Western Oil Surpasses Q2 Earnings Expectations Despite 20% Oil Price Drop

Western Oil (OXY.US) reported second-quarter earnings that surpassed expectations, despite a decline in oil prices. The company's revenue for the quarter ending June 30 reached $64.6 billion, exceeding analysts' expectations of $62.4 billion. Adjusted earnings per share stood at $0.39, significantly higher than the average analyst prediction of $0.29. The company's global average daily production reached 1.4 million barrels of oil equivalent, an approximately 11% increase from the same period last year.

This performance was driven by the company's production growth, which effectively offset the adverse impact of lower oil prices. The significant increase in natural gas prices provided additional support for the company's earnings. Natural gas prices doubled year-over-year to $1.33 per thousand cubic feet. However, the average realized oil price decreased by approximately 20% year-over-year to $63.76 per barrel. This was primarily due to a 20% year-over-year decline in the average price of Brent crude oil futures to around $70 per barrel during the second quarter, as well as the uncertainty caused by the tariff policies implemented by former U.S. President Trump, which suppressed global oil demand.

Western Oil has been proactive in managing its assets and debt. Since the beginning of the second quarter, the company has completed $9.5 billion in new asset divestment transactions, with $3.7 billion of these transactions already settled. As part of its asset divestment plan, the company agreed in July to sell part of its natural gas gathering assets in the Midland Basin to a subsidiary of Enterprise Products Partners for $5.8 billion. This energy company has repaid $30 billion in debt so far this year.

As a leading company in the U.S. shale oil sector, Western Oil has significant production capacity in the Permian Basin, DJ Basin, and the Gulf of Mexico. While continuing to strengthen its core traditional oil and gas production business, the company is also actively advancing its carbon management strategy. "Our outstanding performance in the second quarter demonstrates the operational strength of our diversified asset portfolio," said a company executive. "While pursuing operational excellence, we are steadily advancing our dual-track strategy of developing traditional energy and low-carbon businesses."

Looking ahead, Western Oil also stated that it will reduce the midpoint of its annual capital expenditure forecast by $1 billion and cut international operating costs by $50 million. This strategic move is aimed at enhancing the company's financial flexibility and ensuring sustainable growth in the face of market uncertainties. The company's proactive approach to asset management and debt reduction, coupled with its commitment to operational excellence and strategic diversification, positions it well to navigate the challenges of the energy sector and capitalize on emerging opportunities.