8-K: Occidental Petroleum Details Q2 2025 Earnings Considerations Amidst Gulf of America Production Curtailments and Higher Expected Tax Rate

Occidental Petroleum Corporation provided preliminary second quarter 2025 earnings considerations, noting production curtailments in its Gulf of America assets and an expected higher effective tax rate due to lower anticipated oil prices.

Summary

• Occidental Petroleum Corporation provided a summary of factors management believes will impact its second quarter of 2025 results.
• Gulf of America assets experienced production curtailments due to third-party constraints, extended facility maintenance, and schedule-related delays.
• Due to these curtailments, Gulf of America sales volumes for the second quarter of 2025 are estimated to be 125 Mboed.
• Total company production is expected to remain within the guidance range for the quarter.
• The Adjusted Effective Tax Rate is expected to be 35-37%, driven by a shift in the jurisdictional mix of income due to lower anticipated full year oil prices compared to original expectations.
• Average diluted shares outstanding for the second quarter of 2025 were 1,010.4 million shares.
• Average worldwide realized oil price for the three months ended June 30, 2025, was $63.76 per barrel, with US at $62.83/Bbl and International at $68.88/Bbl.
• Average worldwide realized NGL price was $20.71 per barrel, with US at $20.05/Bbl and International at $25.72/Bbl.
• Average worldwide realized natural gas price was $1.46 per Mcf, with US at $1.33/Mcf and International at $1.90/Mcf.
• Worldwide oil realized price was 100% of average WTI and 96% of average Brent index prices.
• Worldwide NGL realized price was 32% of average WTI, and domestic natural gas was 36% of average NYMEX index prices.

Sentiment

Score: 4

Explanation: The document highlights specific operational challenges (production curtailments, delays) and a negative financial impact (higher tax rate due to lower oil price expectations), indicating headwinds for the quarter. While total production is expected to remain within guidance, the detailed negative factors suggest a cautious outlook.

Positives

• Total company production is expected to remain within the guidance range for the quarter, despite specific regional curtailments.

Negatives

• Production curtailments in Gulf of America assets occurred due to third-party constraints, extended facility maintenance, and schedule-related delays.
• Gulf of America sales volumes for Q2 2025 are estimated at 125 Mboed, impacted by these curtailments.
• The Adjusted Effective Tax Rate is expected to be higher at 35-37%, primarily due to lower anticipated full year oil prices compared to original expectations.

Risks

• General economic conditions, including slowdowns and recessions, domestically or internationally.
• Indebtedness and other payment obligations, including the need to generate sufficient cash flows to fund operations.
• Ability to successfully monetize select assets and repay or refinance debt, and the impact of changes in credit ratings or future increases in interest rates.
• Assumptions about energy markets; global and local commodity and commodity-futures pricing fluctuations and volatility.
• Supply and demand considerations for, and the prices of, products and services.
• Actions by the Organization of the Petroleum Exporting Countries (OPEC) and non-OPEC oil producing countries.
• Results from operations and competitive conditions.
• Future impairments of proved and unproved oil and gas properties or equity investments, or write-downs of productive assets, causing charges to earnings.
• Unexpected changes in costs; inflation, its impact on markets and economic activity and related monetary policy actions by governments.
• Availability of capital resources, levels of capital expenditures and contractual obligations.
• The regulatory approval environment, including ability to timely obtain or maintain permits or other government approvals.
• Ability to successfully complete, or any material delay of, field developments, expansion projects, capital expenditures, efficiency projects, acquisitions or divestitures.
• Risks associated with acquisitions, mergers and joint ventures, such as difficulties integrating businesses, uncertainty associated with financial projections or projected synergies, restructuring, increased costs and adverse tax consequences.
• Uncertainties and liabilities associated with acquired and divested properties and businesses.
• Uncertainties about the estimated quantities of oil, natural gas liquid (NGL) and natural gas reserves.
• Lower-than-expected production from development projects or acquisitions.
• Ability to realize the anticipated benefits from prior or future streamlining actions to reduce fixed costs, simplify or improve processes and improve competitiveness.
• Exploration, drilling and other operational risks.
• Disruptions to, capacity constraints in, or other limitations on the pipeline systems that deliver oil and natural gas and other processing and transportation considerations.
• Volatility in the securities, capital or credit markets, including capital market disruptions and instability of financial institutions.
• Government actions (including geopolitical, trade, tariff and regulatory uncertainties), war (including the Russia-Ukraine war and conflicts in the Middle East) and political conditions and events.
• Health, safety and environmental (HSE) risks, costs and liability under existing or future federal, regional, state, provincial, tribal, local and international HSE laws, regulations, and litigation (including related to climate change or remedial actions or assessments).
• Legislative or regulatory changes, including changes relating to hydraulic fracturing or other oil and natural gas operations, retroactive royalty or production tax regimes, and deep-water and onshore drilling and permitting regulations.
• Ability to recognize intended benefits from business strategies and initiatives, such as low-carbon ventures businesses or announced greenhouse gas emissions reduction targets or net-zero goals.
• Potential liability resulting from pending or future litigation, government investigations and other proceedings.
• Disruption or interruption of production or manufacturing or facility damage due to accidents, chemical releases, labor unrest, weather, power outages, natural disasters, cyber-attacks, terrorist acts or insurgent activity.
• The scope and duration of global or regional health pandemics or epidemics and actions taken by government authorities and other third parties in connection therewith.
• The creditworthiness and performance of counterparties, including financial institutions, operating partners and other parties.
• Failure of risk management.
• Ability to retain and hire key personnel.
• Supply, transportation and labor constraints.
• Reorganization or restructuring of operations.
• Changes in state, federal or international tax rates.
• Actions by third parties that are beyond control.

Future Outlook

Total company production is expected to remain within the guidance range for the second quarter of 2025. The Adjusted Effective Tax Rate is expected to be between 35-37% due to a shift in the jurisdictional mix of income, influenced by lower anticipated full year oil prices compared to original expectations.

Management Comments

• Management believes the provided summary of earnings considerations will impact results for the second quarter of 2025.

Industry Context

The document primarily focuses on company-specific operational and financial factors. However, the mention of a higher expected tax rate due to 'lower anticipated full year oil prices compared to original expectations' suggests a broader industry context of softening commodity prices. Additionally, the risk factors acknowledge the influence of 'global and local commodity and commodity-futures pricing fluctuations and volatility' and 'actions by the Organization of the Petroleum Exporting Countries (OPEC) and non-OPEC oil producing countries' on the company's performance.

Comparison to Industry Standards

• NA

Stakeholder Impact

• Shareholders: Potential negative impact on earnings and share price due to production curtailments and a higher effective tax rate.
• Customers: Potential impact on supply from Gulf of America assets due to production curtailments.
• Creditors: The company's indebtedness and ability to generate sufficient cash flows are listed as general risk factors.

Next Steps

• Finalization of Occidental's financial reporting process for the second quarter of 2025, leading to the full Q2 2025 earnings report.

Key Dates

Recommendation

Keywords

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