Occidental Petroleum Achieves Early Debt Reduction Target and Sets New Goals

Occidental Petroleum Corp. (NYSE: OXY) recently completed its fourth quarter with noteworthy developments, achieving its near-term debt reduction target seven months ahead of schedule. Despite a mixed earnings report, the company has set ambitious goals for the first quarter of 2025.

What Happened: Vicki Hollub, the president and CEO of Occidental Petroleum, announced that the company successfully reached its debt repayment target of $4.5 billion early. This achievement was made possible through a blend of asset sales and organic cash flow.

Sunil Mathew, the Senior Vice President and CFO, expressed optimism about continuing this momentum into 2025. He disclosed plans for $1.2 billion in divestitures during the first quarter.

CEO Hollub emphasized that future strategies will focus on maintaining financial discipline, which echoes the goals set for 2024. Key objectives include furthering the company's progress in reducing debt and fostering sustainable dividend growth.

Importance of Results: For the fourth quarter, Occidental reported earnings of $0.80 per share, exceeding analyst expectations of $0.70 and improving from the $0.74 reported in the same quarter last year. However, the company's revenue fell short of estimates, coming in at $6.83 billion against the anticipated $7.05 billion, down from $7.52 billion year-over-year.

Notably, the company's production levels surpassed guidance, and Occidental raised its quarterly dividend by 9%, bringing it to $0.24 per share.

In 2024, Occidental's chemical division, OxyChem, achieved record production levels, with an average of 1.33 million barrels of oil equivalent (BOE) per day. This figure represented the highest annual production for the company in the United States and exceeded their projected outputs for the year.

Looking ahead, CFO Mathew expects production to decrease in the first half of the year, followed by a significant increase in the second half. OxyChem's full-year pre-tax income is estimated at $1 billion, indicating a slight decline.

Market Response: Following these announcements, Occidental's stock rose by 4.40% on Wednesday and continued to climb by 0.39% in after-hours trading. In comparison, the SPDR S&P 500 ETF Trust (ARCA: SPY), which tracks the broader market, showed a slight increase of 0.24%. Year-to-date, OXY has seen a 4.84% rise and a substantial 23.39% increase over the past year.

Currently, 22 analysts are covering Occidental Petroleum, with an average price target set at $62.10, reflecting a 'sell' rating. Predictions vary widely, with estimates ranging from $45 to $78. Recent analyses from firms like Stephens & Co., Goldman Sachs, and Truist Securities suggest a potential upside of about 13.30%, averaging at $58.

Occidental, Petroleum, Debt