Key financial results

  • Occidental reported adjusted earnings of $2.40 per diluted share and reported earnings of $2.75 per diluted share for the second quarter.In the second quarter, we generated adjusted earnings of $2.40 per diluted share and reported earnings of $2.75 per diluted share.
  • The company generated approximately $3 billion of free cash flow during the quarter, which is the highest level since the third quarter of 2022.We also generated approximately $3 billion of free cash flow during the quarter, our highest level since the third quarter of 2022.
  • Principal debt was reduced by $1.5 billion since the last call to $11.8 billion, marking the lowest level since the second quarter of 2019.Since our last call, we reduced principal debt by $1.5 billion to $11.8 billion, the lowest level since the second quarter of 2019.
  • The company ended the quarter with approximately $4.2 billion of unrestricted cash.We ended the quarter with approximately $4.2 billion of unrestricted cash, giving us additional flexibility as we continue to advance our cash flow priorities.

Business segment results

  • Production: Total production averaged 1.43 million BOE per day, which exceeded the midpoint of guidance by 23,000 BOE per day.Total production for the quarter averaged 1.43 million BOE per day, exceeding the midpoint of guidance by 23,000 BOE per day.
  • Upstream: Domestic lease operating expense was $7.80 per BOE, representing a 6% improvement versus guidance.Domestic lease operating expense was $7.80 per BOE, a 6% improvement versus guidance
  • Midstream and marketing: Midstream and marketing set a new quarterly record with adjusted earnings of approximately $960 million, more than double the midpoint of guidance.Midstream and marketing outperformed in the quarter, setting a new quarterly record with adjusted earnings of approximately $960 million
  • International: International volumes were lower during the quarter due to disruptions in the Middle East.

Capital allocation

  • The Board approved an 8% increase to the quarterly dividend, raising it to $0.28 per share.strengthened the balance sheet and improved financial flexibility, supporting the Board's approval to raise the quarterly dividend by 8% to $0.28 per share.
  • The immediate cash flow priority is to reduce principal debt to a $10 billion milestone.As previously shared, our immediate cash flow priority remains to reduce principal debt to $10 billion.
  • Share repurchases will remain opportunistic and are a lower priority until the redemption of the preferred equity in August 2029.Share repurchase actions will remain opportunistic and any continuous share buyback program will be a lower priority until the redemption of the preferred.
  • After reaching the $10 billion principal debt milestone, the company will focus on reducing net debt while balancing cash building for the 2029 preferred equity redemption.After we achieved the $10 billion principal debt milestone, our focus will be to further reduce net debt.
  • The Waha to Gulf Coast natural gas spread has narrowed as new Permian takeaway capacity has come online.We have seen a significant narrowing of the spread between Waha and Gulf Coast with additional Permian takeaway capacity now coming online.
  • Approximately 3 Bcf of takeaway capacity has already come online, with another 2 Bcf expected by the end of the fourth quarter.there's almost 3 Bcf of capacity that has already come online and potentially another 2 Bcf coming online by the end of the fourth quarter.
  • Sulfur spot prices have moved higher, but Middle East exports face potential volatility due to freight costs and regional disruptions.we see a significant volatility with respect to freight costs, and that could potentially impact our third quarter realization and also some potential delay or disruption to our sales.

Competitive landscape

  • In the Powder River Basin, the company's well productivity is 41% above the industry average on a 6-month oil productivity basis.From a well productivity standpoint, we're about 41% above the industry average using a 6-month oil productivity basis.
  • In the Delaware Basin, secondary bench development performance is 40% higher than the industry average for 2024 to 2026.our secondary bench development, we're about 40% higher than the industry average 2024 to 2026.
  • The company maintains top-tier capital efficiency in U.S. unconventional developments through a value-based development approach.Our approach is unique by basin, asset area and often individual well, which has led to our top-tier capital efficiency in our U.S. unconventional developments.

Macroeconomic environment

  • The company noted that the situation in the Middle East remains fluid and impacts international operations.Internationally, we anticipate normalized volumes while recognizing the situation in the Middle East is fluid.
  • Management acknowledged market volatility and the need to be thoughtful regarding reinvestment and mid-cycle projects.

Growth opportunities and strategies

  • The company aims to add over $4 billion of annual sustainable cash flow by 2030 compared to 2025.Looking ahead, we see a clear pathway to add over $4 billion of annual sustainable cash flow by 2030.
  • Advanced recovery projects are expected to support a decline rate reduction from approximately 25% to 20% by 2030.This base decline improvement is driven by our advanced recovery projects, which are expected to support a decline rate reduction from approximately 25% to 20% by 2030.
  • The company plans to reduce sustaining capital by $900 million through capital efficiency improvements.we expect lower sustaining capital by $900 million through continued improvements in capital efficiency and from a lower total Oxy base decline.
  • Approximately $400 million of Low Carbon Ventures capital will roll off beginning next year as Stratos transitions to operations.With Stratos moving from development to operations, approximately $400 million of LCV capital will fully roll off beginning next year.

Financial guidance and outlook

  • Third quarter production is expected to range between 1.4 million and 1.44 million BOE per day.For the third quarter, we expect production to range between 1.4 million and 1.44 million BOE per day
  • Full year 2026 capital guidance is maintained at $5.5 billion to $5.9 billion.We are maintaining our full year capital guidance range of $5.5 billion to $5.9 billion.
  • The starting point for 2027 capital spending is expected to be $5.9 billion.Looking to 2027, as we mentioned in the previous calls, our starting point for capital spending is expected to be $5.9 billion.
  • Domestic lease operating expense for the full year is maintained at $8.10 per BOE.For the full year, we are maintaining domestic lease operating expense guidance of $8.10 per BOE

Carbon Capture and Low Carbon Ventures

  • Stratos is currently undergoing nontechnology-related repair and commissioning of Trains 3 and 4, with full plant commissioning expected around the end of the year.Based on our current outlook, we expect full plant commissioning to begin around the end of the year as we transition to operations in 2027.
  • The company is focused on CO2, power, and emissions to support the core business and is seeking partners to help move development forward.we really will be focused on bringing in partners to help us move that forward.

Q2 2026 results

MetricResultChange
Adjusted earnings per diluted share$2.40Not stated
Reported earnings per diluted share$2.75Not stated
Free cash flow$3 billionHighest since Q3 2022
Total production1.43 million BOE per dayExceeded midpoint by 23,000 BOE per day
Midstream and marketing adjusted earnings$960 millionRecord performance
Domestic lease operating expense$7.80 per BOE6% improvement versus guidance

How management sounded

Positive (+45 on our -100 to +100 scale). Management expressed high confidence in their new sustainable cash flow plan, raised the dividend, and highlighted operational outperformance, though they remained measured regarding growth and capital allocation. Management sounded more upbeat than on 62% of the 302 calls we cover; most companies sound positive on their own calls, so the comparison says more than the label.

Read the analyst Q&A summary and guidance and outlook for this call.

What to watch before the next call

  • Progress on reducing principal debt to the $10 billion milestone.
  • Commissioning status of Stratos Trains 3 and 4 as they transition to operations in 2027.
  • Operational performance in the Middle East given the fluid regional situation.
  • Execution of advanced recovery projects in the Permian and Gulf of America.

Earlier calls

  • Q1 2026 (May 6, 2026), tone Balanced: Occidental Petroleum reported strong first quarter results, exceeding production guidance with 1.43 million BOE per day. The company is prioritizing debt reduction to $10 billion before reassessing capital allocation strategies.