Occidental Petroleum Corporation

Adjusted earnings were $2.40 per diluted share and reported earnings were $2.75 per diluted share. Free cash flow was approximately $3 billion before working capital, the highest quarterly level since Q3 2022. Total production averaged 1.43 million BOE per day, beating the midpoint of guidance by 23,000 BOE per day, and domestic lease operating expense came in at $7.80 per BOE, 6% better than guidance. Midstream and marketing delivered about $960 million of adjusted earnings, more than double the midpoint of guidance. The company ended the quarter with approximately $4.2 billion of unrestricted cash and principal debt of $11.8 billion, down $1.5 billion from the prior call. For the third quarter, production is expected to range from 1.4 million to 1.44 million BOE per day, domestic LOE is expected to be $8.75 per BOE, and capital spending is guided to $5.5 billion to $5.9 billion for the full year. Management raised full-year total company production guidance, maintained full-year domestic LOE guidance at $8.10 per BOE, and increased full-year midstream and marketing guidance by $300 million.

Richard Jackson emphasized execution, balance-sheet strength and capital discipline as the core of the company’s strategy. He said Occidental is focused on four priorities: strengthening the balance sheet, organically improving resources, driving cost efficiencies and generating differentiated cash flow, and he framed the new plan as a durable way to create value through the cycle. His tone was confident and upbeat, with repeated emphasis that the company’s best results lie ahead and that the plan can support a sustainable dividend and additional flexibility if prices improve.

Sunil Mathew walked through the quarter’s financial performance and the company’s capital-allocation framework. He highlighted $2.40 adjusted EPS, $2.75 reported EPS, about $3 billion of free cash flow before working capital, and $4.2 billion of unrestricted cash, while noting principal debt fell to $11.8 billion and net principal debt to $7.6 billion. He said annual interest run rate is about $760 million, roughly $630 million below 2025 payments, and that the company is prioritizing debt reduction to $10 billion principal debt before making buybacks more prominent; share repurchases remain opportunistic and lower priority until the preferred redemption in August 2029. He also said the company expects the next leg of sustainable cash flow improvement to come from Stratos capital roll-off, interest savings, oil and gas efficiency gains, lower LCV capital and ongoing cost savings.

Analysts focused on the pace of the cash flow improvement plan, how much of it is already in motion, and how management thinks about growth versus free cash flow. Management said the 2026 improvement target of more than $1.2 billion versus 2025 remains on track, with additional progress in 2027 coming from roughly $200 million of Stratos capital roll-off and further interest savings as debt moves toward the $10 billion milestone. Questions also centered on buybacks, preferred redemption and sustaining capital; management said buybacks are secondary to debt reduction and cash build for the 2029 preferred, and explained that lower sustaining capital will come from better decline rates, waterflood/EOR projects and higher drilling efficiency. Analysts also asked about LCV/Stratos, and management said the portfolio is at meaningful milestones, but future progress will depend on bringing in partners.