Occidental Petroleum Corp Q3 2024 Earnings Call Transcript

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

Question: Douglas Leggate - Wolfe Research - Analyst : Thank you. Vicki, I hope you can hear me okay. The line is a little choppy today, but hopefully, you can understand my question. The operational performance is quite extraordinary, and I think you never really laid out synergies with CrownRock. Obviously, they seem to be showing up. But I guess my question is, there seems to be a nervousness certainly in the market around the commodity outlook. And you guys, I guess, have some big decisions, as Sunil laid out, whether you accept the growth or whether you slow down the program, which obviously has got capital implications. So I'm wondering, first of all, if you could -- I know you don't want to give us numbers today, but just give us your thoughts on the macro in a world that clearly does not need any more oil. That's my first question. My follow-up, if I may, is on disposals. You obviously have a lot of options, and you also have laid out this $1.35 billion of chemicals and low-carbon spend next year. So I guess my question is, we're trying to understand what the deleveraging capacity of the portfolio is. You own NET Power, 48%. You obviously own WES. And you've got the roll-off, I assume, of that capital after 2025. So just give us your thoughts on what the pace of deleveraging could look like and what the options are to achieve that as we go into perhaps a softer commodity backdrop.

Question: Roger Read - Wells Fargo Securities, LLC - Analyst : One thing we noticed in the results last night, it was a discussion on the sell-side call, was the oil mix in the Permian here. And I know there's been a lot of moving parts, right, CrownRock comes in, some things go out. But as you think about the go-forward drilling program, what is the right way for us to think about that? Q3 a bit of a blip to the downside and then back up where you were or are we seeing a -- I don't know if the right term is structural change, but maybe a change in the resource base that you have there?

Question: Roger Read - Wells Fargo Securities, LLC - Analyst : Yeah. Sorry about that. I just said last night with the results and then on the sell-side call, there were discussions and questions about the percentage of oil produced out of the Permian. And I was just trying to understand, we had a lot of moving parts this quarter with the addition of CrownRock and then some assets sold as well. And as you look at the go-forward, how should we think about that oil mix? It was 58%, 59% this quarter, 55%. Just -- it's not a huge difference, but we're all watching those small changes and trying to figure out what they mean.

Question: Roger Read - Wells Fargo Securities, LLC - Analyst : Yeah. And I didn't mean to imply a bad total production. It was more just trying to understand the moving components in there. The other question I have -- and I think this has been addressed. But in terms of the goals on debt reduction now -- and let's leave aside what the oil price is going to be because obviously, that will change what CapEx and all that is. But if we just took the forward curve and we think where you're going to be in 12 to 18 months, how do you see the balance sheet? Like what would be defined as success from your standpoint?

Question: Neil Mehta - Goldman Sachs Research - Analyst : Yeah. Vicki, I had a macro question for you. I just -- I think you've talked a lot about how over the next couple of years, you expect shale to get more mature and -- maybe not decline, but resource tapers out and we're going to need to then pull-on exploration. But one of the things that's emerged from this earnings season is very consistent beats on productivity and oil volumes not just from you guys but from the industry broadly. And I just love your perspective, has that evolved the way that you're thinking about the macro, the continued resiliency of supply in the face of a declining U.S. rig count? Your macro perspective would be great.

Question: Neil Mehta - Goldman Sachs Research - Analyst : Thanks, Vicki. That's great color. And then just going back to the DAC and as you think about bringing on Unit 1 by the middle of next year, what are the gating items, the critical path items, to get it into service? And what are you really focused on around the start-up from an engineering standpoint? And then in light of the election, has anything changed about the way you think about the economics of this business? Or is your view on this independent of the subsidy environment?

Question: Paul Cheng - Scotiabank GBM - Analyst : I think the first one is for Sunil. Sunil, you probably already addressed it, but trying to make sure I understand this year based on the fourth quarter CapEx. So your full year CapEx is about, say, $7.1 billion or that about $200 million higher than your previous midpoint guidance. And is that all in the CrownRock because you are doing -- or is that only in Permian because you are doing better? If I'm looking at next year, is CrownRock CapEx is still looking like $900 million. So I think previously, it's assuming that this is a $500 million incremental. So now that -- I mean, how much is the incremental CapEx from CrownRock for next year? This is the first question. And the second question, if we look at the -- I just want to go back into the gas oil ratio. If we look at the third quarter versus the second quarter, you dropped by about 2% in Permian. Is that something one-off that triggered it or is it all driven by CrownRock? And it does look like, fourth quarter, that the gas oil ratio is relatively close to the third quarter. So I suppose that maybe that this is all driven by CrownRock. I just want to clarify and make sure that we understand correctly.

Question: Paul Cheng - Scotiabank GBM - Analyst : And also correspondingly that from '24 to '25 CrownRock, what is the incremental CapEx that we should assume?

Question: Paul Cheng - Scotiabank GBM - Analyst : Is there anything one-off in the third quarter that related to that because it's a drop of 2%? That is a pretty substantial drop comparing to the second quarter oil cut in the Permian.

Question: Scott Gruber - Citi - Analyst : A couple of questions here. Just back on the Permian, you mentioned raising the percentage of secondary zone development in the Delaware from 20% to 40%, if I heard correctly. Where does that figure go in '25? And then as you look at the Midland side of the basin with the CrownRock assets, could you step up the percentage? Where is that percentage currently? And can you step it up in '25 as well?

Question: Arun Jayaram - J.P. Morgan Securities LLC - Analyst : I wanted to see if you could discuss your thoughts on what you view as a more normalized Capex in Chems. You mentioned that you'll spend about $900 million next year given some projects. And what you think about more normalized Capex? And what does the growth Capex you're spending next year - what does that do to the earnings power of that segment? REFINITIV STREETEVENTS | www.refinitiv.com | Contact Us consent of Refinitiv. 'Refinitiv' and the Refinitiv logo are registered trademarks of Refinitiv and its affiliated companies. NOVEMBER 13, 2024 / 6:00PM, OXY.N - Q3 2024 Occidental Petroleum Corp Earnings Call

Question: Arun Jayaram - J.P. Morgan Securities LLC - Analyst : All right. That's helpful. And just one question on the Rockies. It looks like from your disclosure that you have sold some properties in the Rockies. It looks like the Powder River Basin. Just give us a sense of future thoughts on the Powder and what exactly you've divested there?