Occidental Petroleum Corporation (OXY) saw a notable uptick in its stock price during Thursday’s premarket trading session, rising by 1.48% to $56.94. This boost came on the heels of the company’s impressive second-quarter results for 2024. However, despite this positive news, Occidental’s year-to-date performance reveals a challenging landscape compared to broader market gains. Here’s a detailed look at Occidental’s latest financial performance and how it stacks up against the broader S&P 500 index.
Occidental’s Strong Second Quarter Results
Robust Operational Performance
Sponsored
Occidental Petroleum reported a strong operational performance for the second quarter of 2024. The company’s operating cash flow reached $2.4 billion, with operating cash flow before working capital amounting to $3.0 billion. This robust cash flow was a key factor in their solid quarterly performance.
Capital Spending and Free Cash Flow
The company’s capital spending totaled $1.8 billion. Contributions from noncontrolling interests added $42 million, resulting in a free cash flow before working capital of $1.3 billion. This financial flexibility underscores Occidental’s ability to generate significant cash even amidst fluctuating market conditions.
Production and Income Exceeds Guidance
Occidental’s total production for the quarter was 1,258 Mboed (thousand barrels of oil equivalent per day), surpassing the midpoint of guidance by 6 Mboed. The company’s midstream and marketing sectors also outperformed expectations, generating pre-tax adjusted income that exceeded guidance by over $180 million.
Chemical Segment and Earnings
OxyChem, Occidental’s chemical segment, reported pre-tax income of $296 million, aligning closely with guidance. Overall, the company achieved net income of $1.0 billion, translating to $1.03 per diluted share. This represents a significant improvement from the first quarter of 2024, where pre-tax income for oil and gas was $1.2 billion, compared to $1.6 billion in the second quarter.
Operational Highlights
President and CEO Vicki Hollub emphasized the strength of Occidental’s operational performance, noting that the results reflect the company’s ability to leverage its diverse asset portfolio effectively. The company is set to maintain its full-year production guidance, excluding the anticipated divestiture of 15 Mboed in the fourth quarter.
Stock Performance: Occidental vs. S&P 500
Year-to-Date Performance
Despite the recent positive financial results, Occidental Petroleum’s year-to-date (YTD) performance has been less favorable. The stock is down 5.34% YTD, indicating a challenging start to the year. In contrast, the S&P 500 index has shown robust growth, with a YTD increase of 9.01%. This disparity highlights Occidental’s struggle to keep pace with the broader market’s upward trajectory.
Recent Stock Movement
The uptick in Occidental’s stock price by 1.48% to $56.94 during Thursday’s premarket session reflects investor optimism following the announcement of the strong Q2 results. This positive movement, however, needs to be seen in the context of the company’s overall performance trend and its relative underperformance compared to the S&P 500.
Looking Ahead
Future Prospects
Occidental’s strong second-quarter results provide a positive outlook, particularly with the expected addition of CrownRock. The company’s operational efficiencies and strong financial results could serve as a foundation for improved performance in the coming quarters.
Challenges Ahead
Nonetheless, Occidental faces the challenge of reversing its year-to-date decline and aligning more closely with the broader market’s performance. Investors will be keenly watching how the company navigates potential market fluctuations and continues to execute on its operational strategies.
Conclusion
Occidental Petroleum’s impressive Q2 2024 results reflect the company’s robust operational capabilities and financial management. However, the broader market’s performance, as evidenced by the S&P 500’s significant gains, presents a challenging benchmark for Occidental. As the company progresses through the year, its ability to build on this positive momentum will be crucial for restoring investor confidence and improving its year-to-date performance.
