Occidental Petroleum Posts $8.4 Billion Loss in 2Q Amid Oil Price Crisis

Occidental Petroleum posted a $8.35 billion loss in the second quarter as the U.S. oil producer grapples with lower energy demand and the steep drop in fuel prices amid the coronavirus pandemic.

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The net loss of $8.35 billion, or $9.12 per share, in the quarter, compared with earnings of $635 million, or 84 cents per share, in the year-earlier period. Adjusted loss per share was $1.76 missing analysts’ expectations of $1.68. During the reported quarter, average worldwide realized crude oil prices plunged 51% from the prior quarter to $23.17 per barrel.

In addition, Occidental Petroleum (OXY) reported a $6.6 billion writedown in the second quarter including a $5.2 billion charge for oil and gas operations and $1.4 billion impairment for discontinued operations.

“We continue to make progress on our debt structure and have significantly exceeded our cost savings targets while delivering operational excellence across our business,” said Occidental Petroleum CEO Vicki Hollub. “These decisive financial and operational actions reflect our leadership as a low-cost operator, positioning us for success when market conditions improve.”

Looking ahead, the largest onshore U.S. oil producer expects oil and gas production in the third quarter to drop by 13% from the previous quarter, and another 5% in the fourth quarter, to 1.16 million barrels of oil and gas per day. In the Permian basin, Occidental Petroleum estimates that shale output will decline 37% this year, even with significant operating cost reductions, the company said.

Occidental Petroleum shares have been hit hard as the stock plunged 60% so far this year. Meanwhile, the $18.58 analyst average price target implies 13% upside potential over the coming year.

Credit Suisse analyst William Janela this month re-initiated coverage of Occidental Petroleum with a Sell rating and a $8 price target (51% downside potential). The rest of the Street is sidelined on the stock with a Hold consensus, which breaks down into 6 Holds, 6 Sells, and 4 Buys. (See OXY stock analysis on TipRanks)