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Introduction & Market Context
Occidental Petroleum Corporation (NYSE:OXY) released its second quarter 2025 earnings presentation on August 7, highlighting solid operational performance despite a quarter-over-quarter decline in earnings per share. The company’s stock rose 1.22% in premarket trading to $43.06, following a 1.25% decline in the previous session, as investors responded positively to the company’s continued focus on debt reduction and operational efficiencies.
The presentation revealed adjusted diluted earnings per share of $0.39 for Q2 2025, down from the $0.87 reported in the first quarter but supported by strong cash flow generation and cost-cutting initiatives. Occidental continues to emphasize its "Zero In" strategy, focusing on operational excellence, debt reduction, and low-carbon ventures.
Quarterly Performance Highlights
Occidental reported $2.6 billion in operating cash flow for the second quarter, with worldwide production reaching 1,400 thousand barrels of oil equivalent per day (Mboed). The company achieved its lowest lease operating expense (LOE) per barrel of oil equivalent since the fourth quarter of 2021, demonstrating improved operational efficiency.
As shown in the following key takeaways from the presentation, the company is driving financial results through operational excellence while strengthening its balance sheet and reducing costs:
The financial results for Q2 2025 show adjusted diluted EPS of $0.39 and reported diluted EPS of $0.26. The company maintained a strong unrestricted cash balance of $2.3 billion while continuing to invest in its operations with net capital expenditures of $1.9 billion.
The following slide summarizes the second quarter highlights across Occidental’s business segments:
Debt Reduction Progress
A central theme of Occidental’s presentation was its continued progress in debt reduction. The company has repaid $7.5 billion of debt in just 13 months, reducing annual interest expense by approximately $410 million. Additionally, Occidental announced approximately $950 million of additional divestitures since the first quarter of 2025, further strengthening its balance sheet.
The following chart illustrates the company’s debt reduction progress and maturity schedule:
This aggressive debt reduction strategy aligns with CEO Vicki Hollub’s previous statements about the company’s disciplined approach. During the Q1 earnings call, she emphasized that Occidental is "approaching this environment with discernment and discipline" and focusing not just on maximizing free cash flow in 2025 but on "sustaining strong cash flow generation potential over the next several years."
Operational Excellence & Cost Reduction
Occidental highlighted significant progress in cost reduction and operational efficiency. The company announced an additional $150 million in 2025 capital and operating expense reductions, building on previously announced initiatives. In total, Occidental expects $500 million of cumulative cost reductions in 2025.
The company’s technical expertise is driving enduring cost reductions across its U.S. onshore operations:
Capital efficiency improvements are also contributing to cost savings, with the company reducing its 2025 capital plan by $200 million compared to the original plan. This represents an additional $100 million capital reduction from prior guidance. These efficiencies are driven by improvements in drilling operations, with Delaware Basin drilling duration per well improving approximately 20% from 2024.
The following slide illustrates the efficiency momentum leading to further capital reduction:
Strategic Initiatives
Occidental continues to advance its strategic initiatives across its portfolio. In the Delaware Basin, the company is demonstrating industry-leading well performance, with average 6-month cumulative oil production 45% above the basin average and 12-month production 41% above average:
The company also highlighted its high-quality U.S. onshore development runway, noting that its inventory of low-breakeven locations has increased despite drilling or divesting more than 1,200 locations. Occidental reports approximately 13 years of development at current pace with breakeven prices below $60 per barrel:
In the low-carbon space, Occidental’s STRATOS direct air capture project is advancing, with completed construction for Trains 1 & 2 and central processing facilities. The company has also begun wet commissioning and received Class VI permits for the project:
Additionally, Occidental’s 1PointFive subsidiary signed a 25-year carbon offtake agreement with a CF Industries-JERA-Mitsui joint venture, further advancing its position in carbon capture:
Forward-Looking Guidance
Looking ahead to 2026, Occidental expects a significant cash flow inflection from its non-oil and gas businesses. The company projects approximately $1 billion in incremental free cash flow through increased EBITDA and capital roll-off, with contributions from its Chemical, Midstream, and corporate cost improvement initiatives:
The company’s integrated portfolio positions it well for future growth across its Oil & Gas, OxyChem, and Midstream segments:
For the third quarter and full-year 2025, Occidental provided detailed guidance on production volumes, operating costs, and pretax income across its business segments. The company expects to maintain its production base while continuing to focus on its cash flow priorities, including sustainable and growing dividends, debt reduction, and potential share repurchases.
Conclusion
Occidental’s second quarter 2025 presentation demonstrates the company’s continued focus on operational excellence, debt reduction, and strategic positioning for future growth. While adjusted earnings per share declined from the first quarter, strong cash flow generation and ongoing cost reduction initiatives support the company’s financial health.
The market’s positive reaction to the presentation suggests investor confidence in Occidental’s strategy of balancing current performance with long-term value creation through its integrated portfolio and low-carbon initiatives. As the company continues to reduce debt and improve operational efficiencies, it appears well-positioned to navigate the evolving energy landscape.
Full presentation:
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