Occidental raises spending budget, delays direct air capture launch
HOUSTON, Feb 27 (Reuters) - U.S. oil producer Occidental Petroleum Corp on Monday said it would sharply raise spending this year, including on its direct air capture carbon-reduction project, which has been delayed to 2025.
The Houston-based company posted fourth-quarter profit below Wall Street estimates on lower energy prices and higher costs. The direct air capture (DAC) project is closely watched by investors as a potential moneymaker.
|
Advertisement: The National Gas Company of Trinidad and Tobago Limited (NGC) NGC’s HSSE strategy is reflective and supportive of the organisational vision to become a leader in the global energy business. |
Shares fell about 1% in after-hours trading after closing at $58.96.
Occidental, of which investor Warren Buffett's Berkshire Hathaway is a top shareholder, raised its quarterly dividend 38% to 18 cents per share and disclosed a $3 billion share buyback program.
The company had said it would prioritize debt payments and shareholder distribution over oil production growth. Last year, it paid off $10.5 billion in debt, or more than a third of the outstanding principal.
Occidental said it will raise capital spending this year to up to $6.2 billion, from $4.5 billion last year. The company said it is facing higher costs across its oil, chemicals and new energy business.
Spending on lower-carbon projects will at least double to $200 million this year and could hit $600 million depending on how much of its own cash will be required to finance a new business dedicated to capturing CO2 from the air and burying it underground.
Occidental plans to build dozens of DAC plants. The first large-scale DAC plant will be postponed to mid-2025, from late 2024 previously. The project is followed closely by the market as a test of the commercial viability of technology seen as key to combating global warming.
Occidental has been increasing production in the Permian, where it had reported 10-15% higher costs amid strong demand and supply chain constraints. Production in the U.S. top shale basin increased by 8% to 565,000 barrels of oil and gas per day in the fourth quarter.
The shale producer's adjusted per share earnings of $1.61 per share missed analysts' forecast for $1.80 per share, according to Refinitiv IBES. (Reporting by Sabrina Valle; Editing by Maju Samuel and Leslie Adler)