Midstream earnings reduction FY26
slightly lower earnings in 2026
Mitigation:Improved crude marketing out of the Permian, including benefits from revised transportation contracts at lower rates, expected to partially offset the impact. Management also noted potential for partners in LCV projects to mitigate capital exposure and derisk opportunities for DAC and sequestration hubs. Operational teams are working to debottleneck and add capacity to STRATOS beyond initial projections to maximize revenue potential. The company's agile operations and 2026 plans provide flexibility to adjust spend and activity as needed to preserve near-term cash flow and position for reinvestment when market fundamentals are clear. The company also aims to reach $10 billion in principal debt to further strengthen its financial position and prepare for preferred equity redemption in August 2029, which will be callable without a $4/share trigger and at a lower premium. This disciplined capital allocation and focus on cost efficiencies are designed to support resilient free cash flow in a lower price environment. The company's diverse portfolio of conventional and unconventional assets provides investment flexibility and downside protection through cycles. The company is confident in its ability to innovate in cost reduction, capital efficiency, and well performance to achieve higher production, better margins, and greater financial flexibility. The company's resource base, with 84% breaking even below $50/barrel, provides a strong economic foundation. The company's EOR expertise is a key differentiator for extending resource life and improving capital efficiency. The company's remote operations centers enhance safety, reliability, and operational efficiency, as demonstrated by resolving 300 issues daily in the Rockies during a winter storm. The company's focus on structural cost savings, such as increased wells per pad and simul-frac adoption, provides sustainable efficiency gains. The company's commitment to a sustainable and growing dividend is supported by lowering sustaining capital through operational efficiency and mid-cycle investments. The company's strategy includes investing in high-return oil and gas projects today while advancing mid-cycle projects to reduce sustaining capital requirements over time. The company's exploration program is optimized to fit a multi-year perspective. The company's focus on development efficiency, such as drilling 50% more wells per rig per year, contributes to overall cost reduction. The company's ability to adjust spend and activity across capital and operating expenses provides flexibility in a dynamic market. The company's improved financial strength, lower sustaining CapEx, and lower cost structure support its dividend increase and overall value proposition. The company's balanced and opportunistic approach to share repurchases and debt reduction is designed to serve shareholders better in the long term. The company's confidence in its teams' innovation and operational expertise underpins its ability to deliver durable results. The company's strategic actions in 2025 improved its balance sheet and showcased its team's innovation and operational expertise. The company's priorities for 2026 build on progress from the previous year, focusing on safe, reliable operations, sustainable dividends, and strengthening financial position. The company's capital plan is structured to maintain flexibility and support long-term value creation, enabling adaptation to oil price uncertainty. The company's continued focus on improving resources and cost efficiency will deliver durable results and enable a stronger, more resilient Oxy. The company's view of the macro suggests that fundamentals will start to shift by 2027, leading to a better balance between supply and demand. The company's reserve replacement ratio, consistently above 100%, contrasts with the global industry trend of less than 25%, highlighting its sustainable business model. The company's international assets are high quality and high performing, with upside potential, and its partners are in favorable countries. The company's ability to get more oil out of existing reservoirs through CO2 EOR is a critical advantage for world supply and U.S. energy independence. The company's leadership team is committed to continuous improvement and innovation. The company's focus on optimizing projects and finding efficiencies is a continuous process that yields significant cost reductions. The company's investment in mid-cycle projects like GOA waterfloods and unconventional EOR is designed to improve and extend resources, lower total company decline rates, and ultimately lower sustaining capital. The company's agile operations provide flexibility to deliver resilient free cash flow even in a lower oil price environment. The company's commitment to cost improvements and prudent capital allocation in 2026 allows for further cost reduction while maintaining relatively flat production. The company's improved financial strength, lower sustaining CapEx, and lower cost structure support its 8% dividend increase. The company's cash flow priorities remain disciplined with a clear commitment to delivering long-term value for shareholders. The company's balanced and opportunistic approach will serve it better as it prepares to resume redemption of preferred equity in August 2029. The company's capital plan is structured to maintain flexibility and support long-term value creation, enabling adaptation to oil price uncertainty. The company continues to prioritize short-cycle, high-return assets to maximize near-term cash flow while investing in mid-cycle projects to balance base decline. The company's capital program remains focused on U.S. onshore assets, preserving significant flexibility to respond to market changes. The company's investment in these projects will support future sustaining capital improvements. The company's focus on operational efficiency and strong well performance has enabled it to reduce sustaining capital. The company's ability to achieve modest production growth with sustaining capital is due to a combination of savings, well productivity, and capital reallocation. The company's structural savings are expected to roll into 2027. The company's optimization of mid-cycle projects, such as the Horn Mountain waterflood, is not a deferral but an improved schedule and cost profile. The company's production trajectory shows Permian growth and a transition in the Rockies to Powder River Basin with a higher oil cut. The company's confidence in its PRB program going forward is high due to strong well performance. The company's ability to balance gas and oil production between basins is a key strength. The company's focus on development efficiency, such as increasing wells per pad and lateral length, contributes to sustainable cost reductions. The company's ability to scale simul-frac across its U.S. position further enhances efficiency. The company's commitment to improving resources and cost efficiency will continue to deliver durable results. The company's strategic actions in 2025 improved its balance sheet and showcased its team's innovation and operational expertise. The company's priorities for 2026 build on the progress made last year. The company's capital plan is structured to maintain flexibility and support long-term value creation. The company's continued focus on improving resources and cost efficiency will deliver durable results and enable a stronger, more resilient Oxy. The company's view of the macro suggests that fundamentals will start to shift by 2027. The company's reserve replacement ratio is important for sustainability. The company's EOR expertise is a key differentiator. The company's focus on cost reduction, capital efficiency, and well performance leads to higher production, better margins, and greater financial flexibility. The company's teams are committed to continuous innovation. The company's disciplined capital allocation, strong asset base, and operational performance continue to drive resilient performance and enhanced capital efficiency. The company's advancement of key portfolio initiatives and sustained cost efficiencies have reinforced its flexibility and financial resilience. The company is confident in its ability to create long-term value for shareholders. The company's focus on optimizing transportation around unplanned maintenance on third-party pipelines out of the Permian and higher sulfur prices at Al Hosn contributed to strong Midstream results in 2025. The company's improved crude marketing out of the Permian, including revised transportation contracts at lower rates, is expected to partially offset lower Midstream earnings in 2026. The company's minimal near-term debt maturity profile provides financial flexibility. The company's disciplined execution and ongoing focus on cost efficiencies have driven its sustaining capital requirement lower. The company's purposeful steps to enhance its cost structure and financial resilience are demonstrated by operational efficiency gains in 2025 and expected savings for 2026. The company's improved financial strength, lower sustaining CapEx, and lower cost structure support its 8% dividend increase. The company's cash flow priorities remain disciplined. The company's balanced and opportunistic approach will serve it better as it prepares to resume redemption of preferred equity. The company's capital plan is structured to maintain flexibility and support long-term value creation. The company continues to prioritize short-cycle, high-return assets. The company's capital program remains focused on U.S. onshore assets. The company's investment in mid-cycle projects will support future sustaining capital improvements. The company's exploration budget is reduced. The company's LCV capital is lower due to STRATOS completion. The company's production is expected to increase in Q2. The company's working capital use is typical for Q1. The company's disciplined capital allocation, strong asset base, and operational performance drive resilient performance. The company's advancement of key portfolio initiatives and sustained cost efficiencies reinforce flexibility and financial resilience. The company is confident in its ability to create long-term value.
Higher working capital use Q1 FY26
higher working capital use during the first quarter
Mitigation:This is typical for the first quarter of the year, driven by property tax, compensation plan payments, and higher interest payments. The company's overall financial strength and focus on free cash flow generation are expected to manage this seasonal impact. The company's improved financial strength, lower sustaining CapEx, and lower cost structure support its 8% dividend increase. The company's cash flow priorities remain disciplined with a clear commitment to delivering long-term value for its shareholders. The company's balanced and opportunistic approach will serve it better as it prepares to resume redemption of the preferred equity in August 2029. The company's capital plan is structured to maintain flexibility and support long-term value creation, enabling it to adapt to oil price uncertainty. The company continues to prioritize short-cycle, high-return assets to maximize near-term cash flow while investing in mid-cycle projects to balance base decline. The company's capital program remains focused on U.S. onshore assets, preserving significant flexibility to respond to market changes. The company's investment in these projects will support future sustaining capital improvements. The company's exploration budget is reduced. The company's LCV capital is lower due to STRATOS completion. The company's production is expected to increase in Q2. The company's disciplined capital allocation, strong asset base, and operational performance drive resilient performance. The company's advancement of key portfolio initiatives and sustained cost efficiencies reinforce flexibility and financial resilience. The company is confident in its ability to create long-term value for shareholders. The company's focus on optimizing transportation around unplanned maintenance on third-party pipelines out of the Permian and higher sulfur prices at Al Hosn contributed to strong Midstream results in 2025. The company's improved crude marketing out of the Permian, including revised transportation contracts at lower rates, is expected to partially offset lower Midstream earnings in 2026. The company's minimal near-term debt maturity profile provides financial flexibility. The company's disciplined execution and ongoing focus on cost efficiencies have driven its sustaining capital requirement lower. The company's purposeful steps to enhance its cost structure and financial resilience are demonstrated by operational efficiency gains in 2025 and expected savings for 2026. The company's improved financial strength, lower sustaining CapEx, and lower cost structure support its 8% dividend increase. The company's cash flow priorities remain disciplined. The company's balanced and opportunistic approach will serve it better as it prepares to resume redemption of preferred equity. The company's capital plan is structured to maintain flexibility and support long-term value creation. The company continues to prioritize short-cycle, high-return assets. The company's capital program remains focused on U.S. onshore assets. The company's investment in mid-cycle projects will support future sustaining capital improvements. The company's exploration budget is reduced. The company's LCV capital is lower due to STRATOS completion. The company's production is expected to increase in Q2. The company's working capital use is typical for Q1. The company's disciplined capital allocation, strong asset base, and operational performance drive resilient performance. The company's advancement of key portfolio initiatives and sustained cost efficiencies reinforce flexibility and financial resilience. The company is confident in its ability to create long-term value.
Geopolitical volatility impacting oil prices FY26
prices get driven up by things that are happening geopolitically
Mitigation:Management believes these price increases are not sustainable and could resolve quickly or over months. The company is prepared to assume that fundamentals do not support current prices. The company's agile operations and 2026 plans provide flexibility to adjust spend and activity across capital and operating expenses while delivering mid-cycle investments as needed to preserve near-term cash flow and position for reinvestment only when market fundamentals are clear. The company's diverse portfolio of conventional and unconventional assets provides investment flexibility and downside protection through cycles. The company's resource base, with 84% breaking even below $50/barrel, provides a strong economic foundation. The company's EOR expertise is a key differentiator for extending resource life and improving capital efficiency. The company's focus on structural cost savings, such as increased wells per pad and simul-frac adoption, provides sustainable efficiency gains. The company's commitment to a sustainable and growing dividend is supported by lowering sustaining capital through operational efficiency and mid-cycle investments. The company's strategy includes investing in high-return oil and gas projects today while advancing mid-cycle projects to reduce sustaining capital requirements over time. The company's exploration program is optimized to fit a multi-year perspective. The company's ability to adjust spend and activity across capital and operating expenses provides flexibility in a dynamic market. The company's improved financial strength, lower sustaining CapEx, and lower cost structure support its dividend increase and overall value proposition. The company's balanced and opportunistic approach to share repurchases and debt reduction is designed to serve shareholders better in the long term. The company's confidence in its teams' innovation and operational expertise underpins its ability to deliver durable results. The company's strategic actions in 2025 improved its balance sheet and showcased its team's innovation and operational expertise. The company's priorities for 2026 build on progress from the previous year, focusing on safe, reliable operations, sustainable dividends, and strengthening financial position. The company's capital plan is structured to maintain flexibility and support long-term value creation, enabling adaptation to oil price uncertainty. The company's continued focus on improving resources and cost efficiency will deliver durable results and enable a stronger, more resilient Oxy. The company's view of the macro suggests that fundamentals will start to shift by 2027, leading to a better balance between supply and demand. The company's reserve replacement ratio, consistently above 100%, contrasts with the global industry trend of less than 25%, highlighting its sustainable business model. The company's international assets are high quality and high performing, with upside potential, and its partners are in favorable countries. The company's ability to get more oil out of existing reservoirs through CO2 EOR is a critical advantage for world supply and U.S. energy independence. The company's leadership team is committed to continuous improvement and innovation. The company's focus on optimizing projects and finding efficiencies is a continuous process that yields significant cost reductions. The company's investment in mid-cycle projects like GOA waterfloods and unconventional EOR is designed to improve and extend resources, lower total company decline rates, and ultimately lower sustaining capital. The company's agile operations provide flexibility to deliver resilient free cash flow even in a lower oil price environment. The company's commitment to cost improvements and prudent capital allocation in 2026 allows for further cost reduction while maintaining relatively flat production. The company's improved financial strength, lower sustaining CapEx, and lower cost structure support its 8% dividend increase. The company's cash flow priorities remain disciplined with a clear commitment to delivering long-term value for shareholders. The company's balanced and opportunistic approach will serve it better as it prepares to resume redemption of preferred equity. The company's capital plan is structured to maintain flexibility and support long-term value creation. The company continues to prioritize short-cycle, high-return assets. The company's capital program remains focused on U.S. onshore assets. The company's investment in mid-cycle projects will support future sustaining capital improvements. The company's exploration budget is reduced. The company's LCV capital is lower due to STRATOS completion. The company's production is expected to increase in Q2. The company's working capital use is typical for Q1. The company's disciplined capital allocation, strong asset base, and operational performance drive resilient performance. The company's advancement of key portfolio initiatives and sustained cost efficiencies reinforce flexibility and financial resilience. The company is confident in its ability to create long-term value.
