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Occidental Petroleum posts $3.6 bln profit, resumes buybacks

By Reuters_News

20:24, 2 August 2022

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A file photo of he Occidental Petroleum Corp headquarters is pictured in Los Angeles, California September 16, 2013.
A file photo of he Occidental Petroleum Corp headquarters is pictured in Los Angeles, California September 16, 2013.

By Sabrina Valle

- Occidental Petroleum Corp OXY.N posted a rise in second-quarter profit, paid down debt and resumed a buyback program as the U.S. producer benefited from higher crude prices.

The company's net earnings attributable to common stockholders were $3.6 billion, or $3.47 per share, in the second quarter, compared with a $97 million loss, or $0.10 per share, in the same period last year.

The company reduced its gains from the first quarter, when it posted $4.7 billion in profits, or $4.65 per share.

Occidental has recovered from loading up on debt to buy Anadarko Petroleum for $35.7 billion just before COVID-19 pandemic cratered oil demand. It paid down almost $5 billion in debt and achieved its internal deleveraging goal, opening the door for a $3 billion share repurchase program to begin.

Occidental repurchased $1.1 billion through Aug. 1, it said.

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The U.S. producer said Warren Buffett's Berkshire Hathaway Inc BRKa.N has now a 19.5% stake in Occidental, below the threshold where it could record some of the oil company's earnings with its own. .

If it reached 20% ownership, Berkshire could potentially report its proportionate share of Houston-based Occidental's earnings through the so-called equity method of accounting, potentially adding billions of dollars to annual profit.

The company's share price has more than doubled this year to $65.06 on Tuesday, with the company benefiting from rising oil prices following Russia's invasion of Ukraine.

The rally made some investment firms, including Goldman Sachs, in the past weeks downgrade the company recommendation, saying its potential for cash generation is already reflected in the price.

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The difference between trading assets and CFDs
The main difference between CFD trading and trading assets, such as commodities and stocks, is that you don’t own the underlying asset when you trade on a CFD.
You can still benefit if the market moves in your favour, or make a loss if it moves against you. However, with traditional trading you enter a contract to exchange the legal ownership of the individual shares or the commodities for money, and you own this until you sell it again.
CFDs are leveraged products, which means that you only need to deposit a percentage of the full value of the CFD trade in order to open a position. But with traditional trading, you buy the assets for the full amount. In the UK, there is no stamp duty on CFD trading, but there is when you buy stocks, for example.
CFDs attract overnight costs to hold the trades (unless you use 1-1 leverage), which makes them more suited to short-term trading opportunities. Stocks and commodities are more normally bought and held for longer. You might also pay a broker commission or fees when buying and selling assets direct and you’d need somewhere to store them safely.
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