$Occidental Petroleum (OXY.US)$First quarter results were announced. The company's profit fell by a quarter in the first quarter as lower crude oil prices and lower production dragged down results. According to financial reports, Q1 revenue fell 17.3% year over year to US$5.98 billion, and market expectations were US$6.7 billion. Adjusted earnings per share were 63 cents, down 42%, and market expectations were 58 cents. Net profit was US$718 million, or 75 cents per share, compared with net profit of US$983 million, or US$1 per share, for the same period last year.
Although third-party production in the eastern Gulf of Mexico has been suspended for a long time, oil and gas production is close to the midpoint of the company's guiding goals. The price of oil achieved in the first fiscal quarter was 76.04 US dollars per barrel. Crude oil prices in the current quarter were basically the same as in the same period last year, because production cuts in OPEC+ countries offset the decline in demand; the overall average global production in the first fiscal quarter was 1.172,000 barrels of oil equivalent per day, down 3.9% year on year.
The company said its OxyChem division's adjusted profit exceeded expectations due to improved demand for PVC and vinyl chloride monomers, as well as lower ethylene costs. Losses in the midstream and marketing businesses also fell short of expectations, reflecting an increase in crude oil profit margins.
Despite a slight increase in average oil prices, revenue declined because revenue was insufficient to offset the fall in gas prices. In fact, the average price of LNG was $22.14/BBL compared to $24.41/BBL in the first quarter of 2023. However, the biggest drop was in US domestic gas prices, which fell from $3.01 per MCF to $1.61 per MCF.
Prior to this, Permian basin producers$Diamondback Energy (FANG.US)$Last week, better-than-expected first-quarter earnings and revenue were announced. energy giant$Exxon Mobil (XOM.US)$und$Chevron (CVX.US)$It was recently announced that both energy giants experienced a decline in first-quarter earnings and revenue due to falling refining margins and falling natural gas prices.
Meanwhile, geopolitical risks in the Middle East, uncertain signs of growing global demand, and rising US oil inventories have had a push and pull effect on oil prices in recent weeks. As concerns about direct confrontation between Israel and Iran abated, US oil prices fell below $80 per barrel. International benchmark Brent crude futures fell below $83 per barrel on Tuesday. Last week, US oil prices closed below $80 per barrel for the first time since March 8. U.S. crude oil futures fell to around $78 a barrel on Tuesday.
However, UBS Group expects fossil fuels, including crude oil, to become an important part of the global energy mix in the next few years. The bank recently wrote that even if overall market share “gives way more and more” to renewable energy, oil demand could rise into the 2130s.
Buffett continues to buy Occidental Petroleum
In the second half of 2022, Warren Buffett began to significantly increase his oil holdings, which ranged between $57 and $61.50. Buffett's$Berkshire Hathaway-A (BRK.A.US)$Over the past year, it has greatly increased its shares in international oil companies, making Occidental Petroleum one of Buffett's most important holdings. In August 2022, the US Federal Energy Regulatory Commission approved Berkshire Hathaway's purchase of up to 50% of Occidental Petroleum's shares. However, Buffett told shareholders in early 2023 that he had no intention of taking over the company.
In December of last year, in the days after the energy company spent $12 billion to buy Permian producer CrownRock, Buffett spent 588.7 million US dollars to buy more than 10 million shares of the oil company at a price of 558-57 US dollars.
Recently, FactSet data showed that Berkshire Hathaway holds 28.2% of Houston-headquartered Occidental Petroleum. Buffett increased his holdings of Occidental Petroleum by 8.74% in the fourth quarter of last year, increasing his holdings by more than 19.5 million shares. At the beginning of February, before the fourth quarter earnings report was released, Buffett continued to buy large quantities of Occidental Petroleum's shares. According to regulatory documents, Buffett spent about 245.7 million US dollars to buy more than 4.3 million shares of Occidental Petroleum between February 1 and February 5, with a price range of 56.75 to 57.98 US dollars.
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