Occidental Petroleum had record net income of $12.5 billion in 2022 and generated a 28-percent return on capital, which was the highest return it had achieved since before 2005.
President-CEO Vikki Hollub said in Oxy’s recent fourth quarter 2022 report that her company also enjoyed record free cash flow before working capital of $13.6 billion.
“Our high-return Permian Basin production grew by 90,000 barrels of oil per day, propelled by outstanding well results, and we delivered our best year ever in Delaware Basin new well productivity.”
Hollub said Oxy’s Permian Basin reserves remain high. “With the depth and quality of our shale well inventory and two billion barrels of remaining potential in our Permian enhanced oil recovery business, we have the scale to continue our history of reserves replacement,” she said.
“The fourth quarter was a fitting way to wrap up a year of continued operational and financial success. We generated over $2.6 billion of free cash flow, which supported nearly $1.6 billion of balance sheet improvements.”
Hollub said her company’s December recapitalization of NET Power was significant because NET Power has “a technology that generates emission-free power generation and the potential to accelerate emissions reduction efforts in our existing operations and to supply electricity to our direct air capture plants and sequestration hubs.
“Ultimately NET Power could be an important emission-free power generator anywhere that has access to natural gas,” she said.
Hollub said 2022 saw record lateral lengths in the Delaware Basin west of Odessa and in Southeast New Mexico, the Denver-Julesberg Basin in Northeast Colorado and Southeast Wyoming, Oman and the Midland Basin east of Midland where Oxy’s Lulu 3641 DP well exceeded 18,000 feet in 12 days and became its longest lateral.
“With our debt from outstanding bonds down to less than $18 billion and consistent with our shareholder framework, we will shift our focus to share repurchases, dividend growth and a capital program that further strengthens our sustainability,” she said.
Chief Financial Officer Robert Peterson reported that Occidental Petroleum repaid over $10.5 billion of debt and retired all remaining interest rate swaps in 2022, “improving our credit metrics as we sought to regain investment-grade ratings,” he said.
“The completion of our $3-billion share repurchase program moved us closer to returning over $4 per share to our common shareholders, which will begin to trigger a redemption of the preferred equity,” Peterson said.
“Our fast-improved financial position, even compared to one year ago, will enable us to begin allocating a greater proportion of excess free cash flow to our shareholders in 2023.”
