OCCIDENTAL PETROLEUM CORP /DE/ Q3 FY2024 earnings call

• Oil & Gas: Strong production outperformance in Permian Basin, including CrownRock assets, with new well and base production exceeding expectations, drilling efficiency improved by 10% in Permian unconventional drilling cycle times, and lease operating expenses reduced. - CrownRock Integration: Successful integration with no significant safety incidents, sharing best practices, identifying cost efficiencies like $10 million expected savings from water integration and 20% improvement in frac ore utilization white space, and seeing incremental base production improvements. - Direct Air Capture: STRATOS construction progressing smoothly with design improvements (fewer air contactors and pellet reactors to reduce operating expenses), South Texas DAC project awarded $500 million with potential for $150 million more from expanded regional carbon network. - Debt Reduction: Repaid $4 billion in the third quarter, well ahead of the $4.5 billion debt reduction target within 3 months of CrownRock acquisition closing.

The Oil & Gas segment generated $1.5 billion of free cash flow before working capital, exceeding guidance in all three segments. It exceeded the high-end of production guidance, with the Permian Basin, including newly acquired CrownRock assets, performing strongly. The Midland Basin surpassed production guidance in CrownRock assets and legacy Midland Basin assets, while the Delaware Basin continued industry-leading performance. The Chemicals and Midstream businesses outperformed in the third quarter. The low-carbon businesses saw progress, with STRATOS construction on track and the South Texas DAC project awarded up to $500 million by the U.S. Department of Energy. Oil & Gas segment's production was boosted by strong new well performance and higher uptime in the Permian Basin, including CrownRock assets. Chemicals and Midstream leveraged natural gas price facilities for value delivery.

• Sunil Mathew mentioned adjusted profit of $1 per diluted share and reported profit of $0.98 per diluted share. Raised full year guidance for business segments due to third quarter outperformance. - 2025 capital plan: OxyChem capital budget expected to be approximately $900 million, an increase of $200 million from 2024; low-carbon ventures capital budget net of non-controlling interest contributions expected to be approximately $450 million, a $150 million decrease from 2024's $600 million; anticipates single-digit production growth from CrownRock assets in 2025. - STRATOS expected to bring initial 250,000 tons per annum load capacity online in mid-2025, with additional 256,000 tons phased in the next year.

• Commodity price volatility, which can impact capital allocation and financial results. - Weather disruptions, such as hurricanes affecting operations in the Gulf of Mexico. - Potential downside risk to prices in 2025, which could require adjustments to capital plans.

Q: Doug Leggate asked about the macro commodity outlook and deleveraging capacity.

A: Vicki Hollub discussed the macro outlook, stating they are prepared for multiple price scenarios, with plans to adjust capital allocation depending on price trends, and have the capability to react quickly to changing market conditions.

Q: Roger Read inquired about the oil mix in the Permian.

A: Richard Jackson explained that increased secondary benches, especially in the Delaware, and production performance contributed to the oil mix changes, with a move from about 20% secondary benches in 2023 to 40% in 2024.

Q: Neil Mehta asked about the gating items for DAC startup and election impact on DAC economics.

A: Vicki Hollub and Ken Dillon discussed DAC construction milestones like mechanical completion of first two capture trains by year-end and the positive impact of the election on DAC economics, including support for DAC and related initiatives.

Q: Paul Cheng asked about CapEx and GOR in the Permian.

A: Richard Jackson and Sunil Mathew addressed that the full year CapEx increase in 2024 was related to CrownRock's five months of operation, and the GOR change was due to production growth in unconventional areas and secondary benches.

Q: Scott Gruber asked about secondary zone development in the Permian.

A: Richard Jackson provided insights on secondary zone plans, with similar percentages of primary and secondary benches expected in 2025 for the overall Permian and 85% primary benches planned for CrownRock's 2025 program.

Q: Arun Jayaram asked about Chems CapEx and Rockies divestments.

A: Vicki Hollub discussed OxyChem's CapEx and the divestment of properties in the Powder River Basin, explaining the focus on contiguous and value-creating acreage.