Why Occidental Petroleum Stock Plunged 10% Today

2 months ago 24

Neha Chamaria, The Motley Fool

Thu, Apr 10, 2025, 10:22 AM 3 min read

Ironically, Occidental Petroleum conscionable revealed that it realized higher mean prices for lipid and state successful its archetypal 4th versus the 4th quarter, which is bully quality for the institution and its investors. Why did the banal past clang today? There are 3 things to support successful mind.

First, Occidental Petroleum's worldwide mean realized terms for crude lipid was $71.07 per tube successful Q1 versus $69.73 per tube successful the 4th quarter. Even better, its mean worldwide realized earthy state liquid prices jumped astir 19% sequentially, portion its mean realized home natural state terms surged astir 92% to $2.42 per 1000 cubic feet.

The occupation is, unless Occidental Petroleum accrued its accumulation successful Q1, the benefits of higher prices won't travel done its apical and bottommost lines. Unfortunately, I fishy debased production, fixed the harsh winter, works outages, and anemic drilling enactment successful Q4.

Second, though Occidental Petroleum realized higher prices implicit Q4, its year-over-year comparisons don't look good, since the lipid and state shaper realized $76.04 per tube for crude lipid worldwide successful Q1 2024.

Third, and the biggest crushed wherefore Occidental Petroleum shares plummeted today, were lipid prices. With the tariff warfare escalating betwixt the U.S. and China, prices of crude lipid dropped much than 3% this morning, with the West Texas Intermediate (WTI) plunging beneath the $60 mark.

While plunging lipid prices hurts astir each lipid and state producer, it's a bigger headwind for Occidental Petroleum, fixed its precocious indebtedness load. The institution mostly funded its $12 cardinal CrownRock acquisition with indebtedness past twelvemonth -- besides 1 of the biggest reasons wherefore Occidental banal slumped 17% successful 2024.

Occidental Petroleum, however, already repaid indebtedness worthy $4.5 cardinal successful indebtedness wrong months of the acquisition and expects to chopped indebtedness further successful 2025 utilizing its currency flows and proceeds from the merchantability of noncore assets. Meanwhile, CrownRock's Permian assets and Occidental's non-oil businesses should proceed to adhd much value.

The near-term thrust could beryllium bumpy, but this Warren Buffett-owned lipid banal looks similar a large bargain agelong term.

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