Warren Buffett's Favorite Energy Stock Occidental Petroleum Achieves Near-Term Debt Reduction Target 7 Months Early In Q4: Management Sets $1.2 Billion Target For Q1

Despite reporting a mixed fourth quarter, Occidental Petroleum Corp. OXY reduced its near-term debt seven months ahead of schedule during the period. The company also set an ambitious target of further debt reduction during the first quarter of 2025.

What Happened: The president and CEO of Occidental Petroleum, Vicki Hollub highlighted that the company achieved its near-term debt repayment target of $4.5 billion, seven months early “through a combination of asset sales and organic cash flow.”

Senior VP and CFO, Sunil Mathew said, "We are continuing this momentum into 2025 and announced $1.2 billion in divestitures in the first quarter."

Looking ahead to 2025, CEO Hollub outlined a strategy centered on financial discipline, mirroring 2024’s focus. The primary objectives are "to continue our deleveraging progress from last year and deliver sustainable dividend growth."

Why It Matters: Occidental reported fourth-quarter earnings of $0.80 per share, exceeding analyst estimates of $0.70 and up from $0.74 year-over-year. Revenue, however, fell short at $6.83 billion versus an expected $7.05 billion and was down from $7.52 billion last year. Production surpassed guidance, and the company increased its quarterly dividend by 9% to $0.24 per share.

In 2024, OxyChem achieved record total company production, reaching 1.33 million barrels of oil equivalent (BOE) per day. This figure also represented the company’s highest annual U.S. oil production, and it surpassed the upper limit of their projected full-year output.

Talking about the guidance, CFO Mathew anticipated a lower first-half production, followed by a second-half ramp-up. OxyChem’s full-year pre-tax income is projected at $1 billion, reflecting a slight decrease.

Price Action: OxyChem rose 4.40% on Wednesday and advanced further by 0.39% during after-hours trading, contrasting with a slight 0.24% uptick in the SPDR S&P 500 ETF Trust SPY, which tracks the Nasdaq 100 index. OXY remains up 4.84% on a year-to-date basis and 23.39% over a year.

Benzinga tracks 22 analysts with an average price target of $62.1 for the stock, reflecting a "sell" rating. Estimates range widely from $45 to $78. Recent ratings from Stephens & Co., Goldman Sachs, and Truist Securities average $58, suggesting a potential 13.30% upside.