ExxonMobil (XOM) has successfully defended its production rights in a significant regulatory dispute against Occidental Petroleum (OXY, Financial) over one of the largest lithium deposits in the United States. In a landmark decision, regulators in Arkansas have granted ExxonMobil's subsidiary, Saltwerx, the authority to develop a 56,000-acre lithium extraction and processing site. This decision comes amid the U.S. government's broader initiative to enhance the domestic supply of critical minerals, a strategy strongly advocated by the Trump administration.
The outcome is a significant victory for ExxonMobil as it seeks to expand its presence in the rapidly growing lithium market, a key component for electric vehicle batteries and other technologies. Occidental's challenge aimed to disrupt ExxonMobil's plans but was ultimately overruled by the regulatory body. This development underscores the continued competition and strategic maneuvers within the energy and resource extraction industries, as companies vie for control over valuable mineral resources.
Wall Street Analysts Forecast
Based on the one-year price targets offered by 24 analysts, the average target price for Occidental Petroleum Corp (OXY, Financial) is $48.63 with a high estimate of $63.11 and a low estimate of $38.00. The average target implies an upside of 22.09% from the current price of $39.83. More detailed estimate data can be found on the Occidental Petroleum Corp (OXY) Forecast page.
Based on the consensus recommendation from 27 brokerage firms, Occidental Petroleum Corp's (OXY, Financial) average brokerage recommendation is currently 2.8, indicating "Hold" status. The rating scale ranges from 1 to 5, where 1 signifies Strong Buy, and 5 denotes Sell.
Based on GuruFocus estimates, the estimated GF Value for Occidental Petroleum Corp (OXY, Financial) in one year is $55.38, suggesting a upside of 39.04% from the current price of $39.83. GF Value is GuruFocus' estimate of the fair value that the stock should be traded at. It is calculated based on the historical multiples the stock has traded at previously, as well as past business growth and the future estimates of the business' performance. More detailed data can be found on the Occidental Petroleum Corp (OXY) Summary page.
OXY Key Business Developments
Release Date: February 19, 2025
- Free Cash Flow: $4.9 billion generated in 2024.
- Common Dividends: Approximately $800 million paid, with a 22% increase in quarterly dividends.
- Debt Repayment: Achieved $4.5 billion debt repayment target seven months ahead of schedule.
- Capital Spend: $6.8 billion, at the low end of guidance.
- US Oil Production: Record annual production of 1.33 million BOE per day in 2024.
- Lease Operating Expenses: Reduced by approximately 9% per barrel.
- Well Costs: Lowered by roughly 12% across all unconventional basins.
- Proved Reserves: Increased to 4.6 billion BOE, highest in Oxy's history.
- Reserves Replacement Ratio: 230% all-in and 112% organic for 2024.
- OxyChem Pre-Tax Income: Over $1.1 billion in 2024.
- Fourth Quarter Free Cash Flow: $1.4 billion generated.
- Fourth Quarter Adjusted Income: $280 million for OxyChem.
- Global Production: 1.46 million BOE per day in Q4, setting a record for US quarterly production.
- Adjusted Profit: $0.80 per diluted share in Q4.
- Reported Loss: $0.32 per diluted share in Q4 due to environmental remediation liability.
- Unrestricted Cash: Over $2.1 billion at the end of Q4.
- 2025 Capital Plan: $7.4 billion to $7.6 billion, with a focus on short-cycle, high-return assets.
- 2025 Production Guidance: Approximately 1.42 million BOE per day.
- OxyChem 2025 Pre-Tax Income Guidance: Midpoint of $1 billion.
- Midstream Segment 2024 Performance: Surpassed guidance by approximately $600 million.
For the complete transcript of the earnings call, please refer to the full earnings call transcript.
Positive Points
- Occidental Petroleum Corp (OXY, Financial) generated $4.9 billion of free cash flow in 2024, enabling significant dividend payments and a 22% increase in quarterly dividends.
- The company achieved its near-term debt repayment target of $4.5 billion seven months ahead of schedule, improving its balance sheet.
- OXY achieved record total company production of 1.33 million BOE per day in 2024, exceeding the upper end of full-year guidance.
- The company increased its year-end proved reserve balance to 4.6 billion BOE, the highest in its history, with an all-in reserves replacement ratio of 230%.
- OxyChem outperformed expectations, achieving over $1.1 billion in pre-tax income in 2024, and the midstream segment also performed exceptionally well.
Negative Points
- Occidental Petroleum Corp (OXY) reported a loss of $0.32 per diluted share in Q4 2024 due to an increase in long-term environmental remediation liability.
- The company's 2025 capital plan is front-weighted, which may pose risks if market conditions change unfavorably.
- OxyChem's earnings are expected to decrease slightly in 2025 due to higher raw material costs and an oversupplied market in the first half of the year.
- Midstream earnings are expected to be slightly lower in 2025 due to reduced opportunities for gas transportation optimization.
- The company faces challenges in ramping up its STRATOS project, with minimal contribution expected in 2025 due to the timing and ramp-up period.
