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OXY(OXY) - 2025 Q1 - Earnings Call Transcript
OXYOXY(OXY)2025-05-08 18:02
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Financial Data and Key Metrics Changes - The company generated an adjusted profit of 0.87perdilutedshareandareportedprofitof0.87 per diluted share and a reported profit of 0.77 per diluted share in Q1 2025, with a significant difference attributed to the mark-to-market impact of derivatives [20][21] - Operating cash flow before working capital reached 3billion,whilefreecashflowbeforeworkingcapitalwasapproximately3 billion, while free cash flow before working capital was approximately 1.2 billion [5][20] - The company exited Q1 2025 with 2.6billionofunrestrictedcash[20]BusinessLineDataandKeyMetricsChanges−Theoilandgasbusinessproducedover1,390,000BOEperday,aligningwithproductionguidance[5][6]−Domesticoilandgasoperatingcostswerereportedat2.6 billion of unrestricted cash [20] Business Line Data and Key Metrics Changes - The oil and gas business produced over 1,390,000 BOE per day, aligning with production guidance [5][6] - Domestic oil and gas operating costs were reported at 9.5 per BOE, significantly below initial expectations [6] - OxyChem delivered 215milliononanadjustedbasis,overcomingoperationalchallenges[11]MarketDataandKeyMetricsChanges−ThecompanyexpectstotalproductiontogrowfromQ1tothesecondhalfoftheyear,drivenbyactivitiesintheMiddleEastandGulfofAmerica[9][22]−Themidstreamandmarketingbusinessoutperformedexpectations,benefitingfromstronggasmarketingoptimization[12]CompanyStrategyandDevelopmentDirection−Thecompanyisfocusedondebtreduction,havingretired215 million on an adjusted basis, overcoming operational challenges [11] Market Data and Key Metrics Changes - The company expects total production to grow from Q1 to the second half of the year, driven by activities in the Middle East and Gulf of America [9][22] - The midstream and marketing business outperformed expectations, benefiting from strong gas marketing optimization [12] Company Strategy and Development Direction - The company is focused on debt reduction, having retired 2.3 billion in debt year-to-date, with a total of 6.8billionrepaidoverthepasttenmonths[15][26]−ThecompanyisnegotiatingtoextendtheBlock53contractinOmanby15years,whichcouldunlockover800milliongrossbarrelsofadditionalresources[10][62]−Thecompanyaimstomaintainoperationalefficiencyandflexibilityinresponsetomarketvolatility,withafocusonpreservingvaluethroughdisciplinedcapitalallocation[19][30]Management′sCommentsonOperatingEnvironmentandFutureOutlook−Managementhighlighteduncertaintyarounddemand,policy,andsupplyasheadwindsforthesector,leadingtoincreasedcommoditypricevolatility[15][16]−Thecompanyispreparedtoscalebackactivityifcommoditypricesweakensignificantly,emphasizingtheimportanceofmaintainingoperationalefficiencies[17][19]−Managementexpressedconfidenceinthecompany′sabilitytodeliverconsistentresultsanddrivelong−termshareholderreturnsdespitemarketchallenges[29][30]OtherImportantInformation−Thecompanyhasmadesignificantadvancementsincarbonmanagement,includinga25−yearcarbonofftakeagreementforalowcarbonammoniafacility[13]−Thecompanyexpectstoseebenefitsfromrevisedcrudetransportationcontracts,deliveringapretaxcashflowupliftofapproximately6.8 billion repaid over the past ten months [15][26] - The company is negotiating to extend the Block 53 contract in Oman by 15 years, which could unlock over 800 million gross barrels of additional resources [10][62] - The company aims to maintain operational efficiency and flexibility in response to market volatility, with a focus on preserving value through disciplined capital allocation [19][30] Management's Comments on Operating Environment and Future Outlook - Management highlighted uncertainty around demand, policy, and supply as headwinds for the sector, leading to increased commodity price volatility [15][16] - The company is prepared to scale back activity if commodity prices weaken significantly, emphasizing the importance of maintaining operational efficiencies [17][19] - Management expressed confidence in the company's ability to deliver consistent results and drive long-term shareholder returns despite market challenges [29][30] Other Important Information - The company has made significant advancements in carbon management, including a 25-year carbon offtake agreement for a low carbon ammonia facility [13] - The company expects to see benefits from revised crude transportation contracts, delivering a pretax cash flow uplift of approximately 200 million in 2025 [28] Q&A Session All Questions and Answers Question: CapEx and OpEx reductions for this year - Management discussed a mix of efficiency gains and timeline adjustments, emphasizing that the decisions made will not sacrifice production in the outer years [34][36][97] Question: Free cash flow and capital breakdown - Management provided details on the expected cash flow inflection, highlighting contributions from reduced capital spending and increased operating cash flow [40][44] Question: Thoughts on divestitures - Management indicated that divestiture decisions will be value-based, with options available for both short and long cycle assets [51][60] Question: Opportunities in Oman - Management expressed excitement about the potential in Block 53 and the North Oman discovery, anticipating cash flow improvements [61][66] Question: Low Carbon Ventures business - Management highlighted the strong voluntary compliance market for carbon reduction credits and the importance of partnerships in the low carbon space [74][78] Question: U.S. oil supply outlook - Management noted that U.S. shale basins are plateauing or declining, with the Permian potentially plateauing sooner than expected due to reduced activity levels [81][90]