Occidental Petroleum's Q4 2024: Key Contradictions in Gulf Production, Permian Cuts, and Midland Basin Costs

These are the key contradictions discussed in Occidental Petroleum's latest 2024Q4 earnings call, specifically including: Gulf of Mexico production outlook, Permian oil cut expectations, and the impact of operational efficiencies on well costs in the Midland Basin:



Financial and Operational Performance:
- Oxy reported $4.9 billion of free cash flow for the year, enabling them to pay approximately $800 million in common dividends and increase the quarterly dividend by more than 22%.
- The company achieved its near-term debt repayment target of $4.5 billion, seven months ahead of schedule.
- The strong financial results were driven by increased exposure to short-cycle, high-return assets and execution efficiencies that led to a capital spend of $6.8 billion, aligning with the low end of the guidance.

Production and Reserve Growth:
- Oxy's year-end proved reserve balance reached 4.6 billion BOE, the highest in the company's history, representing an all-in reserve replacement ratio of 230% and an organic reserve replacement ratio of 112%.
- The company achieved record U.S. oil production and total company production of 1.33 million BOE per day for 2024, exceeding the upper end of guidance.
- This growth was supported by strong well performance across key U.S. onshore basins and strategic acquisitions like CrownRock, which contributed to improved production and reserve replacement ratios.

Capital Investment and Strategic Projects:
- Oxy plans to invest between $7 billion and $7.2 billion in its Energy & Chemicals business, focusing on short-cycle, high-return assets and major mid-cycle projects to ensure cash flow resilience.
- The company is advancing major growth projects like STRATOS, on track for commercial operation in 2025, and the Battleground modernization and expansion project, expected to complete by mid-2026.
- These investments aim to enhance cash flow and improve Oxy's market position, balancing the need for financial risk reduction with future development opportunities.

Divestiture and Debt Reduction:
- Oxy achieved significant debt reduction by repaying $4.5 billion in 2024 and announcing $1.2 billion in divestiture proceeds for 2025.
- The company aims to use these proceeds for debt reduction, with a focus on strengthening its balance sheet to support future shareholder returns.
- The strategic divestitures are part of a broader effort to optimize the portfolio and allocate capital effectively to maintain operational excellence and innovation.