Occidental Petroleum Corporation OXY used its Q2 earnings call to center the story on a multiyear cash flow plan built on lower costs, lower sustaining capital and a stronger balance sheet.
Management sees more than $4 billion of annual sustainable cash flow improvement by 2030. Adjusted EPS of $2.40 topped the Zacks Consensus Estimate of $1.92, and revenue of $8.33 billion exceeded the $7.18 billion estimate.
OXY Puts Sustainable Cash Flow at Center
President and CEO Richard Jackson said Occidental expects more than $1.2 billion of free cash flow improvement in 2026 before higher oil prices.
Jackson said the company sees more than $4 billion of annual sustainable cash flow improvement by 2030 versus 2025. About 85% is expected to be achievable at lower prices, without requiring production growth.
Senior vice president and CFO Sunil Mathew said 2027 should add roughly $700 million to $800 million versus 2026. Management expects to capture nearly half of the 2030 target by year-end 2027.
Occidental Raises Production Outlook
Mathew said second-quarter production averaged 1.43 million BOE per day, 23,000 BOE per day above the guidance midpoint. Permian strength and higher Gulf of America uptime offset lower international volumes tied to Middle East disruptions.
The CFO said Occidental raised full-year production guidance and expects third-quarter output of 1.40 million to 1.44 million BOE per day. Domestic lease operating expense guidance remains $8.10 per BOE for 2026.
Mathew cited adjusted midstream and marketing income of about $960 million, more than double the guidance midpoint. Full-year guidance rose by $300 million, though third-quarter income is expected to fall as the Waha-to-Gulf Coast gas spread narrows.
OXY Keeps Deleveraging Ahead of Buybacks
Mathew said principal debt fell to $11.8 billion, reducing the annual interest run rate to about $760 million. The board also approved an 8% dividend increase to $0.28 per share.
The CFO reiterated that the immediate priority is reaching $10 billion of principal debt. After that, management plans to reduce net debt while building cash ahead of the preferred equity redemption in August 2029.
A Wolfe Research analyst asked whether buybacks would remain secondary. Jackson favored net debt reduction, while Mathew said large continuous repurchases would remain a lower priority until the preferred redemption.
Occidental Maps Lower Sustaining Capital
A Barclays analyst asked about the pace of sustaining-capital reductions. Mathew said the 2027 capital starting point is $5.9 billion, with sustaining capital at about $5 billion to $5.1 billion after excluding exploration and certain multiyear and growth projects.
Mathew said sustaining capital is targeted to reach $4.5 billion by 2030. The plan combines a lower base decline rate, targeted at about 20% by 2030 from roughly 25%, with further well-cost efficiency.
Senior vice president and president of International Oil and Gas Operations Kenneth Dillon highlighted waterflooding as a decline-management tool. Jackson added that Permian unconventional CO2 pilots delivered more than 45% uplift in estimated ultimate recovery.
OXY Frames Growth as Efficiency-Led
A Mizuho analyst asked how management would approach growth as cash flow improves. Jackson said the near-term bias remains toward free cash flow, with added investment required to preserve returns and capital efficiency.
Mathew said the baseline assumes no production growth. A moderate-growth scenario with about a 2% production CAGR produced greater free cash flow improvement by 2030 than the baseline.
A Goldman Sachs analyst asked about sustainable cost savings. Jackson pointed to drilling efficiency, while Mathew said the Permian plan calls for dropping three rigs in the fourth quarter while still bringing 15 more wells online.
Occidental Leaves a Disciplined Capital Message
Jackson closed with execution, cost efficiency, lower sustaining capital and balance-sheet strength as core priorities. He described the $4 billion plan as a baseline that can improve through efficiencies and measured growth.
Mathew kept capital allocation centered on debt reduction and a sustainable dividend, with reinvestment expected to remain measured and efficiency-led.
What Zacks Signals Say About OXY
OXY carries a Zacks Rank #4 (Sell), with a Value Score of A, Growth Score of C, Momentum Score of F and VGM Score of B. Value and VGM are favorable, while Growth is middling and Momentum is weak under the Zacks framework.
You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.
Zacks methodology places greater weight on the Rank, which reflects earnings-estimate revisions, while Style Scores complement the Rank.The Zacks Rank can change as analysts revise estimates after the just-reported results, so the current mix is not a fixed assessment.
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Occidental Petroleum Corporation (OXY): Free Stock Analysis ReportThis article originally published on Zacks Investment Research (zacks.com).
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