OCCIDENTAL PETROLEUM CORP /DE/ (OXY) Q2 2025 Earnings Summary

Executive Summary

• Adjusted EPS of $0.39 beat Wall Street consensus $0.31; revenue of $6.41B was modestly above $6.33B; EBITDA was slightly below consensus ($2.86B vs $2.93B). The beat was driven by higher volumes and LOE efficiencies, partially offset by lower realized commodity prices . EPS/Revenue estimates from S&P Global: $0.31 EPS, $6.33B revenue, $2.93B EBITDA; actuals $0.39/$6.41B/$2.86B*.
• Sequentially, revenue fell (~6%) as realized oil/NGL/gas prices declined; adjusted EPS dropped from $0.87 to $0.39; production was 1,400 Mboed, above guidance mid-point, with Permian 770 Mboed .
• Guidance: Raised full-year Midstream & Marketing by $85M; lowered OxyChem full-year pretax income to $800–$900M; reduced 2025 capital guidance mid-point by $100M and international OpEx by $50M; guiding Q3 production to 1,420–1,460 Mboed .
• Strategic catalysts: $950M divestitures since Q2 start and ~$$7.5B$$ debt repaid since July 2024; STRATOS (DAC) on track to begin CO2 capture in 2025 with new CDR agreements (JPMorgan and Palo Alto Networks) .

What Went Well and What Went Wrong

• What Went Well
  • Operational efficiency: Domestic LOE outperformed at $8.55/boe, supported by automation, sensors, and AI; Permian well costs down ~13% YTD vs 2024 .
  • Volumes: Total production 1,400 Mboed above guidance mid-point; Permian 770, Rockies 272, Gulf 125, International 233 Mboed .
  • Midstream upside: Segment exceeded high-end of guidance (crude/gas marketing optimization, higher sulfur prices), and full-year guidance raised by $85M .
  • Management quote: “We’re on track to start capturing CO2 this year… the majority of volumes through 2030 from Stratos are now contracted” — Vicki Hollub .
• What Went Wrong
  • Price headwinds: Average realized prices fell QoQ — crude -10% ($63.76/bbl), NGL -20% ($20.71/bbl), domestic gas -45% ($1.33/mcf), pressuring earnings .
  • OxyChem weakness: Pretax income below guidance on weaker caustic/PVC pricing; full-year guidance cut to $800–$900M .
  • Gulf of America curtailments: Third-party constraints and schedule delays reduced sales volumes; earnings considerations flagged 125 Mboed in Q2 .

Financial Results

Segment pretax income (Reported vs Adjusted):

KPIs and realizations:

Comparison vs Wall Street consensus (S&P Global):

Values retrieved from S&P Global.*

Guidance Changes

Earnings Call Themes & Trends

Management Commentary

• “Continued well performance leadership and a focus on enhanced operational efficiencies enabled us to generate strong financial results in the second quarter.” — Vicki Hollub .
• “Our domestic lease operating expense in the second quarter notably outperformed guidance at $8.55 per barrel.” — Sunil Mathew .
• “Trains one and two now moving over to operations… we’re on track to start capturing CO2 this year.” — Vicki Hollub on STRATOS .
• “In the last thirteen months, we repaid approximately $7.5 billion of debt… reducing annual interest expense by approximately $410 million.” — Sunil Mathew .

Q&A Highlights

• Cash tax tailwind: OBB bill expected to reduce cash taxes by $700–$800M, ~35% in 2025 and balance in 2026 (bonus depreciation, R&D expensing, interest deductibility); book tax rate unchanged; deferred tax expense increases .
• Oman extension & free cash implications: Contract extension enhances competitiveness; stacked pay, reduced constraints, potential partners to accelerate without stressing capital .
• Asset sales/deleveraging: ~$950M divestitures since Q1-end; discussion of further non-core cleanup; ahead of debt reduction targets post CrownRock .
• OxyChem outlook: Oversupply from China weighing on caustic/PVC; 2026 likely similar to 2025; integrated margins near variable costs; hence guidance cut .
• Permian oil cut & secondary benches: Oil cut expected to stabilize/increase in H2; secondary benches leverage existing facilities, improving returns; proactive water handling/recycling technology .

Estimates Context

• Beat/miss vs consensus: Adjusted EPS $0.39 vs $0.31; revenue $6.41B vs $6.33B; EBITDA $2.86B vs $2.93B (slight miss). Margin pressure from lower realizations offset by LOE efficiencies and midstream optimization . Values retrieved from S&P Global.
• Estimate implications: Raised midstream guidance and stronger Q3 production outlook could support upward revisions to revenue/EPS in H2; OxyChem guide cut and lower realized prices suggest cautious EBITDA revisions; effective tax rate guidance lowered to ~32% Q3 may support net income bridge .

Key Takeaways for Investors

• Cost leadership intact: Domestic LOE at $8.55/boe and Permian well-cost reductions are structural, supporting cash margins despite commodity price headwinds .
• Near-term volume catalyst: Q3 production guided to 1,420–1,460 Mboed; GoA constraints easing into a stronger exit rate; potential sequential uplift .
• Portfolio high-grading accelerates deleveraging: $950M announced divestitures and $7.5B debt repaid since July 2024 reduce interest by ~$410M annually, improving FCF leverage to equity .
• Chemicals caution: OxyChem guidance lowered ($800–$900M); monitor PVC/caustic market rebalancing and Battleground expansion timing for 2026 uplift .
• Midstream upside: Guidance raised $85M on crude/gas marketing optimization, sulfur pricing, and lower transportation costs rolling through .
• DAC optionality emerging: STRATOS commissioning with CDR offtakes, plus potential South Texas JV with XRG; early-stage but meaningful strategic optionality .
• Trading lens: Modest beat with improving Q3 guide and deleveraging progress vs a cut in chemical guidance; stock likely sensitive to commodity price trends, GoA execution, and further asset sale milestones .