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Investors tracking Occidental Petroleum are likely to focus on Feb. 18, when the company is scheduled to report its fourth-quarter and full-year earnings. The report could act as a near-term catalyst for the stock, but recent market moves suggest oil-price developments may matter more.
Occidental Petroleum reported its third-quarter results on Nov. 10. The company posted a strong quarter, with oil and gas output exceeding the high end of its guidance range, reaching nearly 1.5 million barrels of oil equivalent per day. Its midstream and marketing segment also delivered results above the high end of its guidance range.
Adjusted net income came in at $0.64 per share, beating analysts’ consensus estimate by $0.12 per share. The quarter benefited from higher commodity prices: the company sold oil at an average of $64.78 per barrel, up 2% from the prior quarter, and its average natural gas price was 11% higher than in the previous quarter.
Despite the earnings beat and strong operational performance, the stock response was muted immediately after the report. Shares dipped in the weeks following the earnings release before rising more than 10% in January, supported by higher oil prices and progress on the company’s strategic plan to enhance shareholder value.
In the fourth quarter, Occidental likely faced headwinds as oil prices declined by about 10% during the period, which would be expected to pressure earnings. That is reflected in the analysts’ consensus estimate of only $0.19 per share for the fourth quarter.
Even with expectations low, the company has a recent pattern of beating consensus. Occidental beat the consensus estimate for three straight quarters last year, largely attributed to strong operations. Based on that history, it could again outperform expectations in the fourth quarter.
While Occidental’s fourth-quarter earnings are expected to be lower due to weaker oil prices, the stock’s direction may be driven more by crude price moves than by the earnings number itself. The article notes that changes in oil prices are a more meaningful catalyst for Occidental in the current environment.
Crude prices have been rising this year, supported by the potential for supply disruptions related to Iran amid growing tensions with the U.S. If the U.S. were to take military action against Iran, crude prices could surge—potentially lifting Occidental’s stock as well.
Occidental’s Feb. 18 earnings report may bring another earnings beat, but a major stock move may be more closely tied to developments that affect oil prices—particularly any escalation involving Iran—than to the earnings result alone.
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