Occidental Petroleum’s Earnings Call Highlights Record Production and Debt Reduction

Occidental Petroleum Corp. ((OXY)) has held its Q3 earnings call. Read on for the main highlights of the call.

Occidental Petroleum Corp. recently held its earnings call, highlighting a robust operational performance despite some challenges. The sentiment was largely positive, driven by record production levels and significant cost savings, although there were concerns about international production and the underperformance of the OxyChem segment.

Record Production in Permian Basin

Occidental achieved a milestone in the Permian Basin, with production reaching 800,000 barrels of oil equivalent (BOE) per day. This marks the highest quarterly production in the company’s history, underscoring its strong operational capabilities in this key region.

Strong Operational Performance

The company reported generating $3.2 billion in operating cash flow and $1.5 billion in free cash flow before working capital adjustments. These figures highlight Occidental’s ability to generate substantial cash flow, reinforcing its operational strength.

Debt Reduction and Financial Resilience

Occidental has made significant strides in reducing its debt, repaying $1.3 billion and bringing its principal debt balance down to $20.8 billion. The strategic sale of OxyChem is expected to further reduce debt to below $15 billion, enhancing the company’s financial resilience.

Midstream and Marketing Segment Success

The midstream and marketing segment exceeded expectations with adjusted earnings of $153 million. This success was attributed to strategic gas marketing and higher sulfur prices, demonstrating the segment’s strong performance.

Expanded Permian Resource Base

Occidental expanded its Permian resource base by 2.5 billion BOE, which now represents approximately 70% of the company’s total resources. This expansion underscores the strategic importance of the Permian Basin to Occidental’s overall resource portfolio.

Cost Efficiency Achievements

The company achieved significant cost efficiencies, reducing capital expenditures by $300 million and operating costs by $170 million. Since 2023, Occidental has realized $2 billion in annualized cost savings, reflecting its commitment to operational efficiency.

OxyChem Performance Below Expectations

OxyChem’s performance fell short of expectations, with pretax income at $197 million due to continued softness in the global chlorovinyl market. This underperformance highlights challenges in this segment.

International Production Challenges

Occidental faced challenges with its international assets, which produced slightly lower-than-expected results. However, strong performance in the U.S. helped offset these challenges, maintaining overall production levels.

Forward-Looking Guidance

Looking ahead, Occidental provided guidance indicating continued strong operational performance. The company plans to use proceeds from the OxyChem sale to reduce its principal debt to less than $15 billion, enhancing financial flexibility. They aim to maintain capital expenditures between $6.3 billion and $6.7 billion for 2026, focusing on high-return projects and operational efficiency, with a target oil price scenario of $55 to $60 WTI.

In summary, Occidental Petroleum Corp.’s earnings call painted a picture of a company achieving record production levels and significant cost savings, despite some challenges in international production and the OxyChem segment. The strategic focus on debt reduction and operational efficiency positions Occidental well for future growth.