Detailed Narrative
Strategic Portfolio Transformation
Occidental completed a 10-year journey to build a stronger, more diverse oil and gas portfolio, culminating in the sale of OxyChem. The current portfolio is built around high-margin, lower decline, and long-lasting conventional assets, complemented by a world-class unconventional portfolio. The total resource base has grown to 16.5 billion BOE, up from 8 billion BOE in 2015, and production increased from 668,000 BOE per day in 2015 to 1.43 million BOE per day in 2025. U.S. assets now contribute 83% of production, compared to 50% in 2015, providing investment flexibility and downside protection.
Cost Efficiency and Operational Excellence
The company achieved significant cost efficiencies, with $2 billion in annual oil and gas cost savings since 2023. In 2025, new well capital costs were down 15% overall, including a 16% reduction in Permian unconventional and 13% in the Rockies. New wells in U.S. onshore basins performed over 10% better than the industry on a 6-month cumulative oil per foot basis. For 2026, Occidental targets an additional $500 million in cost savings, comprising $300 million from capital and $200 million from operating and transportation costs, driven by development efficiencies like more wells per pad and increased simul-frac adoption.
Debt Reduction and Financial Flexibility
Debt reduction remained a top priority, with $4 billion repaid in 2025, bringing principal debt to $15 billion after the OxyChem sale. A further $700 million debt tender offer was announced, targeting a principal debt reduction to $14.3 billion, achieving the goal set during the OxyChem transaction. Over the last 20 months, $13.9 billion in debt has been repaid, significantly improving leverage metrics and reducing near-term debt maturities to approximately $450 million over the next four years.
Low Carbon Ventures (LCV) Progress
Occidental is progressing integrated technologies in CO2, power, and midstream to drive resource recovery and long-term value. The STRATOS project, a key LCV initiative, is nearing completion, with Phase 1 expected online in Q2 2026 and Phase 2 commissioning also beginning in Q2 2026. LCV capital spending for 2026 is $250 million lower year-over-year due to the winding down of STRATOS construction, with the project expected to reach steady operations and revenue by mid-to-late 2027, levelizing EBITDA to $90 million-$130 million by late 2028.
Resource Base and Breakeven Economics
The company's total resource base stands at 16.5 billion BOE, providing over 30 years of low-cost development opportunities. Importantly, 84% of this resource base breaks even below $50 per barrel, with an average breakeven of $38 per barrel. This strong economic profile is attributed to continuous improvement in unconventional inventory, including secondary benches, and ongoing cost reductions across the portfolio. Occidental's leadership in enhanced oil recovery (EOR) and advanced recovery techniques continues to extend resource life and improve capital efficiency.
Mid-Cycle Investments and Production Sustainability
Occidental plans to increase investment in key mid-cycle projects by $200 million in 2026, focusing on Gulf of America (GOA) waterflood projects and unconventional EOR. The Horn Mountain waterflood project in GOA is expected to provide significant incremental recovery with initial uplift beginning in late 2027. This pipeline of GOA waterflood projects is anticipated to meaningfully lower the base decline rate and operating expenses, with Horn Mountain's decline projected to reduce from 20% to sub-10% by 2030, and the overall GOA portfolio average decline decreasing to 12%.