Business Context and Reporting Period
This Form 10-Q covers the quarterly period ended March 31, 2026, for Occidental Petroleum Corporation (OXY). The Company operates primarily through two segments: Oil and Gas, and Midstream and Marketing. A defining event for this period was the completion of the sale of its chemical subsidiary, OxyChem, to Berkshire Hathaway on January 2, 2026, for an adjusted purchase price of $9.5 billion. Consequently, OxyChem results are reported as discontinued operations.
Key Financial Metrics
| Metric | Q1 2026 | Q1 2025 |
|---|---|---|
| Net Sales | $5,230 million | $5,704 million |
| Net Income | $3,359 million | $945 million |
| Net Income Attributable to Common Stockholders | $3,175 million | $766 million |
| Diluted EPS (Common) | $3.13 | $0.77 |
| Operating Cash Flow (Continuing Ops) | $1,392 million | $2,032 million |
| Capital Expenditures | $1,554 million | $1,682 million |
| Total Debt (Face Value) | $13,757 million | $20,427 million (Dec 31, 2025) |
| Cash and Cash Equivalents | $3,811 million | $2,604 million |
Segment Performance: The Oil and Gas segment generated income of $1,017 million before taxes, while the Midstream and Marketing segment reported a loss of $87 million before taxes. Discontinued operations contributed $3,123 million in net income, driven by the OxyChem sale gain.
Material Changes vs. Prior Period
- Revenue Decline: Net sales decreased 8.3% year-over-year to $5.23 billion, primarily due to lower realized commodity prices and a $339 million loss on crude oil derivative collars.
- Profit Surge: Net income increased significantly to $3.36 billion, largely due to a $3.1 billion gain on the sale of OxyChem (discontinued operations). Income from continuing operations was $236 million, down from $830 million in Q1 2025.
- Debt Reduction: The Company utilized proceeds from the OxyChem transaction to repay approximately $6.7 billion of debt, reducing total borrowings at face value from $20.4 billion (Dec 31, 2025) to $13.8 billion (March 31, 2026).
- Cash Flow: Operating cash flow from continuing operations decreased to $1.4 billion compared to $2.0 billion in Q1 2025, attributed to higher trade receivables resulting from sharp commodity price increases in March 2026.
Guidance, Outlook, and Risks
Outlook and Strategy: Management prioritizes deleveraging until principal debt reaches approximately $10.0 billion, after which excess cash will be allocated to further debt reduction or share repurchases. The Company maintains a sustainable dividend policy. Average WTI prices for Q1 2026 were $71.93 per barrel.
Risks and Contingencies:
- Environmental Liabilities: The Company retains environmental liabilities related to legacy sites from the OxyChem transaction. Total environmental remediation liabilities were $1.855 billion as of March 31, 2026. A significant portion relates to the Diamond Alkali Superfund Site (DASS), where the Company is appealing a court ruling assigning it 85% of cleanup costs for certain units.
- Derivative Exposure: The Company entered into crude two-way collars in February 2026 with a floor of $55.00 and a weighted average ceiling of $75.89 per barrel to manage cash flow variability.
- Tax Disputes: The IRS is reviewing a $5.2 billion deduction related to the Tronox Adversary Proceeding settlement. If disallowed, the Company may be required to repay approximately $1.4 billion in taxes plus interest.
Investor Verification Checklist
- Verify the final adjusted purchase price and post-closing adjustments for the OxyChem transaction.
- Monitor the status of the appeal regarding the Diamond Alkali Superfund Site (DASS) liability allocation.
- Track the Company's progress toward the $10.0 billion principal debt target.
- Review the outcome of the IRS audit regarding the Tronox settlement deduction.
- Assess the impact of ongoing geopolitical conflicts on realized commodity prices and production volumes.