum
Occidental Petroleum stock advanced 1.7%t to 42.16 on Friday after soaring 6.3% during Thursday's stock market action.
The Warren Buffett stock hit a low of 34.78 on April 9, the lowest for the stock since 2022. OXY is below its 200-day and 50-day moving averages as it struggles to rebound from lows in stock market trade.
Occidental Petroleum shares are down 21% in the 2025 stock market and nearly 27% below this year's high of 53.20.
The oil producer looked to balance its debt for much of 2024. The company reported Wednesday that $2.3 billion of debt has been repaid year-to-date and $6.8 billion since Q3 2024. All 2025 debt maturities have been repaid with $284 million due over next 14 months, Occidental Petroleum reported.
At the end of Q3, the company said it repaid $4 billion of debt, achieving about 90% of its short-term debt reduction target. At the beginning of Q4, Occidental Petroleum had net long-term debt totaling $25.456 billion, up 37% from the end of 2023, according to regulatory filings.
OXY reduced debt by nearly 6% from 2022 to 2023. At the end of 2023, OXY reported that, based on having around $18 billion in debt, $1.1 billion is due in 2024, $1.2 billion in 2025, $1.4 billion in 2026, $900 million in 2027, and $13.3 billion due in 2028 and thereafter.
OXY ended Q4 with free cash flow of $1.35 billion, up 27% compared to Q4 2023. The company in February also raised its quarterly dividend 9% to 24 cents per share.
Berkshire Keeps OXY Bet
Warren Buffett, who will step down from his role as CEO of Berkshire Hathaway at the end of the year, amassed a record level of cash on hand through the first quarter. However, a consistent Buffett buy over the past several years has been Occidental Petroleum.
Before Occidental Petroleum's Q4 report, Buffett's Berkshire Hathaway purchased 763,000 OXY shares on Feb. 7 for an average price of $46.82, according to regulatory filings.
Buffett's stake in Occidental Petroleum is now 28.2%, or $12.4 billion. Along with the 28.2% stake, Berkshire Hathaway also owns $8.5 billion of Occidental preferred stock and has warrants to buy another 83.9 million common shares for $5 billion.
In August 2022, the Federal Energy Regulatory Commission granted Berkshire Hathaway approval to purchase up to 50% of available OXY stock. However, Buffett told shareholders in early 2023 he had no intention of taking over the company.
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Occidental Petroleum is now ranked sixth in Berkshire Hathaway's holdings, representing 4.63% of the portfolio. Apple, American Express, Bank of America, Coca-Cola and Chevron fill out the rest of Buffett's top six holdings.
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Occidental Petroleum stock has a 39 Composite Rating out of a best-possible 99. The Buffett stock also has a 19 Relative Strength Rating and an 82 EPS Rating.
Please follow Kit Norton on X @KitNorton for more coverage.
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