Occidental Petroleum To Gain From Focus On Permian Resources

Occidental Petroleum Corporation (NYSE:OXY) recently provided guidance for the fourth quarter and 2018 results.

Details of the Guidance

The company expects total production in the range of 655-659 thousand barrels of oil equivalent per day (Mboed). The company narrowed the view from the previous guidance of 655-659 Mboed that was provided after the third quarter of 2018. For the fourth quarter, total production is expected in the range of 690-709 thousand barrels of oil equivalent.

The company also expects 2018 Permian Resources production in the range of 211-213 Mboed and the same in the range of 240-250 Mboed in the fourth quarter. Production cost for domestic Oil & Gas is pegged at nearly $12.50/boe.

The company also expects 2018 exploration expenses to be nearly $135 million, which is lower than $150 million from the previous guidance. The company expects exploration expenses to total $70 million in the fourth quarter of 2018.

In the Midstream segment, pre-tax income is expected in the range of $450-$550 million. For 2018, the same is estimated in the range of $1,675-$1,775 million compared with the previous view of $1,650-$1,750 million for 2018.

Pre-tax income in the Chemical Segment is expected to be nearly $220 million in the fourth quarter and nearly $1,155 million in 2018. The previous guidance reflects $1,100 million Pre-tax income for 2018.

What’s Ahead

Occidental Petroleum's focus on the Permian Resources has proved beneficial. The company incurred capital expenditures worth $3.6 billion in the first nine months of 2018 compared with $2.4 billion in the year-ago period. Premium integrated assets drove long-term cash flow growth.

The company expects more than 5-8% production growth in the upcoming years. Occidental Petroleum is consistent at paying dividend, courtesy of strong performance on the back of constant growth in production and cash flow levels.

Price Movement

Shares of Occidental Petroleum have inched up 0.9%,higher than the industry’s 0.0%return in the past month.

Zacks Rank and Key Picks

Occidental Petroleum currently carries a Zacks Rank #3 (Hold).

You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.

A few better-ranked stocks in the same sector include Par Pacific Holdings, Inc. (NYSE:PARR) , EQT GP Holdings, LP (NYSE:EQGP) and TC PipeLines, LP (NYSE:TCP) , each carrying a Zacks Rank #2 (Buy).

Par Pacific Holdings delivered a positive surprise of 118.86% in the past four quarters. The Zacks Consensus Estimate for 2019 earnings moved up 82.6% in the past 60 days.

EQT GP Holdings delivered a positive surprise of 5.62% in the past four quarters. The Zacks Consensus Estimate for 2019 earnings inched up 0.7% in the past 60 days.

TC PipeLines delivered a positive surprise of 15.66% in the past four quarters. The Zacks Consensus Estimate for 2019 earnings moved up 5% in the past 60 days.

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