Occidental Petroleum (OXY) recently delivered solid earnings and navigated shifting oil prices to improve its financial footing, marked by strategic debt reduction and operational strength. Below is a clear snapshot of where things stand, written in a straightforward, human-like tone—warts and all.
Q1 2025 Earnings: A Strong Start
In the first quarter of 2025, Occidental outpaced expectations with adjusted earnings of approximately $0.87 per share, beating Wall Street estimates around $0.69–$0.74. Revenue totaled about $6.84 billion, a touch above forecasts.
Crucially, higher commodity prices helped drive results:
– Realized crude oil prices rose about 2% to around $71 per barrel.
– Natural gas liquids (NGLs) jumped nearly 19% to about $25.94 per barrel.
– Domestic gas spiked roughly 92% to about $2.42 per Mcf.
Production was steady at around 1.39 Mboe/d, with the Permian Basin leading the charge at 754 Mboe/d.
Free cash flow and operating cash flow improved markedly—about $2.1B and $1.2B, respectively—allowing Occidental to pay down debt and reduce capital spending guidance.
Q2 & Q3 2025: Operational Discipline in Action
In Q2, Occidental posted $0.39 adjusted EPS, up from $0.26 GAAP EPS, paired with strong $3.0B operating cash flow and modest $0.7B free cash flow. Production stayed elevated at 1.4 Mboe/d, and continued asset sales enabled $3B in debt repayment year-to-date. The company trimmed both capital and operating cost guidance, building on earlier gains.
By Q3, results remained resilient with $0.64 adjusted EPS and $0.65 GAAP EPS, even as revenue dipped slightly. Production exceeded guidance at 1.465 Mboe/d, and cash flows remained strong: $2.8B operating and $1.5B free cash flow. Occidental chipped away at debt further, reducing principal to $20.8B.
Permian output hit a new high at 800 Mboe/d, and unit operating costs hit their lowest since 2021 at about $8.11/BOE. Occidental also expanded its Permian resource base by 2.5 billion BOE, now representing 70% of total reserves.
OxyChem Sale: Reducing Leverage, Refining Focus
Occidental is selling its chemical arm, OxyChem, to Berkshire Hathaway in a nearly $9.7B all-cash deal slated to close by late 2025. The proceeds aim to drive down Occidental’s debt to under $15B. Occidental will retain legacy environmental liabilities tied to OxyChem.
This move aligns with Occidental’s broader strategy: reduce exposure to non-core assets, focus on upstream & midstream execution, and rapidly deleverage.
Oil Prices & Broader Market Sentiment
Occidental was helped by upward momentum in oil prices early in 2025:
– Brent averaged nearly $75/bbl in Q1—a modest rise.
– Natural gas prices jumped on winter demand, further boosting realized prices.
That said, the stock has seen a roller-coaster ride: it slipped roughly 21% off its 2025 peak, sparking concerns—even from Warren Buffett, whose Berkshire Hathaway holds a nearly 28% stake.
Summary: OXY’s Key Moves
- Earnings beats: Q1–Q3 2025 showed consistent ability to outperform estimates.
- Cash flow strength: Enabled debt reduction, efficiency gains, and strategic flexibility.
- Permian dominance: Records in output, low costs, and expanded resource base cement competitive edge.
- Chemical division exit: The OxyChem sale is pivotal to clean up the balance sheet.
- Market uncertainty: Oil prices remain a wildcard, and recent stock performance reflects investor caution.
“Our teams’ sustained focus on operational excellence unlocked additional efficiencies and supported the delivery of resilient free cash flow.” — CEO Vicki Hollub
Conclusion
Occidental Petroleum is navigating a tricky macro backdrop with focused execution and strong capital discipline. Earnings have consistently beaten expectations, production—especially in the Permian—is firing on all cylinders, and divesting OxyChem shows commitment to a leaner, more resilient balance sheet. That said, a rebound in oil prices or a surprise shift in commodity trends could make or break investor confidence. In short: OXY is doing what it can to shore up its fundamentals. Now, whether that translates into stock upside depends on external market tone—and that remains anyone’s guess.
FAQs
What drove OXY’s Q1 2025 earnings beat?
Higher realized prices for oil, NGLs, and natural gas combined with efficient operations helped drive adjusted EPS above analyst expectations.
Is Occidental paying down debt?
Yes. Strong cash generation and divestitures (including OxyChem pending sale) have helped Occidental significantly reduce its debt throughout 2025.
How important is the Permian Basin to OXY?
Crucial. It’s the heart of Occidental’s production growth, hitting record levels and counting for most of its resource base now.
What does the OxyChem sale mean?
The sale to Berkshire Hathaway is aimed at reducing Occidental’s debt burden while letting it focus on its core oil and gas business. Environmental liabilities remain with Occidental.