OCCIDENTAL PETROLEUM CORP /DE/ Q4 FY2024 earnings call

Key Sections - 2024 Achievements: Occidental Petroleum generated $4.9 billion of free cash flow, achieved near-term debt repayment target of $4.5 billion seven months ahead of schedule, and had a capital spend of $6.8 billion, the low end of guidance. - Operational Excellence: In 2024, the company achieved the highest annual US oil production and record total production at 1.33 million BOE per day. It reduced lease operating expenses per barrel by ~9% and bulk costs by ~12% across unconventional basins. - Reserves: Year-end proved reserve balance was 4.6 billion BOE, the highest in company history, with a 230% reserves replacement ratio for 2024. - Strategic Advancements: Closed on Crown, advanced Stratos and Battleground projects, continued innovation in Permian and international operations, and had ambitious AI initiatives.

In 2024, all three segments of Occidental Petroleum outperformed. The OxyChem business exceeded original guidance midpoint, achieving over $1.1 billion in pre-tax income. The midstream segment performed exceptionally well, with adjusted pretax income surpassing full-year guidance by approximately $600 million. The Oil and Gas segment achieved the highest annual US oil production and record total production at 1.33 million BOE per day, which exceeded the upper end of full-year guidance. In terms of revenue contribution, specific percentages weren't explicitly stated, but each segment contributed to the overall strong financial performance.

2025 Guidance - Capital Plan: The company plans to invest between $7 billion and $7.2 billion in its energy and chemicals business in 2025. Full-year production is expected to average approximately 1.42 million BOE per day, with modest oil growth. - OxyChem: First-quarter income is expected to be lower due to winter storm impacts, plant outage, and raw material cost increases. Full-year pretax income is guided to a midpoint of $1 billion, a slight decrease. - Midstream: Slightly lower earnings in 2025 due to fewer gas transportation optimization opportunities, but benefit from revision of two crude transportation contracts, with approximately $200 million benefit in 2025 and ~$400 million annual savings in 2026. - Production: First quarter production expected to be low due to reduced fourth-quarter activity, winter weather, and maintenance, with second half ramp-up. Permian production expected to grow over 15%, Rockies production flat, and US offshore production increase.

Risks - Environmental Remediation: There is an appeal of an unfavorable federal court ruling on long-term environmental remediation liability, but annual cash outlay isn't expected to materially increase. - Market Volatility: Impact on realized oil prices, service costs, and market conditions affecting chemicals and midstream segments. - Operational Challenges: Weather events, plant maintenance, and PSE-related impacts can affect production volumes.

Q: What is the Gulf of Mexico outlook for 2025?

A: Gulf of Mexico has a busy year ahead with platform turnarounds, drilling activities, production engineering, and commencing the Gulf of America 2.0 project, which will add low F and D cost barrels.

Q: Details on the Echo Patrol JV extension?

A: The terms are similar to before, and it's an extension where about 23 wells will be drilled.

Q: Outlook for the Rockies program in 2025?

A: Lower activity due to ethane rejection, divestitures, but there are efficiency improvements and infrastructure investment in the DJ Basin.

Q: Trajectory for debt reduction?

A: Still comfortable, aiming for the net debt target by early 2027, with opportunities to supplement cash flow from operations.

Q: Drilling and completion efficiencies in 2025?

A: Expect a 7% improvement, driven by operational efficiencies and service cost deflation.

Q: Challenges in Stratus startup?

A: Stratus phase one is close to completion, with startup involving pumping water, making pellets, capturing CO2, and focusing on reducing costs and increasing capacity.

Q: Midstream guidance for 2025?

A: Slightly lower earnings due to fewer gas transportation optimization opportunities, but benefit from crude transportation contract revisions.

Q: Gulf of America beyond 2025?

A: Sustainable production with exploration, EOR, and Gulf of America 2.0 projects, expected to be an important part of growth in out years.

Q: DUR business production status?

A: Production is still around 140,000 barrels per day, part of long-term growth strategy.

Q: Status of DUR technology?

A: Optimistic about direct air capture technology, working towards cost reduction with government support.