Warren Buffett-backed Occidental Petroleum reported better-than-expected fourth-quarter earnings and announced it reached its near-term debt reduction target late Tuesday as the Permian Basin oil producer has been focused on cleaning up its balance sheet and reducing debt in recent quarters.
Occidental Petroleum announced Tuesday Q4 EPS growing 8% to 80 cents with sales totaling $6.84 billion, down 4.6% vs. a year ago. Prior to the report late Tuesday, analysts forecast earnings of 68 cents per share with revenue declining to $6.98 billion.
Occidental Petroleum also produced 1.463 million barrels of oil equivalent per day in Q4.
OXY has now delivered better-than-expected earnings in the last three 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.
The oil producer has been looking to balance its debt for much of 2024. At the end of Q3, the company said it repaid $4 billion of debt, achieving about 90% of its short-term debt reduction target. In August, Occidental executives said they hoped to pay off about 85% of its near-term $4.5 billion debt reduction commitment by the end of Q3.
At the end of the third quarter, 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 A4 2023. The company also reported Tuesday that it signed two agreements in the first quarter of 2025 to divest upstream assets to undisclosed buyers for a combined total of $1.2 billion. The resulting proceeds will be applied to the company's remaining 2025 debt maturities, according to Occidental Petroleum.
The Warren Buffett stock also raised its quarterly dividend 9% on Tuesday to 24 cents per share, payable April 15 to stockholders of record as of March 10.
The Q4 financial report arrives as U.S. oil prices traded around $71.70 per barrel Tuesday, up modestly amid reports that Ukrainian drones struck a major pumping station of a pipeline in southern Russia, disrupting crude oil flows from Kazakhstan.
Occidental Petroleum stock surged 4.5% to 51.03 during Wednesday's stock market action. On Tuesday, OXY advanced 1.6% to 48.84. The stock gained 2.7% last week as it struggles to rebound from lows.
Meanwhile, fellow Permian Basin play Diamondback Energy announced early Tuesday it is acquiring privately owned Double Eagle in a roughly $4.1 billion cash and shares deal. Along with the deal, Diamondback Energy said Tuesday it is committing to sell at least $1.5 billion of "noncore assets" to reduce debt.
FANG shares ended Tuesday down 0.12% after swinging higher and lower Tuesday.
Warren Buffett: Berkshire Keeps OXY Bet
Prior to 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. With this $36 million OXY buy, Buffett's stake in Occidental Petroleum is now 28.3%, or $12.9 billion.
Occidental Petroleum is now ranked sixth in Berkshire Hathaway's holdings, representing 4.89% of the portfolio. Apple, American Express, Bank of America, Coca-Cola and Chevron fill out the rest of Buffett's top six holdings.
OXY shares have pulled back from an April 2024 high but are up 3% in February. However, OXY has declined 10% from its January high of 53.20. The stock is attempting to reclaim its 50-day moving average with its relative strength line hovering around three-year lows.
Warren Buffett Stocks: What's Inside Berkshire Hathaway's Portfolio?
Meanwhile, Buffett's Berkshire Hathaway has continued to support Houston-based Occidental Petroleum. Prior to the Feb. 7 purchase, Buffett most recently bought OXY in December 2024.
Along with the 28.3% 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.
Occidental Petroleum stock has a 35 Composite Rating out of a best-possible 99. The Buffett stock also has a 18 Relative Strength Rating and a 77 EPS Rating.
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