On Thursday, Susquehanna maintained a Positive rating on shares of Occidental Petroleum (NYSE: OXY) but reduced the stock's price target to $65 from the previous $77. The adjustment followed Occidental's third-quarter results, which surpassed expectations in terms of production and earnings per share (EPS).
Occidental Petroleum is expected to reach a production level of 1,450 thousand barrels of oil equivalent per day (Mboe/d) in the fourth quarter, anchored by robust performance from new wells in the Permian Basin and an increase in projections for its recently acquired CrownRock assets.
The company's third-quarter achievements included a significant debt reduction, paying off $4 billion and reaching approximately 90% of its short-term $4.5 billion debt reduction target within just two months after finalizing the CrownRock acquisition.
The company has expressed intentions to continue operating a five-rig program within its CrownRock assets throughout 2025. This strategy is anticipated to yield mid-single-digit growth. Additionally, Occidental plans to preserve flexibility in capital expenditure for the rest of its U.S. onshore portfolio, which will be influenced by the fluctuations in commodity prices.
Susquehanna's revised price target reflects the firm's confidence in Occidental's strategic initiatives and its ability to manage capital efficiently while pursuing growth. Despite the lowered target, the Positive rating indicates a belief in the company's potential for continued operational success and financial health.
In other recent news, Occidental Petroleum Corporation (NYSE:OXY) reported a strong third-quarter performance in 2024, marking a record-high U.S. production and significant debt reduction. The company generated $1.5 billion in free cash flow and reported an adjusted profit of $1.00 per diluted share.
Operational successes in the Permian Basin, coupled with the integration of CrownRock assets, bolstered these results. Occidental Petroleum also raised its full-year production guidance to a midpoint of 1.45 million barrels of oil equivalent per day for Q4.
Despite setbacks in the Gulf of Mexico due to weather conditions, the company has managed to maintain a strong performance. The projected capital expenditures for 2025 are estimated to be between $900 million and $950 million. The company also plans to reduce its capital budget for low-carbon ventures to $450 million by 2025, while increasing the chemicals segment capital budget to $900 million.
These are recent developments that highlight the company's commitment to its deleveraging strategy, efficiency, and stability in the face of potential market volatility. Occidental Petroleum remains confident in its financial position with no debt maturities due in 2024 and sufficient cash to cover 2025 obligations.
InvestingPro Insights
Recent data from InvestingPro sheds additional light on Occidental Petroleum's financial position and market performance. The company's market capitalization stands at $47.97 billion, with a P/E ratio of 13.73, suggesting a relatively modest valuation compared to earnings. This aligns with the article's discussion of the company's operational efficiency and debt reduction efforts.
InvestingPro Tips highlight that Occidental has maintained dividend payments for an impressive 51 consecutive years, demonstrating a long-term commitment to shareholder returns. This consistency is particularly noteworthy given the cyclical nature of the oil and gas industry. Additionally, analysts predict the company will remain profitable this year, which supports Susquehanna's positive outlook despite the lowered price target.
The company's revenue for the last twelve months as of Q3 2024 was $27.14 billion, with a gross profit margin of 61.77%. These figures underscore Occidental's ability to generate substantial profits, which is crucial for funding its strategic initiatives and debt reduction plans mentioned in the article.
For investors seeking a more comprehensive analysis, InvestingPro offers 7 additional tips for Occidental Petroleum, providing deeper insights into the company's financial health and market position.
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