The Occidental Petroleum story
Occidental Petroleum is a Permian-focused oil and gas producer whose central question is whether its portfolio can fund further debt reduction after the OxyChem exit.
Written from Occidental Petroleum's own filings with the SEC, and rewritten when it publishes a new earnings release. Updated 2026-09-30.
- $56.10share price, last close
- $56.1Bmarket value
- 21/36TenQ Score checks passed
- 0.3%growth a year the price assumes
The story in brief
- Debt reduction continues. In the quarter to June 2026, Occidental reduced principal debt by $1.9 billion to $11.8 billion, approaching its $10.0 billion milestone.
- Cash generation strengthened. Occidental generated $3.0 billion of free cash flow before working capital from continuing operations in the quarter to June 2026, with capital expenditures of $1.6 billion.
- Modest growth implied. The reverse DCF implies free cash flow after stock pay growth of 0.3% a year for ten years, below Occidental's historical pace and the TenQ check's bar.
What drives the business
- Occidental's focus on oil and gas followed its approximately $12.4 billion CrownRock acquisition in August 2024, alongside which it issued approximately $9.7 billion of new debt.
- The January 2026 completion of the OxyChem transfer to Berkshire Hathaway for $9.7 billion in cash, subject to customary purchase price adjustments, advanced its strategy of strengthening the balance sheet and concentrating on oil and gas.
- With operations centered on the US Permian Basin, Occidental produced 1,433 Mboed globally in the quarter to June 2026, exceeding the high end of guidance as the Permian and Gulf of America business units outperformed.
- Midstream and marketing reported pre-tax income of $1.3 billion in the quarter to June 2026, compared with a loss of $87 million in the preceding quarter, helped by crude transaction timing and transportation capacity optimizations.
- Berkshire also holds preferred stock that ranks ahead of common stock, with Occidental paying $170 million of preferred dividends in the quarter to June 2026.
What the price assumes
At $56.10, the reverse DCF implies free cash flow after stock pay growth of 0.3% a year for ten years using a 10.2% discount rate.
Occidental delivered 11.1% annual growth on that measure over the last ten years, while the TenQ check sets a 7.6% bar by slowing that record halfway toward 4%.
What could change the story
- Commodity prices remain central to earnings: realized crude prices rose 38% from the preceding quarter to $96.78 per barrel in the quarter to June 2026, while domestic realized gas prices were negative $1.48 per thousand cubic feet.
- Revenue growth of 19.4% over the last twelve months contrasts with annual revenue growth of -16.2% over the last three years, leaving sustained growth unproven.
- TenQ's checks flag return on employed capital of 9.4% against a 10.0% bar and a near-term liquidity ratio of 1.41 against 1.50, despite progress reducing debt.
- The OxyChem exit did not remove all associated obligations: Occidental retained legacy tort claims and environmental liabilities and expects remediation spending over many years.
What to watch next
- Management expects significant free cash flow growth by 2030 from advanced recovery and its development approach, making production, capital spending and operating cash flow the key measures of execution.
- Further movement toward the $10.0 billion principal debt milestone will show whether cash generation continues to support debt reduction alongside the quarterly dividend increased by an additional 8% to $0.28 per share.
- Subsequent midstream and marketing results will help distinguish lasting transportation benefits from the crude transaction timing that contributed to the quarter to June 2026.
Sources
- Occidental Petroleum's earnings release, filed with the SEC
- Its latest 10-Q or 10-K, for the risk factors
- The OXY stock report, for every figure and check