Key facts
- Occidental Petroleum's average realized oil prices increased by 38.4% in the second quarter compared to the first quarter.
- Higher benchmark crude rates, influenced by Middle East conflict and supply disruptions through the Strait of Hormuz, drove the price increase.
- Benchmark Brent crude averaged $96.68 per barrel in the second quarter.
- Occidental's realized oil price in the second quarter was $96.78 per barrel.
- Occidental's realized natural gas prices averaged negative 80 cents per million cubic feet in the second quarter.
- Occidental's realized natural gas liquids prices rose nearly 30% to $24.64 per barrel in the second quarter.
Occidental Petroleum reported a significant increase in its average realized oil prices for the second quarter, with a 38.4% rise compared to the previous three months. This surge was attributed to higher benchmark crude rates, exacerbated by geopolitical risk premiums and supply disruptions in the Middle East due to the ongoing conflict involving Iran. Benchmark Brent crude saw its average closing price climb to $96.68 per barrel in the April-June quarter, a 23% increase from the first quarter. Occidental's worldwide average realized oil price reached $96.78 per barrel during the same period.
In contrast, the company's realized natural gas prices averaged negative 80 cents per million cubic feet in the second quarter, a shift from positive $1.20 per mcf in the prior quarter. However, realized natural gas liquids prices saw a nearly 30% increase, reaching $24.64 per barrel from $18.99 per barrel in the preceding three months.
The conflict, which has led to disruptions in oil supplies through the Strait of Hormuz, has driven Brent oil prices from below $80 a barrel to over $100. Occidental Petroleum's stock has seen a gain of over 9% since the conflict began, though its year-to-date stock performance of approximately 40% has underperformed the surge in crude prices. Investors are reportedly concerned that oil prices may not remain elevated long-term, with efforts underway to secure shipping lanes and release emergency oil stockpiles.
Despite market uncertainties, Occidental plans to spend $5.7 billion on capital projects this year and expects to generate over $1.2 billion in incremental free cash flow. Earlier in the year, Occidental reported a 1.6% year-on-year decrease in realized oil prices for the first quarter, even as benchmark crude rates rose amid Middle East tensions. In that quarter, Brent crude averaged $89.62 per barrel, and Occidental's realized oil price was $69.91 per barrel.