The operator introduces the Occidental's Second Quarter 2024 Earnings Conference Call and hands it over to Jordan Tanner, Vice President of Investor Relations. Vicki Hollub, President and CEO of Occidental, highlights the company's strong operational performance in the second quarter and the recent acquisition of CrownRock's assets in the Midland Basin. She also mentions the progress of their strategic divestiture program, which will help meet their debt reduction targets.

In the second quarter, the company had strong operational performance and exceeded production expectations, resulting in $1.3 billion in free cash flow. They have achieved cost savings and efficiency gains in their unconventional well program and anticipate further improvements in the second half of the year. The company is also focused on secondary bench development and reducing lease operating expenses to improve cash margins.

The company's lease operating expenses decreased in the second quarter and they have more optimization initiatives planned for the second half of the year. They have also made progress in water stewardship and have confidence in meeting their production guidance for the year. The midstream business performed well in the second quarter and capitalized on market opportunities.

In the second half of the year, there may be fewer opportunities for optimization due to the Matterhorn pipeline being placed in service, but the company's teams will be prepared for any potential bottlenecks. The low carbon businesses are seeing growth, with a recent agreement with Microsoft for the sale of direct air capture credits. The integration of CrownRock into the company's portfolio is also expected to bring benefits, including high-margin production and potential for technical advancements and operational efficiencies through scale.

In the past few days, the combined teams of Oxy and CrownRock have been working on integrating the two companies. They are looking forward to discussing their enhanced portfolio and the progress of the integration. The acquisition of CrownRock has allowed Oxy to improve its existing portfolio and they have announced a divestiture program to monetize some of their assets. They have already closed or announced $1 billion of Permian Basin divestitures and plan to retire $3 billion of debt in the third quarter. Sunil will provide more details on the second quarter financial results, guidance, and progress on their strategic financial actions.

Oxy's acquisition of CrownRock's assets in the Midland Basin has allowed them to compete for capital and strengthen their balance sheet. They have successfully issued $5 billion in senior unsecured notes and plan to use their strong free cash flow and proceeds from divestitures to reduce debt by over $3 billion in the third quarter. They have also announced the sale of certain Delaware Basin assets for $818 million, which will result in a reduction of 15,000 BOE per day in fourth quarter Permian production.

In addition to the recent transaction, the company has completed several smaller divestments in the Permian, totaling $152 million. These divestments, along with excess cash flow, will be used to reduce the company's debt. The company is ahead of schedule on their debt reduction commitments and aims to reach a principal debt target of $15 billion or less. In the second quarter, the company generated a profit of $1.03 per diluted share and had $1.8 billion of unrestricted cash. The company's diversified business segments, strong production performance, and operational excellence contributed to these results. The company's capital spending in the second quarter was consistent with their business plan.

The company reported a negative working capital change in the second quarter due to higher oil volumes and increased barrel shipments. They provided pro forma guidance for the second half of the year, which includes the acquisition of CrownRock and excludes production from a Permian divestment. The company expects their total and Permian production to remain flat, but with the addition of CrownRock, their total production guidance has increased. They anticipate an improving production trajectory in all domestic assets, including the Gulf of Mexico, despite potential downtime due to tropical weather. Adding CrownRock to their portfolio is also expected to improve their operating costs and capital efficiency.

OxyChem's 2024 business is performing well, but economic conditions in China and deferred interest rate reductions have affected their trajectory for the year. They have revised their full year guidance and anticipate a strong third quarter. They are executing their 2024 capital program and maintaining their dividend and investment-grade credit rating. All three rating agencies have affirmed their credit rating.

The company is focused on their deleveraging strategy and plans to return at least $4.5 billion of debt before next August. They are off to a good start with their divestiture program and will continue to evaluate their assets for divestment opportunities to further reduce debt. The company is confident in their financial commitments and believes that their actions will benefit their portfolio, increase cash flow, and accelerate shareholder value. The CEO also highlights the company's strengths in subsurface expertise, operational excellence, and their newly acquired assets. They expect their chemical and midstream businesses to provide steady cash flow, and their leadership in decarbonization solutions will benefit shareholders in the long term. The call will now open for questions and the company's CFO and COO are available for the Q&A session.

During a conference call, Vicki Hollub and her team at the company discussed their progress in deleveraging and their recent asset sale announcement. When asked about the market for asset sales and their plans for future monetization, Hollub mentioned their strong portfolio and the need to maintain confidentiality in order to maximize value. She also mentioned their confidence in achieving their debt reduction targets and the potential for synergies from their recent CrownRock acquisition. More details will be provided in the next quarter.

The paragraph discusses the production profile and synergies associated with the acquisition of a 170,000 barrel a day asset. The team has had a week to look at the situation and they are excited about the assets. The team has found some additional details that differentiate from their initial expectations. They will have more updates at the end of the year. The team is currently working on understanding the 2024 plan and sees a lot of positives and potential upsides.

The company experienced some downtime due to weather and operational issues, but they are currently focused on optimizing returns through shallower zones. They see potential for improvement in well costs and performance, and are working on efficiency and water management to drive synergies with CrownRock. Development plans have been delayed, but the company remains optimistic about future opportunities.

The speaker is excited about the team and the opportunities they have. They recently signed an agreement with Microsoft for the STRATOS project, which is making good progress. They are also pleased with the progress of their carbon engineering R&D team, which is working on capturing and using CO2 from the air.

The company is focused on cost reduction and is seeing promising innovations in their development. They are closely monitoring CDR sales and will incorporate them into their FID criteria. Construction is on track and they are constantly learning and making improvements. They are also working with companies like Technip Energies to achieve cost down for their equipment.

The company has received strong support from their vendors and is expecting growth in the Rockies region. They have seen good performance in the DJ and Powder River basins and will be pausing activity in the second half of the year to rework their development plans for primary and secondary benches. They plan to have a new development plan in place by the end of the year to compete with capital in 2025.

The speaker is pleased with the steady activity in the DJ and is looking to make a competitive case for the Powder River basin in 2025. The next question from a shareholder is about the failed deal with Ecopetrol to purchase a 30% interest in CrownRock. The speaker explains that they believe CrownRock is one of the best assets they have seen and they wanted to purchase 100% of it, but had an agreement with Ecopetrol that gave them the right to purchase 49% of anything purchased in a certain area. The shareholder also asks about the potential impact on CapEx and production for next year, but the speaker says it is too early to determine.

The company wanted to purchase assets in the Midland Basin, and their partner, Ecopetrol, also wanted to be involved. After negotiations, they settled on a 30% working interest. However, the deal was ultimately rejected by Colombia's President Petro, who is against the oil and gas industry. The company's strategy of using CO2 for enhanced oil recovery was of interest to Ecopetrol.

The speaker discusses the Ecopetrol joint venture and the potential for the JV to end. If it does, the assets would be divided between the two companies. The speaker also mentions that the JV currently produces around 40,000 barrels a day. In response to a question about the CrownRock asset, the speaker states that the spending has been steady and that the production profile is strong. The net production for the Midland asset is clarified to be 40,000 barrels a day. The speaker is then asked about the expected cash flow from the asset sales, but does not provide a specific answer.

The company is still evaluating potential divestitures and cannot provide information on cash flow at this time. They are also working on developing their direct air capture program, with plans to expand after the STRATOS project is operational. They are in discussions with potential partners and licensees, and have made progress with their sequestration hubs in the Gulf Coast. The King Ranch hub is the next target for development, and has advantages in terms of scale and resources. The company is continuing to work on engineering for the subsurface and direct air capture in South Texas.

Roger Read asked about the company's plans for cash returns. The company mentioned during the presentation that they plan to pay down debt and then resume buying back shares and potentially retiring the preferred. Roger asked if they plan to continue buying back preferred shares or if they will focus on dividends and leave room for potential acquisitions.

Vicki Hollub discusses the company's acquisition and share repurchase plans, stating that they will resume buying back shares once their debt is reduced and it depends on the macroeconomic environment. She also mentions the possibility of buying back the Berkshire preferred if they are in a prolonged high-price environment. In regards to the midstream business and gas trading, Matterhorn is expected to start mid- to late quarter. Neal Dingmann asks about the company's activity with tiebacks in the Gulf of Mexico for the remainder of the year.

Vicki Hollub and Kenneth Dillon discuss the various opportunities in the Gulf of Mexico, including exploration, base operations, and waterflood projects. They mention the use of data analytics and AI to better understand the subsurface, recent discoveries, and upcoming projects. They also mention the completion of major turnarounds and the use of OFS services.

The speaker mentions that there has been an improvement in capital efficiency and well cost facilities due to the teams' efforts and engagement with service contractors. They have seen a 10% year-to-date decrease in well cost, which will continue to benefit them in the future. The supply chain for onshore U.S. is also seeing deflation, with a 10% decrease in drilling and completion costs and even higher decreases in OCTG. The contractors are also focused on improving efficiency and utilizing technology, which will benefit both parties. CrownRock's involvement in the Midland Basin will also bring value to the company.

David Deckelbaum from TD Cowen asks about CrownRock's progression into next year and whether there will be any changes in activity levels and capital expenditure. Vicki Hollub responds that they plan to keep the same activity level with CrownRock and potentially do more with less due to the combined capabilities of their teams. She also mentions that the divestment of Barilla Draw was due to lack of capital investment and their philosophy of divesting assets that do not compete for capital. Deckelbaum also asks about direct air capture and whether there is a wait-and-see approach among potential partners following the STRATOS project.

Vicki Hollub and Richard Jackson discuss the growing interest in STRATOS and the potential for strategic and capital partnerships. They plan to focus on proving the value and cost efficiency of STRATOS before pursuing partnerships. They are currently engaging with potential offtake partners and seeking future capital partnerships. The conference has now concluded.

This summary was generated with AI and may contain some inaccuracies.