Warren Buffett stock Occidental Petroleum reported mixed second-quarter financials Wednesday, slightly missing on profit expectations while matching revenue expectations, as low oil and natural gas prices in the first half of the year continue to take their toll. OXY stock lost ground in early trade Thursday.
While oil and natural gas prices have retreated in 2023, Warren Buffett's Berkshire Hathaway has continued to invest in those areas.
The billionaire investor bought up Occidental Petroleum stock throughout the first half of the year, bringing his stake in the Houston-based company to 25%.
The Warren Buffett stock dropped 2.4% early Thursday, after ending down 1.9% at 61.45 on Wednesday. Berkshire also holds a stake in Dow Jones energy giant Chevron. On Tuesday, CVX dropped 0.8%. CVX and ExxonMobil reported on Friday that second-quarter sales fell around 30% with profits sinking 50% compared to a year ago.
Warren Buffett Stock: Occidental Petroleum Earnings
Estimates: Analysts expected Occidental Petroleum to report earnings sinking 77% to 72 cents per share in Q2. Meanwhile, Wall Street forecast revenue falling 37% to $6.7 billion.
Results: Occidental Petroleum reported EPS of 68 cents, down 78% vs. 2022, as sales fell 37% to $6.7 billion.
OXY announced oil and gas pre-tax income for the second quarter of 2023 was $1.1 billion, down 73% from Q2 2022.
OXY reported Wednesday that income from its oil and gas operations declined due to lower domestic natural gas and natural gas liquids prices (NGL) as well as lower domestic crude oil volumes.
Average Q2 worldwide crude oil prices fell 22% to $73.59 per barrel, according to OXY. Meanwhile, the company said average worldwide NGL prices decreased 545 $19.08 per barrel in Q2.
Occidental produced 1.218 million barrels of oil equivalent per day, exceeding the mid-point of its guidance. OXY announced Wednesday it expects average full-year production of 1.210 million barrels of oil equivalent per day.
In Q1, OXY had forecast full-year production guidance to average 1.195 million barrels of oil equivalent per day. Occidental Petroleum executives previously forecast 2023 production to average 1.18 million barrels of oil equivalent per day, keeping production mostly flat compared to the 1.16 million in 2022.
Occidental Petroleum also repurchased $425 million of stock in Q2. So far in 2023, OXY completed around 40% of its $3 billion repurchase program.
Warren Buffett And His Energy Plays
On July 10, Warren Buffett upped his bet on liquefied natural gas, agreeing to buy the Dominion Energy share of the Maryland-based Cove Point LNG export plant in a $3.3 billion deal. Berkshire already owns a stake.
Meanwhile, on June 28 Buffett announced Berkshire purchased an additional 2.14 million shares of OXY over three days. Berkshire bought Occidental Petroleum stock at prices between 57.01-57.17. The OXY purchases brought Berkshire's total stake in Occidental Petroleum to 25%.
Buffett sold around $6 billion worth of Chevron stock in the first quarter, according to Berkshire's Q1 financial report.
Buffett's outfit reported reducing CVX holdings to $21.6 billion as of March 31. Warren Buffett began buying the Dow Jones stock in 2020. Prior to Buffett's Q1 decision to sell, Berkshire Hathaway amassed a stake totaling 167 million CVX shares, worth around $29 billion.
Investors will get a better idea about Warren Buffett stocks OXY and CVX this weekend when Berkshire Hathaway reports Q2 results.
Warren Buffett Stock: Crude Oil Prices Above $80
Currently, oil markets have undergone a change of heart. Crude oil prices have rallied for several weeks, topping $80 a barrel late last week for the first time since mid-April.
However, prices moved lower Wednesday even as the Energy Information Administration (EIA) announced U.S. commercial crude oil inventories fell by 17 million barrels from the previous week. At 439.8 million barrels, U.S. crude oil inventories are approximately 1% below the five-year average for this time of year, according to EIA data.
U.S. crude futures fell around 2% to around $79.70 per barrel on Wednesday. On Monday, crude rose 1.5% to $81.80, the highest since April. U.S. crude soared 15.8% in July, its best monthly gain since January 2022.
Brent crude futures edged down more than 1% to $83.60 Wednesday, with the international oil benchmark up 14.2% in July.
The market is focusing on tighter global supply amid Saudi-led cuts while demand hopes are improving. Odds of a U.S. recession have fallen, while Chinese authorities recently pledged to step up stimulus, bolstering the demand outlook for the world's top crude importer.
Meanwhile, U.S. natural gas futures traded around $2.49 per million British thermal units Wednesday. Investors anticipate homes and businesses will use less gas as the weather turns cooler in the next two weeks. Natural gas plants generating electricity will see less demand (like other power plants) due to reduced air conditioning use.
Please follow Kit Norton on Twitter @KitNorton for more coverage.
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