Warren Buffett-backed Occidental Petroleum reported mixed first-quarter earnings and revenue late Tuesday, as EPS caved more than 40%s. OXY shares edged down early Wednesday.
Occidental Petroleum saw Q1 earnings fall 42% to 63 cents per share while revenue declined 17% to $5.975 billion. The company's total average global production was 1.172 million barrels of oil equivalent per day, down 4% vs. Q1 2023 and near the mid-point of its guidance. Analysts expected first-quarter EPS to fall 47% to 58 cents with sales totaling $6.7 billion, according to FactSet.
The company also reported it ended the quarter with operating cash flow of $2 billion.
"We are executing in all areas of our diversified portfolio and positioned for free cash flow growth," Chief Executive Vicki Hollub said in the earnings release Tuesday.
Occidental's results come after Permian Basin producer Diamondback Energy reported better-than-expected first-quarter earnings and revenue last week. Supermajors Exxon Mobil and Chevron, recently announced first-quarter earnings and revenue declines, with lower refining margins and natural gas prices taking a toll on the energy giants. Warren Buffett has a 6.8% stake in CVX.
Occidental Petroleum stock fell around 1.2% to 64.34 during market action on Wednesday. OXY shares gained a fraction to 65.07 on Tuesday.
The Warren Buffett stock fell 5% last week to 64.39, falling below its 50-day moving average. OXY shares have gained around 8% in 2024 but are down 10% from an April 12 high. OXY topped analysts' Q4 expectations in February.
Meanwhile, geopolitical risk in the Middle East, uncertain signals of demand growth in China and rising U.S. stockpiles have had a push-pull effect on oil prices in recent weeks. U.S. prices have settled back below $80 per barrel as concerns eased over direct confrontation between Israel and Iran. Futures for Brent crude, the international benchmark, traded below $83 per barrel Wednesday.
U.S. crude oil futures dropped below $78 per barrel Wednesday. Last week, U.S. oil prices had their first weekly close below $80 since March 8.
Switzerland-based UBS expects fossil fuels, including crude oil, will be an important part of the globe's energy mix for years to come. The bank recently wrote that oil demand will likely rise into the 2030s even as the overall market share will "increasingly give way" to renewables.
Warren Buffett Keeps Buying OXY
Through the latter half of 2022 Buffett loaded up on OXY, with the billionaire investor targeting shares in the $57-$61.50 price range. Warren Buffett's Berkshire Hathaway substantially increased its stake in the international oil play over the past year, putting OXY among Buffett's top holdings.
Berkshire Hathaway holds a 28.2% stake in Houston-based Occidental Petroleum, according to FactSet. Warren Buffett increased his stake in Occidental Petroleum by 8.74% during the fourth quarter, adding more than 19.5 million shares.
In August 2022, the Federal Energy Regulatory Commission granted Berkshire Hathaway approval to purchase up to 50% of available OXY stock. However, Warren Buffett told shareholders in early 2023 he has no intention of taking over the company.
In early February, ahead of Q4 earnings, Warren Buffett loaded up on Occidental Petroleum stock. Buffett spent around $245.7 million on more than 4.3 million shares of OXY between Feb. 1 and Feb. 5, with a price range of 56.75 to 57.98, according to regulatory filings.
In December, Warren Buffett also spent $588.7 million on more than 10 million shares of OXY stock, with a price range of 55.58 to a fraction more than 57, in the days following the energy company's $12 billion acquisition of Permian Basin producer CrownRock.
MarketSurge charts show OXY stock finding price support around the 55-57 range, dating back to June 2022.
Occidental stock has a 42 Composite Rating out of 99. The Warren Buffett stock also has a 62 Relative Strength Rating and a 10 EPS Rating.
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