Occidental Petroleum Corp Q2 2024 Earnings Call Transcript

The following is excerpted from the question-and-answer section of the transcript.

Question: Neil Mehta - Goldman Sachs & Company, Inc. - Analyst : Good morning, Vicki and team, and good progress here on deleveraging. That's kind of where I want to start. I recognize the Barilla Draw announcement here a couple of days ago. What's the asset sale market look like? And can you talk about the opportunity set to continue to make progress on monetization?

Question: Neil Mehta - Goldman Sachs & Company, Inc. - Analyst : Thanks, Vicki. And then just to follow up on the CrownRock acquisition, just building off slide 27, just your early thoughts, recognizing you're going to give us more next quarter on potential synergies and thoughts about the production profile. I know you had talked about this being a 170,000 barrel a day asset and the guide is a little softer than that, but recognize that it's not a full year, and you haven't done your hands full on these assets. So just your perspective on the production profile and the synergies associated with that.

Question: Betty Jiang - Barclays - Analyst : Hi. Good afternoon. Maybe I want to switch gear a bit. I want to ask about the STRATOS project. Really, congratulations on signing the agreement with Microsoft this quarter. And I wanted to get an update on where that project is today, the start-up timing on that and any goal on what percentage of the carbon credits that you want to sell ahead of time? And yeah, maybe start from there.

Question: Betty Jiang - Barclays - Analyst : Yes, it does. Thank you very much for that color. Maybe shifting back to upstream, a follow-up on the Rockies. Just after several quarters of very strong performance, do you think that the third-quarter guidance is also, again, seeing sequential growth, but as activity is expected to slow down in the second half, would love to get some color on how you think about the production activity trajectory going forward.

Question: Paul Cheng - Scotiabank GBM - Analyst : Thank you. Good morning. I think the first one is maybe for Sunil. I think you guys have said you have discussed with Ecopetrol for them to purchase 30% on divided interest in the CrownRock and then that fell apart. So, from that standpoint, what is the sticky point on that? And perhaps more importantly, the reason why you purchased CrownRock must be you think that it is better or at least better than the average of your portfolio. So why that will be one of the first asset that you're trying to sell down. So, trying to get some understanding of the logic behind when you're initially talking to Ecopetrol for the deal? Second question is that I know it is a little bit early for 2025 for CapEx and production. But can you give us some idea that maybe the moving part plus and minuses for next year on both the CapEx and the production number?

Question: John Abbott - Wolfe Research - Analyst : This is John Abbott on for Doug Leggate. Just sticking with Ecopetrol shale joint venture, how much production is associated with that JV. And just out of curiosity, if they did not want to continue in the Midland for some reason, would you be potentially interested in that asset?

Question: John Abbott - Wolfe Research - Analyst : Yes. I was just sort of curious if you would be interested in that asset and just sort of curious as to how much production may be associated with that joint venture currently.

Question: John Abbott - Wolfe Research - Analyst : That's very helpful. And then for the second question, very quickly, what was the run rate spending at CrownRock?

Question: John Royall - J.P. Morgan Securities LLC - Analyst : So my first question is on the asset sale program. To date, you've sold or agreed to sell about $1 billion worth of assets. Is there anything you can offer on the lost cash flow you expect from these assets. We know the production impact from Barilla Draw, but I was just wondering on the cash flow side, if there's anything you can give us there.

Question: John Royall - J.P. Morgan Securities LLC - Analyst : Okay. Yes, I was just referring to the $1 billion that you've already announced. But okay. So, my follow-up is just on the DAC program. Maybe you can talk about how it's developing kind of looking past STRATOS. Are you in serious or advanced discussions with potential partners and/or licensee's for future DACs? Or do you expect that those discussions would ramp once you have sort of a proof of concept out there with STRATOS being operational? Just trying to understand how you expect the program to evolve post STRATOS?

Question: Roger Read - Wells Fargo Securities, LLC - Analyst : Thank you and good afternoon. I guess I'd kind of like to come at the question on the cash returns. Comments were made in the presentation on the catch-up calls yesterday, get the debt paid down and then get back to buying back shares potentially even go after retiring the preferred. And I'm just curious kind of how you're looking at that in terms of what you would want to do once the balance sheet is where you want it? Meaning, do you want to get all the way back to buying back the preferred again? Or does it make sense to be a little more steady with the share repos, raise the dividend and then leave yourself the flexibility for acquisitions.

Question: Roger Read - Wells Fargo Securities, LLC - Analyst : Yeah, the 10-year kind of change. Okay. And then as an unrelated follow-up, just your guidance on the Midstream business and the gas trading. What is the expectation that you have on Matterhorn in terms of start-up that's built into your expectations? Is that middle of the quarter, end of the quarter? I'm just trying to understand like maybe upside, downside to the guidance.

Question: Neal Dingmann - Truist Securities - Analyst : Hi, good afternoon. Thanks for taking my question. My first question, Vicki, is just on the Gulf of Mexico. Specifically, could you give some color as how active you might be with tiebacks through the remainder of the year? I think you've got a lot of opportunities there and then maybe even I look at all the exploration opportunities. I'm just - given all these opportunities you have, do you anticipate a bit more start-ups there on the exploration side starting next year?

Question: Neal Dingmann - Truist Securities - Analyst : Great update. And then just a second on OFS services. I'm just wondering are you seeing any, given sort of the recent volatility or maybe downturn a little bit downturn in oil, have you seen any recent softness and just wondered how different OFS prices might be trending onshore versus offshore?

Question: David Deckelbaum - TD Cowen - Analyst : Afternoon, Vicky and team. Thanks for taking my questions. I was curious if I could ask a little bit more just on the CrownRock progression into next year. I think you all still are standing by getting towards that 170,000 a day target and then perhaps growing it from there. So when we think about CapEx for next year, given that this was a high-graded transaction, do you see the CrownRock assets sort of feeding some capital from some areas that you were spending money on in '24 as we think about that program? And I guess in part of that, is there some savings on the CapEx side associated with selling Barilla Draw?

Question: David Deckelbaum - TD Cowen - Analyst : I appreciate the color there. And then maybe my second question, just on direct air capture, just following STRATOS. I know there was some enthusiasm, especially last year around ADNOC and their interest in direct air capture. Would you characterize most of your conversations with most parties at this point as sort of being in a wait-and-see mode around STRATOS and how some of these first projects perform?