Occidental Petroleum (OXY) Q1 FY26 earnings call: guidance and Q&A

What are Richard Jackson's top priorities and strategic vision for Oxy as the new CEO?

Richard Jackson emphasized near-term execution of the 2026 program, continued free cash flow improvement through cost efficiency, lower decline rates, and midstream/LCV improvements. He highlighted driving sustainable cash flow, lowering sustaining capital, and growing the dividend, with opportunistic share repurchases. He also stressed workforce efficiency and leveraging technology like AI.

“Our focus now is on execution and delivery.”

asked by Douglas George Blyth Leggate · answered by Richard Jackson

What does 'ongoing net debt reduction' mean on Slide 20, specifically regarding pre-positioning for preferred equity redemption and potential for zero net debt?

Sunil Mathew clarified that after reaching $10 billion principal debt, options include building cash for preferred equity redemption in August 2029, further principal debt reduction, or opportunistic share repurchases if there's a major dislocation. He noted no specific net debt target, and the decision will depend on the macro environment to maximize shareholder value.

“We don't have a specific net debt target, but ultimately, it's going to depend on the macro, and we will take the appropriate action at that point based on what we believe maximizes shareholder value.”

asked by Douglas George Blyth Leggate · answered by Sunil Mathew

Why does Oxy hesitate to adopt a formulaic return of cash program, opting for opportunistic buybacks instead? Is it due to macro volatility or other reasons?

Richard Jackson stated that Oxy prefers flexibility over a formulaic approach to navigate uncertainties. He emphasized fundamental drivers like cost efficiency, capital efficiency, and lower operating expenses. He noted that continuous share repurchases through cycles help dividend growth, and the focus is on growing the dividend and creating opportunities for buybacks.

“having flexibility through uncertainties has given us advantages to be able to move to do that.”

asked by Nitin Kumar · answered by Richard Jackson

How will Oxy pivot to measured reinvestment after reaching the $10 billion debt target, and what is the thought process between short-cycle and long-cycle investments?

Richard Jackson explained that reinvestment conditions require a clearer macro environment and continued efficiencies. He highlighted the importance of reducing decline rates through EOR and waterfloods to lower sustaining capital. He aims for clear outcomes from reinvestment, demonstrating improved value, and seeks a more balanced approach between conventional and unconventional assets to accelerate long-term value. Sunil Mathew added that $5.9 billion is a starting point for 2027 sustaining capital, with increases in Gulf of America for waterfloods and exploration.

“Being able to go from mid-20s towards 20 or less over the next few years in terms of decline rate reduces our sustaining capital hundreds of millions of dollars, which gives us more headroom for return on capital.”

asked by Arun Jayaram · answered by Richard Jackson

Given service companies are pushing price increases on rigs, frac, and consumables, how do these inflationary pressures impact Oxy's capital expenditure range and expected landing within it?

Richard Jackson stated that Oxy's 7% new well cost improvement is largely driven by efficiencies, and while there are ups and downs in pricing, costs are largely holding flat. He emphasized working with service partners for performance and utilization. Ken Dillon added that supply chain has been managed well, with no shortages or impacts on production, and vendors are interested in market share, which benefits Oxy's scale. They do not see an impact on the CapEx range.

“we do not see that as an impact on our range. And in fact, our cost improvement is intact through efficiencies.”

asked by Arun Jayaram · answered by Richard Jackson

Vicki's perspective on the next decade for the energy sector, what makes her optimistic, and what are the biggest concerns for the investment community?

Vicki Hollub acknowledged ongoing volatility but noted historical WTI average real prices of $76.32 (since 1974) and $81.67 (since 2001). She believes peak supply will occur before peak demand, and Oxy is well-positioned with its portfolio, EOR capabilities, and strong international relationships to address future energy needs. She highlighted the U.S. production plateau expected between 2027-2030.

“we're perfectly positioned with where we are today, the capabilities in the portfolio to be a part of helping to address that.”

asked by Neil Mehta · answered by Vicki Hollub

Is the view that Oxy is now long inventory and will focus on organic growth, diminishing the probability of large M&A, shared by the leadership team?

Vicki Hollub stated they 'did not go through what we went through to build this portfolio to let it sit there for 30 years.' Richard Jackson affirmed a strong focus on organic development, extracting value from the existing 'rightsized resource base' through capital and operating efficiency. He mentioned opportunities for asset trades but emphasized delivering value from the current portfolio.

“we're very focused on organic development. So I think what's been done has been -- put us in an outstanding place. Our responsibility now is to extract value from it.”

asked by Neil Mehta · answered by Richard Jackson