OXY

Business Context and Reporting Period

This Form 10-Q covers the quarterly period ended June 30, 2026, for Occidental Petroleum Corporation (OXY). The Company operates primarily through two segments: Oil and Gas, and Midstream and Marketing. A defining event for the period was the completion of the sale of its chemical subsidiary, OxyChem, to Berkshire Hathaway on January 2, 2026, for an adjusted sales price of $9.5 billion. Consequently, OxyChem results are reported as discontinued operations. The Company is a large accelerated filer with 999.6 million shares of common stock outstanding as of July 31, 2026.

Key Financial Metrics

Material Changes vs. Prior Period

• Revenue Growth: Net sales increased 21% year-over-year to $13.3 billion, driven by higher realized crude oil prices (average WTI $82.36 vs. $67.58) and higher marketing margins.
• Profitability Surge: Net income attributable to common stockholders increased 468% to $5.98 billion. This was significantly boosted by a $3.1 billion after-tax gain from the OxyChem divestiture recorded in discontinued operations.
• Debt Reduction: The Company utilized proceeds from the OxyChem sale and operating cash flow to repay approximately $8.6 billion in debt during the first six months of 2026, reducing total borrowings at face value by roughly 42%.
• Segment Performance: The Oil and Gas segment income increased 47% to $3.9 billion, while the Midstream and Marketing segment turned a loss of $33 million in the prior year into income of $1.3 billion.

Guidance, Outlook, and Risks

• Dividend Increase: In August 2026, the Board increased the quarterly dividend by 8% to $0.28 per share.
• Market Outlook: Management notes that oil prices remain volatile due to geopolitical developments, including conflicts in the Middle East and Iran, which have created risk premiums. Trade policy actions and tariffs are also monitored as potential cost drivers.
• Strategic Priorities: The Company focuses on maintaining a strong balance sheet, delivering a sustainable dividend, and sustaining base production while advancing carbon management solutions.
• Key Risks:
  • Environmental Liabilities: The Company faces significant remediation obligations, particularly at the Diamond Alkali Superfund Site (DASS). A court ruling in late 2024 assigned the Company approximately 85% of cleanup costs for specific units, resulting in a $925 million liability increase. The Company is appealing this ruling.
  • Tax Disputes: A pending U.S. Tax Court decision regarding the deductibility of a $5.2 billion Tronox settlement payment could require the Company to repay approximately $1.4 billion in taxes and interest if the deduction is disallowed.
  • Commodity Volatility: Earnings are heavily influenced by crude oil, NGL, and natural gas prices.

Investor Verification Checklist

• OxyChem Proceeds: Verify the final adjusted sales price and the specific allocation of the $9.5 billion proceeds toward debt repayment versus other uses.
• DASS Litigation Status: Monitor the appeal of the District Court's ruling regarding the 85% liability assignment for the Diamond Alkali Superfund Site, as this could materially impact future liabilities.
• Tronox Tax Ruling: Track the U.S. Tax Court's decision on the $5.2 billion settlement deduction, which poses a potential $2.4 billion cash outflow risk (taxes plus interest).
• Debt Maturities: Confirm the Company's ability to meet remaining debt obligations, noting that no debt maturities are due in 2026 following the recent paydowns.
• Derivative Exposure: Review the impact of the crude oil collars (floor $55, ceiling ~$76) on future cash flows given current market prices.