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DATE
Nov. 10, 2026
CALL PARTICIPANTS
- Vice President of Investor Relations – Babatunde Cole
- President and Chief Executive Officer – Richard Jackson
- Senior Vice President and Chief Financial Officer – Sunil Mathew
- Senior Vice President and President, International Oil and Gas Operations – Ken Dillon
TAKEAWAYS
- Adjusted EPS — $1.91 per diluted share, excluding $1.61 per diluted share in reported earnings primarily due to mark-to-market losses in marketing and crude hedges.
- Free Cash Flow — $2.8 billion, driven by operational execution and cost discipline combined with higher commodity prices.
- Total Production — 1.43 million barrels of oil equivalent per day, exceeding the midpoint of guidance by 7,000 barrels of oil equivalent per day.
- Principal Debt Repayment — $1.8 billion repaid in the third quarter, bringing total year-to-date prepayments to $10.4 billion.
- Debt Milestone — The company reached its $10 billion principal debt milestone and established a new target of $6 billion.
- New Mexico Production — 284,000 barrels of oil equivalent per day, representing a 23% increase since January 2026 and a new record for the asset.
- Powder River Basin Growth — 70% production growth compared to the first quarter of 2026, supported by bringing a record 27 wells online.
- AI Operational Uplift — 9,000 wells, or 68% of artificial lift wells, are under AI surveillance, which management reported contributes to a 7% annual production uplift.
- New Well Costs — A 7% improvement year to date, reflecting continued advancement in drilling and completion efficiencies.
- Domestic Lease Operating Expense — $8.54 per barrel of oil equivalent, outperforming quarterly guidance despite higher commodity-linked costs for CO2 and diesel.
- Capital Expenditures — $1.3 billion for the third quarter, with full-year 2026 spending remaining within original guidance ranges.
- 2027 Capital Outlook — $5.9 billion in planned spending, which management expects will maintain relatively flat production compared to 2026 levels.
- Sustainable Cash Flow Target — $4 billion in annual sustainable cash flow addition by 2030, representing an approximate 95% increase compared to 2025.
- Interest Expense Run Rate — A projected $400 million per year upon reaching the $6 billion debt milestone, which is $1 billion lower than 2025 interest expense.
- Gulf of America Production — 110,000 barrels of oil equivalent per day, impacted by third-party gas pipeline constraints and maintenance activities.
- EOR Sidetrack Program — 80 sidetrack wells drilled year to date, adding 10,000 barrels of oil equivalent per day of production capacity.
- STRATOS Progress — 2,000 metric tons of atmospheric CO2 captured to date during commissioning, with full plant start-up scheduled for the end of 2026.
- Unconventional Well Productivity — 2025 and 2026 wells performed at least 10% above the industry average on a six-month cumulative oil per lateral foot basis.
- CO2 Offtake Agreements — Agreements signed for 2 million metric tons per year of anthropogenic CO2, representing 15% of the company’s 2026 purchased CO2.
- Waterflood Resources — 450 million barrels of oil equivalent identified at a breakeven price of less than $40 per barrel.
- Barnett Formation Performance — Drilling costs of less than $750 per foot with six-month oil productivity averaging 12.5 barrels of oil per foot.
- Midstream and Marketing Income — $309 million in adjusted pretax income, driven by stronger sulfur pricing and sales volumes at Al Hosn.
- Realized Gas Prices — $1.61 per thousand cubic feet for domestic gas, a 209% improvement from the negative $1.48 per thousand cubic feet realized in the second quarter.
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RISKS
- Mathew stated, “Our guidance reflects Gulf of America production curtailments related to the third-party gas pipeline constraint, which extended into the fourth quarter as well as the impact of the hurricane in early October,” noting the sustained impact on regional volumes.
- Mathew warned that the company expects “lower gas marketing income as additional Permian gas takeaway capacity comes online in the fourth quarter,” which will likely narrow regional pricing spreads.
- Management noted that interest in certain EOR projects is subject to final investment decisions expected in early 2027, introducing uncertainty to the timeline for low-cost CO2 expansion.
SUMMARY
Occidental Petroleum Corporation (OXY +2.04%) reported adjusted earnings of $1.91 per diluted share and reached a critical financial milestone by reducing principal debt to $10 billion. Management reported that the company is executing a long-term strategy to add $4 billion in annual sustainable cash flow by 2030, primarily through operational efficiencies, lower decline rates, and significant interest expense savings. The company generated $2.8 billion in free cash flow during the quarter, benefiting from record production in New Mexico and the Powder River Basin. Management established a new principal debt target of $6 billion, which would bring the interest expense run rate down to approximately $400 million per year. Looking toward 2027, the company plans a capital budget of $5.9 billion to sustain production while advancing mid-cycle projects such as Gulf of America waterfloods and Permian enhanced oil recovery initiatives.
- The company utilizes autonomous AI systems to manage approximately 50% of its AI-surveilled wells, representing 450,000 barrels of oil equivalent per day.
- Management expects to reduce the total company base decline rate from 25% to 20% by 2030, which would lower the capital required to sustain production to approximately $4.5 billion.
- Richard Jackson stated, “Once we achieved our $6 billion principal debt milestone, we will balance additional principal debt reduction and building cash” to prepare for the preferred equity redemption in August 2029.
- The STRATOS direct air capture project is undergoing repairs to its calciner structural supports while continuing to build pellet inventory for its 2027 operational transition.
- The company has identified 500 candidates for its EOR sidetrack program, which uses existing wellbores to accelerate production at lower costs than new grassroots wells.
- Sunil Mathew noted that at $6 billion in principal debt, the company would achieve a debt-to-EBITDA ratio of one at $50 WTI, marking its strongest balance sheet position in a decade.
- The company is exploring offshore opportunities in Peru, Colombia, and Trinidad and Tobago, targeting unrisked volumes of more than 2 billion barrels of oil equivalent.
INDUSTRY GLOSSARY
- BOE: Barrels of oil equivalent, a unit of energy that combines oil and natural gas volumes based on their energy content.
- EOR: Enhanced oil recovery, a technique used to increase the amount of crude oil that can be extracted from an oil field, often by injecting CO2
Source: www.fool.com — article syndicated from the publisher’s feed; all rights remain with the original publisher.
