Occidental Petroleum ,oxy) missed the first-quarter earnings view on Tuesday due to plunging oil and natural gas prices. Meanwhile, Warren Buffett told investors over the weekend that he has no intention of taking over Occidental Petroleum, even as he considered and Berkshire Hathaway ,BRKB) “love” their current OXY shares.
Warren Buffett: Occidental Petroleum Income
EstimateWall Street expects EPS to fall 42% to $1.24 in the first quarter, according to FactSet. Analysts projected that revenue would fall about 11% to $7.46 billion. For the year, consensus views call for a 43% decline in earnings and a roughly 17% decline in revenue.
ResultOccidental Petroleum reported first-quarter revenue fell 13% to $7.26 billion. OXY's earnings fell 48% to $1.09 per share.
Pre-tax income from oil and natural gas fell 36% to $1.6 billion in Q1 due to lower worldwide crude oil and US natural gas prices.
Occidental Petroleum produced 1.22 million barrels of oil equivalent per day in the first quarter, up 13% from last year. OXY raised its full-year production guidance to an average of 1.195 million barrels of oil equivalent per day. Occidental Petroleum executives previously forecast an average production of 1.18 million barrels of oil equivalent in 2023, keeping production mostly flat compared to 1.16 million in 2022.
Cash flow from operations came in at $2.9 billion, a 10% decline compared to Q1 2022. Meanwhile, free cash flow fell 33% in Q1, totaling $1.69 billion. Occidental Petroleum repurchased $752 million worth of stock on pace with its 2023 $3 billion repurchase program.
At the end of Q4, OXY announced plans to return $3 billion to shareholders through share buybacks in 2023. Occidental Petroleum also increased its dividend by 38%. In 2022, Occidental Petroleum returned $562 million to shareholders in the fourth quarter, and a total of $3 billion in both buybacks and dividends.
Futures: Five Big Earnings Movers Late
challenge of inflation
In late February, Occidental Petroleum missed analysts' fourth-quarter earnings targets. OXY reported earnings per share fell 9% to $1.61 per share in Q4, while revenue rose 4% to $8.22 billion. On the year, EPS jumped 267% to $9.35, while sales grew 43% to $36.63 billion.
In February, Holb told investors during the Q4 earnings call that “inflation will continue to be a challenge” for the energy sector in 2023, as OXY anticipated. By 2022.
US crude oil futures were hovering around $73.47 per barrel on Tuesday.
It was the fourth straight rise after oil prices fell below $64 in afternoon trade on Thursday amid banking sector concerns, a possible US debt default and recession fears. US natural gas was trading around $2.42 per million British thermal unit on Tuesday.
Natural gas futures fell below the $2 mark at the end of February 2023 for the first time since September 2020. Natural gas prices have declined nearly 80% from their August 2022 high of $10.
Warren Buffett and OXY Stock
Occidental Petroleum stock dropped 1% after regular trading on Tuesday. OXY ended Tuesday's market trade slightly down, 0.02%, at 58.95, within Buffett's OXY buying range.
Buffett loaded up on OXY through late 2022, with the billionaire investor targeting shares in the $57-$61.5 price range.
Berkshire has significantly increased its stake in the international oil play over the past year, making OXY among Buffett's top holdings. Ahead of earnings, the “Oracle of Omaha” said on Saturday that his company has no plans to maneuver the controls.
“We will not make an offer for control of Occidental,” Buffett said during Berkshire Hathaway's annual shareholder meeting.
Buffett currently owns a 23.5% stake in the Houston-based energy company, or about 211 million shares, after a buying spree in March. In August, 2022, the Federal Energy Regulatory Commission approved Buffett and Berkshire Hathaway to buy up to 50% of the available OXY stock.
“We like the stocks we have,” Buffett said Saturday. “We may or may not have more in the future but we certainly have warrants on a much larger amount of stock.
“I'm glad we have,” Buffett said.
Occidental Petroleum stock ranks third Oil and Gas – International Exploration and Production Industry Group. OXY has a composite rating of 67. The Relative Strength Rating of Occidental Petroleum stock is 47. The EPS rating of the shares is 66.
Please follow Kit Norton on twitter @KitNorton for more coverage.
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