Occidental Petroleum Corporation OXY used its third-quarter 2026 earnings call to reset its balance-sheet target after reaching $10 billion in principal debt. Management outlined how operational efficiencies and lower interest costs could lift sustainable cash flow.
Adjusted EPS of $1.91 topped the Zacks Consensus Estimate of $1.43, while revenues of $6.77 billion exceeded the $6.73 billion estimate. Executives emphasized 2027 spending and shareholder-return priorities.
Occidental Petroleum Corporation Price, Consensus and EPS Surprise
Occidental Petroleum Corporation Price, Consensus and EPS Surprise
Occidental Petroleum Corporation price-consensus-eps-surprise-chart | Occidental Petroleum Corporation Quote
OXY Sets a New Principal Debt Target
Chief financial officer Sunil Mathew said that Occidental repaid $1.8 billion in principal debt during the quarter, bringing 2026 reductions to $10.4 billion. Quarter-end unrestricted cash totaled $3.9 billion.
Mathew established a new $6 billion debt milestone. Responding to Goldman Sachs, he explained that this level corresponds to debt-to-EBITDA of roughly one at $50 WTI, its intended long-term threshold.
Mathew said that the company could reach that milestone and potentially a net cash position in 2027 at mid-cycle or current strip prices. Buybacks remain opportunistic ahead of preferred equity redemption in August 2029.
Occidental Maps Out 2027 Cash Flow Priorities
Mathew identified approximately $5.9 billion as the starting point for 2027 capital spending, with relatively flat production. The allocation includes Permian enhanced oil recovery, Gulf of America waterfloods and international projects.
He projected $700 million to $800 million in sustainable annual cash flow improvement in 2027 versus 2026, bringing total annual improvement to about $2 billion by year-end 2027. The 2030 objective exceeds $4 billion compared with 2025.
Chief executive officer Richard Jackson linked the plan to reducing base decline rates from roughly 25% to 20%. Sustaining capital is targeted at approximately $4.5 billion by 2030.
OXY Sees Fourth-Quarter Production Recovering
Third-quarter production averaged 1.43 million barrels of oil equivalent per day, surpassing the midpoint of guidance. U.S. onshore execution offset disruptions in the Gulf of America and international operations.
Mathew guided fourth-quarter output to 1.43 million to 1.47 million barrels of oil equivalent per day. Gulf pipeline restrictions extended into the quarter, while an October hurricane also affected the outlook.
Responding to Barclays, Mathew projected broadly flat 2027 volumes, with oil production flat to slightly higher. Modest Permian growth could offset weakness elsewhere, while Gulf waterflood investment affects drilling schedules.
Occidental Expands Recovery and CO2 Sourcing
Jackson described enhanced recovery as a way to improve production efficiency. The company drilled approximately 80 conventional EOR sidetracks this year and identified another 500 candidates.
He also discussed unconventional recovery pilots producing approximately 45% oil uplift. In the Gulf, identified waterflood resources total roughly 450 million barrels of oil equivalent at breakevens below $40.
Asked by Barclays about CO2 economics, Jackson detailed offtake agreements for 2 million metric tons of annual supply from gas-processing plants, roughly 15% of purchased CO2. Developer investment decisions are still pending.
OXY Details AI Gains and STRATOS Timetable
Jackson said AI now monitors around 9,000 artificial-lift wells, or 68% of the fleet. Predictive surveillance has reduced failure frequency by 22% compared with 2023.
In response to Melius Research, Jackson clarified that roughly half the monitored wells operate autonomously, including about 450,000 barrels per day of production in the Delaware Basin.
Jackson expects STRATOS to begin full startup around year-end, transitioning to operations in 2027. Answering Mizuho, he reaffirmed a 2028 project EBITDA target of $90 million to $130 million while emphasizing cost reductions.
Occidental Keeps Shareholder Returns Measured
Mathew emphasized dividend growth supported by sustainable cash flow at $50 WTI. The company announced two 8% quarterly dividend increases during 2026, but offered no timetable for further increases.
Jackson said a stronger balance sheet would allow more countercyclical repurchases. For now, management continues to prioritize debt reduction, lower sustaining capital and disciplined investment over accelerating volume growth.
OXY’s Zacks Rank and Style Scores
Occidental carries a Zacks Rank #2 (Buy) at present. Its Value Score of A reflects favorable valuation characteristics, while the Momentum Score of B indicates positive readings on those investment styles. It currently has a Growth Score of C. You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.
The VGM Score of A combines those characteristics and complements its favorable rank, a pairing associated with better relative-performance potential over the next one to three months. The Zacks Rank may change as analysts revise estimates following the results.
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This article originally published on Zacks Investment Research (zacks.com).
Source: finance.yahoo.com — article syndicated from the publisher’s feed; all rights remain with the original publisher.
