*
Occidental misses Q4 profit estimate as inflation hits
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Quarterly dividend increased about 38% to 18 cents per
share
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Signature carbon reduction project launch delayed to
mid-2025
(Recasts lead with spending on carbon reduction program; adds
2023 guidance)
By Sabrina Valle
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.
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)
