Occidental Petroleum Corporation · Q2 2026 call

We have already reduced our principal debt to $11.8 billion. Our accelerated debt reduction lowers our go-forward annualized interest by approximately $630 million compared to 2025 interest payments. This structural savings helped enable an additional 8% increase to the quarterly dividend this year as approved by our Board and announced yesterday.

Looking ahead, we see a clear pathway to add over $4 billion of annual sustainable cash flow by 2030. This represents an approximate 95% annualized growth compared to 2025.

Importantly, this increase is driven by durable improvements across the business, including lower-cost, lower sustaining capital and a stronger balance sheet. Additionally, we can deliver this cash flow without increasing production and can expect approximately 85% to be achieved at even much lower prices.

Today, our resources totaled 16.5 billion BOE and are well understood and balanced, providing more than a 30-year low-cost development runway across conventional and unconventional assets.

Second, we expect lower sustaining capital by $900 million through continued improvements in capital efficiency and from a lower total Oxy base decline. This base decline improvement is driven by our advanced recovery projects, which are expected to support a decline rate reduction from approximately 25% to 20% by 2030.

Finally, we will see a reduction in Low Carbon Ventures capital spending. With STRATOS moving from development to operations, approximately $400 million of LCV capital will fully roll off beginning next year.

At STRATOS, we're making good progress on the nontechnology-related repair and commissioning of Trains 3 and 4. Based on our current outlook, we expect full plant commissioning to begin around the end of the year as we transition to operations in 2027.

As we consider future reinvestment for growth, we appreciate we have a deep inventory of advantaged, well-understood resources for low-cost development. However, when we invest for growth, we want to be thoughtful. Simply put, it must be measured, efficiency-led and clearly value additive.

We also generated approximately $3 billion of free cash flow during the quarter, our highest level since the third quarter of 2022.

Midstream and Marketing outperformed in the quarter, setting a new quarterly record with adjusted earnings of approximately $960 million, which was more than double the midpoint of guidance.

Since our last call, we reduced principal debt by $1.5 billion to $11.8 billion, the lowest level since the second quarter of 2019. This brings our go-forward annual interest run rate to approximately $760 million, which is approximately $630 million lower than our interest payment in 2025.

Net principal debt is now $7.6 billion, reflecting the $4.2 billion of cash we have built.

Near-term debt maturities remain low with only $414 million due through the end of 2029.

Share repurchase actions will remain opportunistic and any continuous share buyback program will be a lower priority until the redemption of the preferred.

Looking to 2027, as we mentioned in the previous calls, our starting point for capital spending is expected to be $5.9 billion. […] At that level of investment, you can assume relatively flat production in line with 2026.

So between '26, and '27, it's going to be around $2 billion, which is approximately or close to 50% of the $4 billion savings.

In terms of leverage metrics, last year, our debt-to-EBITDA based on the actual price of $65 WTI was around 1.9x. And once we get our principal debt down to $10 billion, our debt-to-EBITDA normalized for $65 WTI is almost going to be half of that.

As you know, Oxy is an industry leader in water flooding. We injected water prior to CO2 in all the large Permian EOR fields, also internationally with great success right through to today in Oman, where we use it to reduce declines from 19% to around 7% once complete, extending field lives.

Our drilling efficiency continues to get better. We're almost 50% better in terms of well delivery per rig.

based on the efficiencies we have seen so far in Permian, the plan is to drop three rigs in Q4. And but we're actually expecting to have 15 more wells online in Permian.

As you think about power generation, data center build-out, one outcome is the ability to capture CO2 off of those facilities. […] And so CO2 and power are 30% of the operating cost of an EOR barrel.

From a well productivity standpoint, we're about 41% above the industry average using a six-month oil productivity basis. Well cost is down about 10% this year.

We've seen consistent more than 45% uplift in terms of EUR. So if you're thinking about 10% average recovery in an unconventional well, now you're talking getting up to 15%. We think ultimately, as we continue to cycle CO2, that can get up to 20%.

I mean, I think in the second quarter, our realized gas price was negative $1.50. So it was almost a $2.50 swing compared to the first quarter.