Occidental Q2 profit misses forecasts on lower energy prices

HOUSTON: Occidental Petroleum reported an 83% slump in second-quarter profit due to a slide in oil and gas prices, sending the shares of the US producer down about 3% in extended trading on Wednesday (Aug 2).

Occidental said net income attributable to common stockholders stood at US$605 million (RM2.7 billion), or 63 cents per share, for the three months ended June 30, compared with US$3.55 billion, or US$3.47 per share, a year ago.

The Houston-based company posted adjusted profit of 68 cents per share for the quarter, compared with analysts’ average estimate of 72 cents, according to Refinitiv data.

The company’s average realised price for oil fell to US$73.59 per barrel for the April-June quarter from US$107.72 a year ago.

Oil and gas prices soared last year in the wake of Russia’s invasion of Ukraine but energy prices have dropped sharply this year as fears of shortages eased amid global economic challenges.

Benchmark Brent crude prices averaged US$80 a barrel in the second quarter of 2023, compared with US$110 a year ago.

The lower oil prices were still lucrative for oil producers and Occidental’s production in the quarter rose to 1.22 million barrels of oil equivalent per day (boepd) from 1.15 million boepd a year earlier.

Occidental raised its full year production forecast on the back of higher-than-expected output in the second quarter. The company had said in May that it expected second-quarter production to be the lowest this year.

Results were also impacted by impairment charges related to the Powder River Basin, where Occidental has determined not to pursue future exploration and appraisal activities.

Occidental had interest in over 300,000 net acres in the Powder River Basin in Wyoming at the end of 2022 and had planned to run one drilling rig in 2023 with targeted completions activity throughout the year, according to its annual report.

Separately, Phillips 66 reported a 46% fall in second-quarter profit on Wednesday, the latest US refiner to signal the hit from a decline in margins from last year’s sky-high levels when Russia’s invasion of Ukraine squeezed fuel supplies.

The company’s shares fell 2.7% to US$109.04 in afternoon trade.

Realised margins fell 46.5% to US$15.32 per barrel in the second quarter, Phillips said.

Refiners’ margins were beefed up last year as a rebound in fuel demand came amid a supply crunch caused by pandemic-era refinery closings and global oil market disruptions from Russia’s invasion of Ukraine.

Rivals Valero Energy Corp and Marathon Petroleum have reported steep declines in quarterly profits on pressured margins.

Crude utilisation rate was 93% in the second quarter, higher than 90% a year earlier, Phillips 66 said, while total processed input was unchanged year-over-year at 1.9 million bpd.

On an adjusted basis, the Houston-based refiner’s US$3.87 per share earnings beat the average analyst estimate of US$3.56, according to Refinitiv data.

Second-quarter net income fell to US$1.7 billion, or US$3.72 per share, from US$3.2 billion, or US$6.53 per share, in the year-ago quarter. – Reuters