Occidental Petroleum Q2 Earnings Call Highlights

Occidental Petroleum exceeded production guidance in the second quarter, generating approximately $3 billion in free cash flow before working capital and posting record midstream and marketing earnings of about $960 million. The company reduced principal debt by $1.5 billion to $11.8 billion and raised its quarterly dividend by 8% to $0.28 per share. Management’s near-term priority is reducing principal debt to $10 billion. Occidental targets more than $4 billion in additional annual sustainable cash flow by 2030, driven by lower costs, reduced sustaining capital, declining production rates and the 2029 preferred-equity redemption rather than production growth. Occidental generated adjusted earnings of $2.40 per diluted share and reported earnings of $2.75 per diluted share in the second quarter. Free cash flow before working capital was approximately $3 billion, aided by operational performance, cost discipline and higher commodity prices. The company ended the quarter with about $4.2 billion of unrestricted cash. Total production averaged 1.43 million barrels of oil equivalent per day, exceeding the midpoint of guidance by 23,000 BOE per day. Domestic production benefited from strong base and new-well performance in the Permian Basin and higher uptime in the Gulf of America. Those gains more than offset lower international volumes related to disruptions in the Middle East. Domestic lease operating expense was $7.80 per BOE, 6% below guidance. Chief Financial Officer Sunil Mathew said higher domestic production and maintenance schedule optimization in the Gulf of America supported the result. Midstream and marketing adjusted earnings reached a quarterly record of about $960 million, more than double the midpoint of guidance. The segment benefited from gas marketing optimization, crude marketing margins related to cargo-sale timing and commodity-price movements, and higher sulfur prices at Al Hosn. Lower sulfur sales partially offset those factors. Occidental reduced principal debt by $1.5 billion during the period to $11.8 billion, its lowest level since the second quarter of 2019. The company said the reduction brings its go-forward annual interest expense run rate to approximately $760 million, about $630 m...