- Free Cash Flow Resilience: Generated $4.3 billion in free cash flow before working capital despite 14% oil price decline in 2025.
- Debt Reduction: Repaid $4 billion in debt, lowering principal debt to $15 billion, with a tender offer to reduce further to $14.3 billion.
- Production Efficiency: Achieved record 1.4 million BOE/day production, exceeding guidance while cutting oil and gas capital by $300 million.
- 2026 Capital Plan: Capped at $5.5–$5.9 billion, a $550 million reduction from 2025, with 70% allocated to U.S. onshore projects.
- Operational Cost Savings: Reduced well costs by 7% and facilities/construction costs by 5%, driving $1.2 billion in 2026 free cash flow improvement.
Operational Highlights
OXY achieved a 107% organic reserves replacement ratio and a total resource base of 16.5 billion barrels of oil equivalent, providing over 30 years of low-cost opportunity. The company's Midstream segment delivered outstanding results, with adjusted pretax income exceeding guidance. Permian production grew 4% year-on-year, while Rockies production was down year-on-year due to a transition to the Powder River Basin.
Guidance and Outlook
OXY expects to produce 1.45 million BOE per day in 2026, with first-quarter volumes lower due to reduced activity, winter storm impact, and planned turnarounds. Production will increase in the second quarter, driven by stronger Permian volumes. The company has reduced its capital expenditure (CapEx) guide by $800 million, with $300 million in savings from efficiency gains and $100 million from reduced exploration CapEx. OXY expects to improve free cash flow by over $1.2 billion in 2026, driven by operational savings and interest savings.
Valuation and Return Metrics
Occidental Petroleum's current valuation metrics indicate a P/E Ratio of 22.33, EV/EBITDA of 5.87, and a Dividend Yield of 1.85%. The company's Return on Invested Capital (ROIC) stands at 3.63%, while its Return on Equity (ROE) is 6.43%. With a Net Debt / EBITDA ratio of 1.77, OXY's leverage metrics have improved significantly. Analysts estimate next year's revenue growth at 7.3%, indicating a positive outlook for the company's financial performance.
Long-term Prospects
OXY's disciplined capital allocation, strong asset base, and operational performance will drive resilient performance and enhanced capital efficiency. The company has structural savings, including a 28% reduction in well costs, and development efficiencies. OXY's production trajectory will benefit from these efficiencies and mid-cycle project optimization. The company is optimizing, not deferring, projects like Horn Mountain and EOR, with an expected uplift in late 2027.