Occidental Petroleum Corp, a U.S. oil and gas producer, reported a 48% decline in its first-quarter earnings due to a decrease in global energy prices caused by concerns over the health of the global economy. The company's crude oil sold for 19% less than the year-ago quarter, averaging $74.22 per barrel. Despite an increase in first-quarter oil and gas daily output to 1.22 million barrels from 1.08 million a year earlier, the company's adjusted income dropped 48% from the prior year to $1.1 billion. Adjusted earnings of $1.09 per share for the quarter fell far short of analysts' $1.24 per share estimate compiled by Refinitiv.
Berkshire Hathaway Inc, owned by billionaire investor Warren Buffett, holds a 24% stake in the company. Occidental almost doubled capital spending in the quarter from a year earlier to $1.5 billion, and cash flow from operations before working capital fell 24% to $3.2 billion. The company increased its year-end production guidance by 20,000 barrels of oil and gas to 1.22 million barrels per day.
In the quarter, the company repurchased $752 million of common stock, accounting for over 25% of its $3 billion annual repurchase program, and triggered the redemption of $647 million of preferred stock. Brent crude averaged $82 a barrel in the quarter, about 20% lower than year-ago levels as concerns rose over the health of the global economy amid the recent banking crisis in the U.S. and China's weaker-than-estimated economic recovery. Average domestic realized gas prices decreased by approximately 32% from the prior quarter to $3.01 per million cubic feet.
Despite the decline in earnings, Buffett stated on Saturday that Berkshire Hathaway was not planning to acquire Occidental but remained happy with its large investment in the oil company.
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