Latest news with #Occidental
Yahoo
28-05-2025
- Business
- Yahoo
Occidental Petroleum: Navigating Market Pressures with Berkshire's Backing
Warren Buffett's (Trades, Portfolio), Berkshire Hathaway has further increased its investment in Occidental Petroleum. The conglomerate now owns approximately 265 million shares, representing about 28.2% of Occidental's outstanding shares. Despite the increased stake, Buffett has indicated that Berkshire does not intend to take a controlling interest in Occidental. Warning! GuruFocus has detected 3 Warning Sign with OXY. Occidental's stock has faced challenges recently, declining approximately 21% from its 2025 peak of $53.20 to close at $42.16, with a low of $34.78 in the previous month. Despite these fluctuations, Berkshire's continued investment underscores its confidence in Occidental's long-term prospects. Berkshire Hathaway has become the largest shareholder in Occidental Petroleum. However, this partnership could not shield Occidental (NYSE:OXY) from a significant decline in its stock during the first quarter of 2025. Falling oil prices and the market shock triggered by a Trump-era event known as "Liberation Day," widely regarded as a grey swan event that disrupted global sentiment, further intensified the decline. Brent is still down nearly 13% year over year. Recent signs of economic recovery are partially driven by easing tensions and de-escalating the tariff conflict between the U.S. and China. For at least a few months, the two superpowers have been negotiating a trade agreement that may or may not be chart below illustrates OXY's notably poor performance compared to some of its competitors. OXY has declined by 33% year-over-year, a significant drop compared to ExxonMobil (NYSE:XOM). While negotiations between the U.S. and China are underway, the long-term effects on the global economy remain concerning. Warren Buffett (Trades, Portfolio) has steadily increased his stake in Occidental Petroleum since 2022. His involvement began in 2019 when Berkshire Hathaway invested $10 billion in Occidental in preferred stock with an 8% annual dividend, helping finance the company's acquisition of Anadarko Petroleum. Occidental ultimately outbid Chevron by offering $76 per share, surpassing Chevron's $65 per share proposala move widely viewed as overpaying. The deal's hefty price tag and high debt load pushed Occidental to the brink of financial distress in the following years. Today, Occidental's stock trades around $42.16, well below Anadarko's acquisition price, highlighting the deal's long-term cost. This analysis also excludes the impact of suspended or reduced dividends, further underscoring Occidental's financial strain Hathaway's investment in Occidental included high-yielding preferred shares and lucrative warrants, which likely played a key role in attracting Buffett's interest. While crossing the 20% ownership threshold often signals a potential takeover, Buffett has publicly stated he has no intention of acquiring the company outright. Instead, this is a strategic, long-term bet on the enduring importance of oil and gas. Despite the global shift toward renewable energy, Buffett seems confident that traditional energy sources will remain essential to the world economy for decades. When Warren Buffett (Trades, Portfolio) began investing in Occidental Petroleum, I took notice; who wouldn't? His track record speaks volumes. So, like many others, I followed his lead and purchased more shares. Fast forward 18 months, and here's the honest truth: Unfortunately, it hasn't paid off. OXY has experienced a significant decline from the price range where Buffett was buying, which was around $51 to $60+. It closed today at $41.13, meaning that anyone who followed his trades during that time is likely facing a sizeable loss. In contrast, the broader market has recovered from the liberation day effect. It can be difficult to accept that even one of the greatest investors in the world can make a wrong call, at least in the short term. There were valid reasons to be bullish: oil prices were strong, Buffett's stake suggested deep conviction, and OXY has some top-tier assets. But debt, environmental liabilities, and oil market volatility have weighed heavily. Lesson learned? Even the best make mistakes sometimes. While I still respect Buffett's long-term perspective, this experience reinforced a key rule for me: don't just follow the money, understand the business, the risks, and your own timeline. In the short term, oil prices are expected to experience moderate volatility, which may allow OXY to stabilize and regain some value lost recently. This volatility will be influenced by weak demand from China and ongoing global economic uncertainty while also being supported by geopolitical risks and OPEC+ supply management. Over the medium term, prices may trend higher due to years of underinvestment in production and sustained demand, even as the energy transition continues. U.S. oil production will likely be a stabilizing factor, although it will adopt a more disciplined growth approach. The market is projected to remain within the $65$85 range, with potential for upward movement if supply tightens unexpectedly. Occidental Petroleum Corporation (NYSE:OXY) is a prominent American oil and gas exploration and production company based in Houston, Texas. As one of the largest independent oil and natural gas companies in the United States, OXY operates in the U.S., the Middle East, and Latin America. This article updates my previous publication on GuruFocus from January 6, 2025. In 1Q25, Occidental Petroleum reported $6.843 billion in revenue, a 14% increase year-over-year. The revenue discussed comprises three main segments: the oil and gas segment, OxyChem (the chemical division), and the midstream and marketing division. Overall, these results exceeded market expectations. Below are the details presented in one chart: The oil and gas segment was the primary contributor to the 1Q25 financial results, generating $5.697 billion in revenue and $1.7 billion in pre-tax income fueled by a 19% increase in production and rising commodity prices. OxyChem, the chemical division, generated $1.246 billion in revenue and achieved a pre-tax income of $185 million, surpassing expectations despite facing challenges with pricing and costs. The midstream and marketing segment generated $203 million but reported a pre-tax loss of $77 million, mainly due to losses from derivatives. The company reported a positive free cash flow in 1Q25, which was significantly lower than I had anticipated. The free cash flow, calculated by subtracting capital expenditures from cash generated from operations, amounted to a disappointing $240 million in 1Q25. This figure marks the lowest free cash flow since 2021, as illustrated in the chart below. Nevertheless, OXY increased its quarterly dividend to $0.24 per share for 2025, reflecting a 9% rise from the $0.22 per share paid last year. According to the company's earnings release and financial statements for 1Q25, there were no share buybacks during this period. OXY calculates free cash flow using a different formula, reporting it as $1.155 billion, including "working capital and other." This approach is somewhat misleading, as it does not accurately represent the true free cash flow. Ultimately, deciding whom to trust on this issue is up to you. On a different note, EBITDA was $3.567 billion in 1Q25, 19.4% higher than reported in 1Q24. Cash from operations totaled $2.148 billion, while capital expenditures (CapEx) reached $1.908 billion. Despite the company's progress, Occidental Petroleum's debt situation is a significant concern. This issue is particularly troubling due to the recent decline in oil prices. The company's free cash flow has decreased to a level that hinders its ability to reduce its substantial debt burden effectively. As of 1Q25, the net debt was approximately $22.18 billion. However, during the quarter, Occidental repaid $2.3 billion of its debt, which was supported by asset sales following the acquisition of CrownRock LP in August 2024. The company's cash, cash equivalents, and marketable securities totaled $2.612 billion, while its long-term debt, including the current portion, stood at $24.787 billion. The upstream segment is the most significant part of the company, accounting for 83.3% of total revenue. This quarter, the company reported strong production results, with total oil equivalent production reaching 1,391K barrels of oil equivalent per day (Boepd). However, this represents a slight decline from 1,463K Boepd in the previous quarter. Specifically, U.S. oil equivalent production was 1,167K Boepd, down from 1,233K Boepd in the prior quarter. While this production level remains solid, it does show some signs of weakness, as illustrated in the graph below: In the first quarter of 2025, Occidental Petroleum reported domestic oil and gas operating costs of $9.05 per barrel of oil equivalent (BOE). This figure shows a slight improvement from the fourth quarter of 2024, when the LOE was $9.15 per BOE. The decrease in operating expenses is primarily due to the integration of CrownRock's assets, which include 1,700 new wells, 750 of which have breakeven costs below $40 per barrel. Furthermore, Occidental has reduced its drilling and completion costs by 12% compared to 2023, with an additional improvement of 7% expected by 2025. The US production breakdown by region was as follows: The Permian segment is the most productive, accounting for approximately 64.6% of U.S. production in 1Q25. However, the significant increase year-over-year came from the Rockies and the Gulf of America. In contrast, this quarter, international production reached 224K barrels of oil equivalent per day (Boepd). Additionally, oil production comprised 50.6% of the total production for this quarter. The company sold oil for $71.07 per barrel, a decrease from $76.04 last year. The price of natural gas liquids (NGL) increased to $25.94, up from $22.14 last year. Additionally, the company sold its (global) natural gas for $2.30 per thousand cubic feet (Mcf), compared to $1.68 last year. NGL and natural gas have seen significant year-over-year increases, while oil prices have remained stable around $72 per barrel. Note: The chart has been adjusted to account for the dividend. Occidental is currently trading within a descending channel pattern, with resistance at $48.75 and support at $41.10. With the relative strength index (RSI) at 47 descending, the retracement to the previously formed support level of about $41 is justified, and it may then bounce higher once again toward the 200-day moving average (200MA). The RSI, however, implies that OXY might exhibit additional weakness before being oversold, pointing to a potential breakdown if oil keeps declining. Please look at the chart above for more information. I recommend adopting a Last-In-First-Out (LIFO) strategy for 6070% of your position. Set your target price just below the 200-day moving average, around $48 to $50. Given the current level of uncertainty in the market, using a LIFO strategy for the majority of your investment is advisable. A descending channel is generally recognized as a bearish continuation pattern. It forms when the price consistently declines between two parallel downward-sloping lines: a resistance level and a support level. As I mentioned a few months ago, this pattern emerged from a descending trend, and we recently experienced a breakout. However, we now find ourselves in the opposite situation, where a potential breakdown may occur at the end of this new cycle. Making a decision right now is exceedingly difficult due to the high levels of volatility and unpredictability. Therefore, maintaining a healthy financial position at all times is wise. Taking profits above $48 gradually and aiming for a higher resistance level at $54 is a good trading strategy. Alternatively, if the anticipated breakdown pattern occurs, watch for a retreat between $41 and $39 to begin accumulating once more. Note: It is essential to frequently update the TA chart to remain relevant, as we operate in an extremely volatile environment. This article first appeared on GuruFocus.
Yahoo
28-05-2025
- Business
- Yahoo
Occidental Petroleum: Navigating Market Pressures with Berkshire's Backing
Warren Buffett's (Trades, Portfolio), Berkshire Hathaway has further increased its investment in Occidental Petroleum. The conglomerate now owns approximately 265 million shares, representing about 28.2% of Occidental's outstanding shares. Despite the increased stake, Buffett has indicated that Berkshire does not intend to take a controlling interest in Occidental. Warning! GuruFocus has detected 3 Warning Sign with OXY. Occidental's stock has faced challenges recently, declining approximately 21% from its 2025 peak of $53.20 to close at $42.16, with a low of $34.78 in the previous month. Despite these fluctuations, Berkshire's continued investment underscores its confidence in Occidental's long-term prospects. Berkshire Hathaway has become the largest shareholder in Occidental Petroleum. However, this partnership could not shield Occidental (NYSE:OXY) from a significant decline in its stock during the first quarter of 2025. Falling oil prices and the market shock triggered by a Trump-era event known as "Liberation Day," widely regarded as a grey swan event that disrupted global sentiment, further intensified the decline. Brent is still down nearly 13% year over year. Recent signs of economic recovery are partially driven by easing tensions and de-escalating the tariff conflict between the U.S. and China. For at least a few months, the two superpowers have been negotiating a trade agreement that may or may not be chart below illustrates OXY's notably poor performance compared to some of its competitors. OXY has declined by 33% year-over-year, a significant drop compared to ExxonMobil (NYSE:XOM). While negotiations between the U.S. and China are underway, the long-term effects on the global economy remain concerning. Warren Buffett (Trades, Portfolio) has steadily increased his stake in Occidental Petroleum since 2022. His involvement began in 2019 when Berkshire Hathaway invested $10 billion in Occidental in preferred stock with an 8% annual dividend, helping finance the company's acquisition of Anadarko Petroleum. Occidental ultimately outbid Chevron by offering $76 per share, surpassing Chevron's $65 per share proposala move widely viewed as overpaying. The deal's hefty price tag and high debt load pushed Occidental to the brink of financial distress in the following years. Today, Occidental's stock trades around $42.16, well below Anadarko's acquisition price, highlighting the deal's long-term cost. This analysis also excludes the impact of suspended or reduced dividends, further underscoring Occidental's financial strain Hathaway's investment in Occidental included high-yielding preferred shares and lucrative warrants, which likely played a key role in attracting Buffett's interest. While crossing the 20% ownership threshold often signals a potential takeover, Buffett has publicly stated he has no intention of acquiring the company outright. Instead, this is a strategic, long-term bet on the enduring importance of oil and gas. Despite the global shift toward renewable energy, Buffett seems confident that traditional energy sources will remain essential to the world economy for decades. When Warren Buffett (Trades, Portfolio) began investing in Occidental Petroleum, I took notice; who wouldn't? His track record speaks volumes. So, like many others, I followed his lead and purchased more shares. Fast forward 18 months, and here's the honest truth: Unfortunately, it hasn't paid off. OXY has experienced a significant decline from the price range where Buffett was buying, which was around $51 to $60+. It closed today at $41.13, meaning that anyone who followed his trades during that time is likely facing a sizeable loss. In contrast, the broader market has recovered from the liberation day effect. It can be difficult to accept that even one of the greatest investors in the world can make a wrong call, at least in the short term. There were valid reasons to be bullish: oil prices were strong, Buffett's stake suggested deep conviction, and OXY has some top-tier assets. But debt, environmental liabilities, and oil market volatility have weighed heavily. Lesson learned? Even the best make mistakes sometimes. While I still respect Buffett's long-term perspective, this experience reinforced a key rule for me: don't just follow the money, understand the business, the risks, and your own timeline. In the short term, oil prices are expected to experience moderate volatility, which may allow OXY to stabilize and regain some value lost recently. This volatility will be influenced by weak demand from China and ongoing global economic uncertainty while also being supported by geopolitical risks and OPEC+ supply management. Over the medium term, prices may trend higher due to years of underinvestment in production and sustained demand, even as the energy transition continues. U.S. oil production will likely be a stabilizing factor, although it will adopt a more disciplined growth approach. The market is projected to remain within the $65$85 range, with potential for upward movement if supply tightens unexpectedly. Occidental Petroleum Corporation (NYSE:OXY) is a prominent American oil and gas exploration and production company based in Houston, Texas. As one of the largest independent oil and natural gas companies in the United States, OXY operates in the U.S., the Middle East, and Latin America. This article updates my previous publication on GuruFocus from January 6, 2025. In 1Q25, Occidental Petroleum reported $6.843 billion in revenue, a 14% increase year-over-year. The revenue discussed comprises three main segments: the oil and gas segment, OxyChem (the chemical division), and the midstream and marketing division. Overall, these results exceeded market expectations. Below are the details presented in one chart: The oil and gas segment was the primary contributor to the 1Q25 financial results, generating $5.697 billion in revenue and $1.7 billion in pre-tax income fueled by a 19% increase in production and rising commodity prices. OxyChem, the chemical division, generated $1.246 billion in revenue and achieved a pre-tax income of $185 million, surpassing expectations despite facing challenges with pricing and costs. The midstream and marketing segment generated $203 million but reported a pre-tax loss of $77 million, mainly due to losses from derivatives. The company reported a positive free cash flow in 1Q25, which was significantly lower than I had anticipated. The free cash flow, calculated by subtracting capital expenditures from cash generated from operations, amounted to a disappointing $240 million in 1Q25. This figure marks the lowest free cash flow since 2021, as illustrated in the chart below. Nevertheless, OXY increased its quarterly dividend to $0.24 per share for 2025, reflecting a 9% rise from the $0.22 per share paid last year. According to the company's earnings release and financial statements for 1Q25, there were no share buybacks during this period. OXY calculates free cash flow using a different formula, reporting it as $1.155 billion, including "working capital and other." This approach is somewhat misleading, as it does not accurately represent the true free cash flow. Ultimately, deciding whom to trust on this issue is up to you. On a different note, EBITDA was $3.567 billion in 1Q25, 19.4% higher than reported in 1Q24. Cash from operations totaled $2.148 billion, while capital expenditures (CapEx) reached $1.908 billion. Despite the company's progress, Occidental Petroleum's debt situation is a significant concern. This issue is particularly troubling due to the recent decline in oil prices. The company's free cash flow has decreased to a level that hinders its ability to reduce its substantial debt burden effectively. As of 1Q25, the net debt was approximately $22.18 billion. However, during the quarter, Occidental repaid $2.3 billion of its debt, which was supported by asset sales following the acquisition of CrownRock LP in August 2024. The company's cash, cash equivalents, and marketable securities totaled $2.612 billion, while its long-term debt, including the current portion, stood at $24.787 billion. The upstream segment is the most significant part of the company, accounting for 83.3% of total revenue. This quarter, the company reported strong production results, with total oil equivalent production reaching 1,391K barrels of oil equivalent per day (Boepd). However, this represents a slight decline from 1,463K Boepd in the previous quarter. Specifically, U.S. oil equivalent production was 1,167K Boepd, down from 1,233K Boepd in the prior quarter. While this production level remains solid, it does show some signs of weakness, as illustrated in the graph below: In the first quarter of 2025, Occidental Petroleum reported domestic oil and gas operating costs of $9.05 per barrel of oil equivalent (BOE). This figure shows a slight improvement from the fourth quarter of 2024, when the LOE was $9.15 per BOE. The decrease in operating expenses is primarily due to the integration of CrownRock's assets, which include 1,700 new wells, 750 of which have breakeven costs below $40 per barrel. Furthermore, Occidental has reduced its drilling and completion costs by 12% compared to 2023, with an additional improvement of 7% expected by 2025. The US production breakdown by region was as follows: The Permian segment is the most productive, accounting for approximately 64.6% of U.S. production in 1Q25. However, the significant increase year-over-year came from the Rockies and the Gulf of America. In contrast, this quarter, international production reached 224K barrels of oil equivalent per day (Boepd). Additionally, oil production comprised 50.6% of the total production for this quarter. The company sold oil for $71.07 per barrel, a decrease from $76.04 last year. The price of natural gas liquids (NGL) increased to $25.94, up from $22.14 last year. Additionally, the company sold its (global) natural gas for $2.30 per thousand cubic feet (Mcf), compared to $1.68 last year. NGL and natural gas have seen significant year-over-year increases, while oil prices have remained stable around $72 per barrel. Note: The chart has been adjusted to account for the dividend. Occidental is currently trading within a descending channel pattern, with resistance at $48.75 and support at $41.10. With the relative strength index (RSI) at 47 descending, the retracement to the previously formed support level of about $41 is justified, and it may then bounce higher once again toward the 200-day moving average (200MA). The RSI, however, implies that OXY might exhibit additional weakness before being oversold, pointing to a potential breakdown if oil keeps declining. Please look at the chart above for more information. I recommend adopting a Last-In-First-Out (LIFO) strategy for 6070% of your position. Set your target price just below the 200-day moving average, around $48 to $50. Given the current level of uncertainty in the market, using a LIFO strategy for the majority of your investment is advisable. A descending channel is generally recognized as a bearish continuation pattern. It forms when the price consistently declines between two parallel downward-sloping lines: a resistance level and a support level. As I mentioned a few months ago, this pattern emerged from a descending trend, and we recently experienced a breakout. However, we now find ourselves in the opposite situation, where a potential breakdown may occur at the end of this new cycle. Making a decision right now is exceedingly difficult due to the high levels of volatility and unpredictability. Therefore, maintaining a healthy financial position at all times is wise. Taking profits above $48 gradually and aiming for a higher resistance level at $54 is a good trading strategy. Alternatively, if the anticipated breakdown pattern occurs, watch for a retreat between $41 and $39 to begin accumulating once more. Note: It is essential to frequently update the TA chart to remain relevant, as we operate in an extremely volatile environment. This article first appeared on GuruFocus. Error in retrieving data Sign in to access your portfolio Error in retrieving data Error in retrieving data Error in retrieving data Error in retrieving data
Yahoo
27-05-2025
- Business
- Yahoo
Big Oil Is Getting in the Way of Sound U.S. Energy Policy
Republican lawmakers are encountering a surprising source of opposition to reforming and rationalizing U.S. energy policy: Americas Big Oil companies. Before the dust had even settled on the 2024 national elections, CEOs at major oil companies from Occidental and Chevron to Exxon Mobil were laying down markers by warning about the need for continuity and certainty in climate policy. Many in Big Oil continue to recommend that the U.S. remain a party to the Paris Agreement despite the fact that many supporters of the accord openly pursue the goal of ending the very existence of American oil and gas companies. More recently, many of these same corporations have leapt to defend the 2022 Inflation Reduction Act (IRA), the massive spending bill signed into law by President Biden with its endless buffet of clean energy tax credits. The IRA was widely touted as the biggest "climate bill" in history and is now in the crosshairs for big cuts by the GOP-controlled Congress. In recent years, all the major oil companies have pursued plans to either diversify into lower-carbon energy businesses or lower their "carbon footprint." For example, Occidental is constructing its inaugural Direct Air Capture project in West Texas, where the company plans to scrub carbon dioxide out of the atmosphere, bury it and then sell "carbon credits" to other industries. Exxon Mobil is building its own carbon capture and sequestration (CCS) system on the Gulf Coast, along with a new hydrogen production facility in East Texas. Chevron is adding both CCS and hydrogen capacity and ramping up its biofuels volumes. Big Oil is making some big bets on green energy science projects, all of which have one thing in common: None are remotely close to economical without generous government subsidies. Hence the continuing support for federal handouts. All of this creates the obvious "moral hazard" challenge, especially at the scale of subsidies in play. This dynamic is visible at the state level too, even in Texas. Since 2021 when Winter Storm Uri shut down the states grid for days and killed hundreds of people, Texas legislators have been scrambling to fix the underlying problem: Massive subsidies have fueled unchecked growth in highly intermittent wind and solar power, leading to underinvestment in reliability. In the current legislative session, Texas Republicans have proposed new reliability standards for all ERCOT generators that would effectively force wind and solar plants - both planned and existing - to invest in back-up power from dispatchable fuel sources such as natural gas and coal. In short, the legislation seeks to simply ensure that wind and solar operators pay their fair share of the costs imposed on consumers to keep the grid reliable. The Texas Oil & Gas Association and the energy-dominated Texas Association of Manufacturers have both been lobbying to kill this commonsense bill because it would raise the cost of many of the renewable power purchase agreements signed by these groups members. One could be cynical and suspect the opponents are eager to retain their green PR images at the lowest cost possible. Major U.S. oil and gas companies are failing to read the room. The real costs of going green are increasingly impossible to hide. Public tolerance is evaporating for the unintended consequences of trying to force a transition away from abundant fossil fuels. Momentum has clearly shifted and theres been a change in the "direction of travel" in energy domains, to borrow a phrase favored by the International Energy Agency. For the past two decades, Big Oils climate strategy has focused on being the last man standing in a net-zero world. Voicing public support for costly energy policies (including carbon taxes) is a key part of this calculated bet. Given their deep financial pockets, oil majors can allocate billions of dollars of capital for green indulgences to curry favor with government regulators and sustainability-focused investors. Smaller and private energy businesses dont have that luxury and are also disproportionately impacted by onerous environmental rules. Increasing regulatory pressure on faster-growing independent energy companies helps to raise their cost of doing business, and it tamps down domestic production, which is "good" for commodity prices. One could, again, be cynical. Since most small domestic companies dont have the ability to shift operations overseas, higher costs weaken their balance sheets and make them potential acquisition targets for bigger players as the industry continues to consolidate. This wouldnt be the first time in history that larger companies have used other issues as proxies to gain competitive advantage. The old patterns of brass-knuckled market fights of days of yore are just as likely to be a feature of whats really happening as are claims of concern for the climate. Call it climate duplicity. We are at a critical juncture in Americas energy future. Big Oil needs to be on the right side of history to try to help restore sound energy policy in this country. Paul Tice is a senior fellow at the National Center for Energy Analytics and author of 'The Race to Zero: How ESG Investing Will Crater the Global Financial System.'
Yahoo
21-05-2025
- Business
- Yahoo
Occidental Petroleum Continues Working Toward Capturing This Potential $5 Trillion Future Market Opportunity
Occidental recently lined up a potential funding partner for its next carbon capture project. The oil company is an emerging leader in this potentially massive market. It's also working on commercializing the technology. 10 stocks we like better than Occidental Petroleum › Occidental Petroleum (NYSE: OXY) believes carbon capture and storage (CCS) will eventually become a massive market. The oil company estimates it could be a $3 trillion to $5 trillion global industry in the future. It's not alone in that view. Oil giant ExxonMobil (NYSE: XOM) estimates that there could be a $4 trillion market for capturing and storing carbon dioxide by 2050. Both oil companies are working toward capturing this potentially multitrillion-dollar market opportunity. Occidental recently signed a deal with a potential partner to develop what could be its next direct air capture (DAC) facility in Texas. The company's early leadership in carbon capture and storage puts it in a strong position to capture a meaningful portion of what looks like a massive opportunity. Occidental Petroleum and its subsidiary 1PointFive signed an agreement with XRG, the investment company of Abu Dhabi's ADNOC, to evaluate a joint venture to develop a DAC facility in South Texas. As part of the deal, XRG will consider investing up to $500 million into a facility that could capture 500,000 tonnes of carbon dioxide per year. The oil company noted that the announcement follows several significant milestones in developing DAC technology. That includes progress on constructing its first DAC facility in West Texas. The STRATOS facility is on track to begin commercial operations this year. That facility would also capture up to 500,000 tonnes of carbon dioxide per year. It's partnering with investment giant BlackRock, which agreed to invest $550 million into the project. Occidental was also awarded up to $650 million in funding from the U.S. Department of Energy to help support the development of its South Texas DAC hub. The initial 500,000-tonnes-per-year DAC facility would only be the beginning of this hub. The site has the potential to support up to 30 million metric tons of carbon dioxide removal each year through DAC facilities. Meanwhile, the site has about 165 square miles of acreage that has the potential to store up to 3 billion tonnes of carbon dioxide in underground saline formations. Occidental Petroleum has also been working to commercialize its DAC technology to make money from its investments. A major aspect of its strategy has been selling carbon removal credits to companies seeking to reduce their carbon footprints. For example, it signed an agreement with Microsoft last July to sell 500,000 metric tons of carbon dioxide removal credits over six years to support the technology giant's carbon removal strategy. That was the largest single purchase of carbon removal credits enabled by DAC technology. These credits will support Occidental's STRATOS DAC facility. The oil company has signed agreements to sell carbon credits to several other companies, including AT&T, Amazon, and TD. The oil company has also signed other commercial agreements related to carbon capture and storage. In 2022, the company signed an agreement with SK Trading International to supply it with up to 200,000 barrels of net-zero oil for five years. Occidental will inject about 100,000 tonnes of captured carbon dioxide into the ground, offsetting the entire lifecycle emissions of this crude oil -- that is, extraction, transportation, shipping, refining, and use. Occidental also recently signed a 25-year agreement with fertilizer maker CF Industries (NYSE: CF) to store 2.3 million metric tons of carbon dioxide per year at its Pelican Sequestration Hub in Louisiana. This agreement will support a low-carbon ammonia production facility that CF Industries and its joint venture partners are building in Louisiana. ExxonMobil signed two similar agreements with CF Industries in recent years. Last year, it agreed to transport and permanently store 500,000 metric tons per year of carbon dioxide captured at a complex in Mississippi, which will reduce the site's emissions by 50%. In 2022, Exxon signed a landmark commercial agreement with CF Industries to store up to 2 million tonnes per year from a facility in Louisiana. CF Industries is one of six commercial customers Exxon has lined up in recent years, representing 16 million tons of carbon dioxide per year. Occidental and Exxon believe these commercial agreements are only the beginning. Occidental thinks it could eventually make as much in earnings and cash flow from CCS as it currently does from oil and gas. Meanwhile, Exxon believes CCS could be a multibillion-dollar business for the company. Furthermore, given the long-term contracted nature of its CCS projects, the technology will help reduce its earnings volatility in the future. Occidental Petroleum continues to make progress in growing its CCS platform. It's working on lining up funding partners such as XRG and agreements to commercialize its DAC facilities and sequestration hubs. This strategy could create a lot of value for investors in the future if CCS grows as big as the company believes it will become. It makes Occidental a more compelling long-term investment opportunity in the oil patch. Before you buy stock in Occidental Petroleum, consider this: The Motley Fool Stock Advisor analyst team just identified what they believe are the for investors to buy now… and Occidental Petroleum wasn't one of them. The 10 stocks that made the cut could produce monster returns in the coming years. Consider when Netflix made this list on December 17, 2004... if you invested $1,000 at the time of our recommendation, you'd have $642,582!* Or when Nvidia made this list on April 15, 2005... if you invested $1,000 at the time of our recommendation, you'd have $829,879!* Now, it's worth noting Stock Advisor's total average return is 975% — a market-crushing outperformance compared to 172% for the S&P 500. Don't miss out on the latest top 10 list, available when you join . See the 10 stocks » *Stock Advisor returns as of May 19, 2025 John Mackey, former CEO of Whole Foods Market, an Amazon subsidiary, is a member of The Motley Fool's board of directors. Matt DiLallo has positions in Amazon. The Motley Fool has positions in and recommends Amazon and Microsoft. The Motley Fool recommends Occidental Petroleum and recommends the following options: long January 2026 $395 calls on Microsoft and short January 2026 $405 calls on Microsoft. The Motley Fool has a disclosure policy. Occidental Petroleum Continues Working Toward Capturing This Potential $5 Trillion Future Market Opportunity was originally published by The Motley Fool Sign in to access your portfolio
Khaleej Times
20-05-2025
- Business
- Khaleej Times
Adnoc deepens US energy ties with $60 billion deal
The US has pledged up to $60 billion in investments for UAE energy projects, reinforcing a strategic partnership announced during the UAE-US business dialogue with President Donald Trump. Adnoc, the UAE's state-owned energy giant, signed multiple agreements with US energy firms, bolstering the UAE's role as a global energy hub and a trusted investment destination. The deals include a landmark collaboration with ExxonMobil and INPEX/JODCO to expand the Upper Zakum offshore field, the world's second-largest of its kind, located 84km northwest of Abu Dhabi. The phased development will leverage AI and clean energy from the UAE's grid to boost production capacity while minimising emissions. Artificial islands will also be used to enhance environmental protection during drilling. Additionally, Adnoc and Occidental signed an agreement to explore increasing the Shah Gas field's capacity from 1.45 billion to 1.85 billion standard cubic feet per day, enabling more natural gas for domestic industries and LNG exports. Further expanding US-UAE ties, Abu Dhabi's Supreme Council for Financial and Economic Affairs awarded a new unconventional oil exploration concession to US-based EOG Resources for a 3,609-square-kilometre block in Al Dhafra. This marks the first such award to a US company, with Adnoc overseeing exploration and holding an option to join future production. The agreements align with Adnoc's global investment arm, XRG, prioritising the US market. XRG plans to expand investments in gas, LNG, specialty chemicals, and energy infrastructure across the American energy value chain. A notable framework agreement with Occidental's 1PointFive will evaluate XRG's potential investment in a Texas-based direct air capture project, capable of removing 500,000 tons of CO₂ annually, with XRG considering funding up to one-third of the development costs. Dr Sultan Al Jaber, Adnoc's managing director and UAE Minister of Industry, emphasised the shared commitment to energy security and market stability. 'These partnerships with US energy majors strengthen our bilateral ties and unlock sustainable value at the energy-AI nexus,' he said. The enterprise value of UAE energy investments in the US is projected to reach $440 billion by 2035, part of a $1.4 trillion investment plan. These initiatives underscore Abu Dhabi's attractiveness to global investors and its focus on sustainable energy innovation. By integrating advanced technologies and low-carbon solutions, the UAE aims to meet rising global demand while driving socioeconomic progress, further solidifying its position as a leader in the global energy landscape.
