OCCIDENTAL PETROLEUM CORP /DE/

What they do

Occidental explores, develops, produces, and markets crude oil, NGLs, and natural gas, primarily from the Permian Basin and Gulf of America. It also operates midstream and marketing assets, including CO2 handling and transportation, with a growing carbon management business (e.g., STRATOS). Following the January 2026 sale of OxyChem, the company is a pure-play oil and gas and midstream entity.

Revenue drivers

• Oil and Gas — Core segment; revenue driven by crude oil, NGL, and natural gas sales. In Q2 2026, pre-tax income was $2.8 billion on production of 1,433 Mboed.
• Midstream and Marketing — Generates income from gathering, processing, transportation, and marketing of oil, NGLs, and gas. Q2 2026 pre-tax income was $1.3 billion, benefiting from higher crude and gas margins.
• WES Equity Investment — Equity method investment in Western Midstream contributes recurring income; Q2 2026 equity income was $149 million.

Recent performance

For Q2 2026, Occidental reported net income attributable to common stockholders of $2.8 billion, or EPS of $2.75, and adjusted EPS from continuing operations of $2.40. Operating cash flow from continuing operations was $5.1 billion, with free cash flow before working capital of $3.0 billion. Average worldwide realized crude oil prices rose 38% quarter-over-quarter to $96.78 per barrel, while domestic realized gas prices were negative $1.48 per Mcf. For full-year 2025, revenue was $21.57 billion and net income was $2.37 billion, down from 2024 as WTI prices fell to $64.81 per barrel.

Strategy

Management’s stated priorities are to maintain production, grow the dividend sustainably, and allocate excess cash to deleveraging until principal debt reaches approximately $14.3 billion, after which cash may fund buybacks or further debt reduction. They also emphasize investments in high-return oil and gas assets and advancing integrated CO2, power, and midstream technologies. The OxyChem sale for $9.7 billion closed January 2, 2026, with proceeds used to repay debt, and the company reduced principal debt by $1.9 billion in Q2 2026 to $11.8 billion.

Risks

• Commodity price volatility — Results are highly sensitive to oil, NGL, and natural gas prices; 2025 average WTI fell to $64.81 per barrel from $75.72 in 2024.
• Negative natural gas prices — Domestic realized gas prices were negative $1.48 per Mcf in Q2 2026, reflecting regional oversupply and transportation constraints.
• Geopolitical and OPEC actions — Oil prices are influenced by OPEC supply decisions, military conflicts, and trade tariffs, which could disrupt demand or pricing.
• Tariff and cost inflation — U.S. tariffs on imports may raise supplier costs and affect product demand; the company has limited control over these external factors.

Outlook

Management expects to generate significant free cash flow growth by 2030, driven by advanced recovery capabilities and cost efficiencies. They target continued debt reduction toward a $10.0 billion milestone, with principal debt at $11.8 billion as of Q2 2026. Guidance for oil and gas production was exceeded in Q2 2026, with Permian and Gulf of America assets outperforming.