Occidental Petroleum (NYSE: OXY) continues to demonstrate strong capital efficiency and operational performance in its U.S. oil & gas operations. The company’s latest 4Q 2024 earnings report highlights record-breaking production, strategic cost control, and robust reserves replacement, reinforcing OXY’s position as a leading low-cost operator in the industry.
Record U.S. Production with Optimized Costs
One of the standout achievements for OXY in the fourth quarter was record U.S. production, hitting 1,233 thousand barrels of oil equivalent per day (Mboed). The Permian and DJ Basins were the primary drivers behind this surge, with improved well completions and enhanced recovery techniques playing a key role.
Despite lower oil prices, Occidental successfully navigated the market by keeping its production costs low. The company’s realized crude oil price averaged $69.73 per barrel, down 7% from the third quarter of 2024. However, OXY offset this with higher efficiency in drilling and completions, ensuring that production growth remained strong while capital expenditures stayed disciplined.
Capital Efficiency and Free Cash Flow Growth
OXY’s ability to generate strong cash flow while maintaining cost discipline was evident in the fourth quarter:
- Operating cash flow: $3.6 billion
- Free cash flow before working capital: $1.4 billion
- Capital expenditures: $1.8 billion
The company’s focus on lean operations and disciplined investment allowed it to maintain production growth while keeping costs under control. This efficiency translated into meeting and exceeding production guidance, with U.S. output surpassing expectations by 13 Mboed.
Strong Reserves Replacement Ensures Long-Term Efficiency
OXY’s reserves replacement metrics further underscore its long-term operational efficiency:
- Reserves Replacement – All-In: 230%
- Reserves Replacement – Organic: 112%
- Proved Reserves Growth: Increased to 4.6 billion BOE, driven by key acquisitions and discoveries.
The company’s acquisition of CrownRock added 623 million BOE to its reserves, while additional extensions and discoveries in the Permian Basin contributed another 326 million BOE. This strong reserves replacement rate ensures that OXY is not just sustaining current production but actively positioning itself for future growth.
CEO Commentary on Operational Excellence
OXY’s President and CEO, Vicki Hollub, emphasized the company’s commitment to efficiency and sustainable operations:
“Our teams continued to demonstrate industry-leading performance during the fourth quarter of 2024, outperforming guidance across all three segments and delivering record U.S. production while improving our capital efficiency.”
By prioritizing financial discipline, production optimization, and high reserves replacement, OXY has reinforced its reputation as a low-cost producer with a sustainable long-term strategy in U.S. oil & gas operations.
Looking Ahead: What’s Next for OXY’s U.S. Operations?
Occidental Petroleum’s focus on efficiency, free cash flow generation, and disciplined capital spending will remain key themes heading into 2025. As the industry continues to navigate oil price fluctuations, OXY’s ability to maximize output while minimizing costs will keep it ahead of competitors.
With its record production, low-cost operations, and robust reserves base, Occidental Petroleum is well-positioned for long-term success in the U.S. oil & gas sector.
