Patrick Smith’s Post

Occidental Petroleum (Oxy) is set to release its Q1 2024 figures after the market closes on 7/May (Tuesday).  The oil company’s revenue and earnings are expected to fall in Q1, a trend seen across the industry due to falling oil and gas prices. Revenue is anticipated to drop by 6.6% QoQ and 7.3% YoY to USD 6.7 billion, with an estimated EPS of USD 0.58, indicating a 21.6% QoQ and 46.8% YoY decline. The company has gained popularity, largely due to Warren Buffett's interest. Berkshire Hathaway currently owns 28% of Oxy's outstanding shares. Other than Buffett’s bullish outlook for the firm, it has other things going for it that piqued investor attention. For instance, its lower-carbon energy solutions platform, Oxy Low Carbon Ventures. The company plans to invest USD 600 million this year to develop and expand the capabilities and operations of its low-carbon energy solutions platform. Oxy also formed a joint venture with BlackRock, focusing on providing lower-carbon energy solutions. BlackRock will fund USD 550 million (50%) of STRATOS' development costs. Oxy anticipates the carbon capture and sequestration industry to become a USD 3 trillion to USD 5 trillion global industry in the coming decades. Coming to its oil and gas operations, Oxy agreed to acquire CrownRock Minerals, LP for USD 12 billion last year, aimed at strengthening its position in the Permian Basin. However, regulatory delays have pushed the deal's closure to Q2 2024 from the expected Q1 2024. Oxy expects to increase its annual free cash flow by USD 1 billion within the first year of acquiring CrownRock Minerals, LP, based on an assumed oil price of USD 70 per barrel (its price point at the time of the deal). With crude oil now above USD 80 per barrel, the acquisition could potentially generate even higher cash flow. The company's debt, standing at USD 18.5 billion at the end of 2023, is another area of focus. It aims to reduce its debt by USD 4.5 billion by the end of 2024, primarily through asset sales and increased cash flow.

"Occidental Petroleum Corp. has reported $718 million in net income for the first quarter, down by $265 million compared to the same three-month period a year ago due to weaker global oil prices and lower domestic petroleum volumes. Despite the fall, which becomes steeper by prior-quarter comparison, the Warren Buffet-backed integrated energy company beat the Zacks Consensus Estimate of earnings per share by 16.1 percent, helped by lower lease operating costs in the United States." #OXY #Upstream

ExxonMobil beat analysts’ estimates as higher oil production from the US Permian Basin helped cushion a drop in crude prices and tightening refining margins. Exxon earned $1.92 a share in the third quarter, more than the $1.87 median estimate among analysts surveyed by Bloomberg. Chevron and Shell also turned in better-than-expected performances. #EnergyConnects #energynews #energyindustry #news #oott #oilandgasindustry

Ecopetrol Pulls Out Of Deal to Buy Oxy’s CrownRock Minerals, LP Assets Occidental Petroleum has disclosed that Colombia’s Ecopetrol S.A. has pulled out of a deal to buy a 30% stake in Occidental’s CrownRock assets. Last year, Occidental announced a deal to acquire CrownRock and its significant Permian Basin assets in a cash and stock deal valued at ~$12B. In May, Occidental reaffirmed plans to sell $4.5B-$6B of CrownRock assets within 18 months of closing the purchase, set to be completed by August. Occidental hoped to use part of the proceeds from the Ecopetrol deal to pay down debt, which had ballooned to $18B at the end of Q1. https://lnkd.in/e-dCWStr

U.S. oil production was supposed to pick up in the second half of the year. And yet the U.S. is currently producing as much oil as it was the second week of January. 13.3 million bpd. A level of oil production first hit in 2023. Not looking good for that second half bump. Will $70 oil help with this? Unlikely. Check these numbers from S&P Global: “Pioneer currently has roughly 5,706 wells in the Midland Basin, with the bulk of those high quality, with breakevens ranging from $60.15/b to $71.71/b. ExxonMobil has roughly 1,907 wells in the Midland. The bulk of those have breakevens ranging from $67.84/b to $84.05/b.” https://lnkd.in/gcMXCXES $70 oil now also doesn't look good for increased production in 2025, even though the industry wants you to believe Permian shale oil is profitable at $30 a barrel.

Nice Article by Dylan Lucas which explains the cost effects to gas and oil when we install more renewables and move to more efficient energy electrical energy use. Personally, I’ve lived in a society completely manipulate by the oil and gas Giants in all what we do and I hope to see soo. that this can be liberated. Next steps is to be self sufficient with renewables and work in local microgrids which will remove also the need of energy traders taking their cut.

As the world reaches abundance, where developed nations increase energy efficiency and decrease their energy needs, we are reaching a peak with China being the capstone. As China installs more and more solar, and build more and more electric vehicles they reduce their oil imports as well as oil imports for any country that uses solar and EVs. This reduces global demand for oil and the price falls. As the price falls, wells become less economical. Why spend $100 to get an $80 product? Who is paying to subsidize that extraction? This is where global peak oil comes from. Not because we ran out of oil. But because it was more economical to not go and get it. From the fossil fuel perspective they are being crunched on both sides. The ceiling price is synthetics made from negative electricity prices, waste to methane made from landfills, and biological farming waste sources are the high price cap currently. And those prices are decreasing as our need to manage waste increases and technology efficiency increases. But more effectively we are seeing electrification replacing their need with heat pumps and EVs and solar panels, for heat transportation and on the electricity grid. This is because electricity is lower cost and anyone who switches is investing in saving future money, even if it isn’t cheaper today. And as more energy burden is switched from fuel to higher systemic efficiency electric, the ripple effects will cut the demand even faster. For example the energy to run the drill, the exploration team’s equipment, the tanker, the offshore drilling platform, the steel pipeline manufacturer, the gas station refuel truck. All of those needs disappear. So with China’s demand for oil retreating, and their exports are able to lower demand around the globe, and alternatives from other oil importing nations learn to make alternatives cheaper than importing, we will see the tail end of the bull whip as an oil exporting country. We have migrated our oil to developing nations who need it, but the number of customers is shrinking as each country hits their development milestone of no oil imports needed. Look to the UK who after 100 years will no longer need coal. Next to follow is gasoline for cars, and then natural gas for everything else. Will there still be some uses? Yes. But nowhere near as economical as electric. Because as you use up a single time use resource it gets more expensive as you have to scrape the bottom of the barrel, after picking the lowest hanging fruit. But a technology decreases in price as we deploy. And by 2030 there will be virtually nowhere in the world where solar isn’t the cheapest energy resource.

𝐁𝐞𝐫𝐤𝐬𝐡𝐢𝐫𝐞 𝐇𝐚𝐭𝐡𝐚𝐰𝐚𝐲 𝐁𝐨𝐨𝐬𝐭𝐬 𝐒𝐭𝐚𝐤𝐞 𝐢𝐧 𝐎𝐜𝐜𝐢𝐝𝐞𝐧𝐭𝐚𝐥 𝐏𝐞𝐭𝐫𝐨𝐥𝐞𝐮𝐦 𝐭𝐨 𝐍𝐞𝐚𝐫𝐥𝐲 29% Billionaire Warren Buffett's Berkshire Hathaway Inc. has increased its investment in Oxy Petroleum, acquiring another 2.95 million shares. 𝑯𝒆𝒓𝒆'𝒔 𝒘𝒉𝒂𝒕 𝒚𝒐𝒖 𝒏𝒆𝒆𝒅 𝒕𝒐 𝒌𝒏𝒐𝒘: 1. 𝙉𝙚𝙬 𝙎𝙩𝙖𝙠𝙚 𝘿𝙚𝙩𝙖𝙞𝙡𝙨 Berkshire Hathaway now holds approximately 255.3 million shares, nearly 29% of Occidental's common stock, which is valued at around $15.37 billion. 2. 𝙍𝙚𝙘𝙚𝙣𝙩 𝙋𝙪𝙧𝙘𝙝𝙖𝙨𝙚𝙨 Berkshire paid about $176 million for the new shares in three separate purchases since last Thursday. 3. 𝙍𝙚𝙜𝙪𝙡𝙖𝙩𝙤𝙧𝙮 𝘼𝙥𝙥𝙧𝙤𝙫𝙖𝙡 In August 2022, Berkshire received U.S. regulatory approval to buy up to 50% of Occidental. However, Buffett stated that he had no plans to acquire the company entirely. 4. 𝙎𝙩𝙧𝙖𝙩𝙚𝙜𝙞𝙘 𝙄𝙢𝙥𝙡𝙞𝙘𝙖𝙩𝙞𝙤𝙣𝙨 An acquisition could diversify Berkshire's energy portfolio, including utilities, electricity distributors, and renewable power projects. 5. 𝙊𝙘𝙘𝙞𝙙𝙚𝙣𝙩𝙖𝙡'𝙨 𝙍𝙚𝙘𝙚𝙣𝙩 𝙈𝙤𝙫𝙚𝙨 Last year, Occidental acquired Permian shale oil producer CrownRock Minerals, LP for $12 billion, strengthening its position in the largest U.S. oilfield. 6. 𝙈𝙖𝙧𝙠𝙚𝙩 𝙍𝙚𝙖𝙘𝙩𝙞𝙤𝙣 Occidental shares have seen a marginal increase this year and were up slightly in premarket trading on Tuesday. 𝑾𝒉𝒂𝒕 𝒅𝒐𝒆𝒔 𝒕𝒉𝒊𝒔 𝒎𝒆𝒂𝒏 𝒇𝒐𝒓 𝒊𝒏𝒗𝒆𝒔𝒕𝒐𝒓𝒔? Buffett's continued investment in Occidental Petroleum highlights confidence in the company's future and the broader energy sector. P.S. Repost this update for your network ♻️ Thank you! https://lnkd.in/gRtG96pp

Occidental Petroleum's stock recently declined by 1.42%, underperforming the broader market and losing 10.56% over the past month. Analysts project a 16.95% drop in EPS for the upcoming quarter, while revenue is expected to rise by 5.18%. With a Zacks Rank of #3 (Hold) and a forward P/E ratio below the industry average, Occidental is trading at a discount, though analysts' sentiment is mixed. https://lnkd.in/gi2Jgnfi

OIL: From Uninvestible to Must Own Intriguing article - Natural Resource Investors Commentary from Goehring & Rozencwajg Associates, LLC Premise: The oil market is on the brink of a transformation similar to the uranium market a year ago, shifting from uninvestible to must-own. For the first time, oil has entered a structural deficit, with demand outpacing production since 2021. This shortage was temporarily masked by massive releases from government strategic reserves, but with the US halting its SPR releases, oil prices have begun to rally. Key points: • Inventories have dropped by 800 million barrels over the last three years, marking the sharpest decline in oil market history. • Despite past skepticism, oil assets are now seen as the must-own asset class of the decade, with mineral and royalty ownership appreciating significantly. • Major acquisitions by Exxon and Chevron signal a shift in the industry, highlighting the scarcity of prime undrilled acreage. • Their analysis indicates that the Permian basin, the last stronghold of US shale oil, is nearing its peak production, pointing to an era of unprecedented tightness in global oil markets. Their summary? - *** Investing in oil requires a contrarian outlook and resilience, but the potential rewards are substantial. The public market may be hesitant, but true industry insiders are advocating for oil assets, signaling a significant opportunity for those willing to take the risk. See their article: https://lnkd.in/gSTPy4Ch 02/27/2024 Visit CAYLER CAPITAL CAPITAL and our Data Room at CaylerCapital.com for more info about our Systematic-Fundamental, Relative-Value, uncorrelated Oil/Products program.   #oil #CTA #hedgefunds #investing #commodities Trading commodity futures & options is speculative, involves risk, and is not suitable for all investors. The Cayler Capital Energy Program is only available to Qualified Eligible Persons (“QEP”), as defined by CFTC regulation 4.7. This is NOT an offer or solicitation.