OXY · Q1 2026 Earnings

Bullish

Occidental Petroleum

Reported May 5, 2026

30-second summary

Occidental beat its own Q1 production guide at 1,426 Mboed and paired the print with a materially raised midstream outlook (+~$800M to $1.1B) while maintaining the FY2026 capex range at $5.5–5.9B (vs. the prior Q3-era directional $6.3–6.7B). The setup is striking: full-year production midpoint adjusted to 1.44 MMBoe/d, free cash flow of $1.75B in the quarter, principal debt at $13.3B en route to the $10B near-term target, and a new explicit >$1.2B incremental FCF target for 2026 before any price uplift. This is the cash-and-cost story the Q4 brief flagged — now with bigger numbers attached. Vicki Hollub also announced her retirement effective June 1; COO Richard Jackson will succeed her as CEO on that date.

Headline numbers

EPS

Q1 FY2026

$1.06

Revenue

Q1 FY2026

$5.23B

-8.3% YoY

Free cash flow

Q1 FY2026

$1.75B

Key financials

Q1 FY2026

Metric	Q1 FY2026	YoY	Q4 FY2025	QoQ
Revenue	$5.23B	-8.3%	$5.11B	+2.3%
EPS	$1.06	—	$0.31	+241.9%
Free cash flow	$1.75B	—	$0.96B	+81.7%

Guidance

Company raised full-year midstream earnings guidance by $800M to $1.1B but significantly cut capital expenditure guidance from $6.3-6.7B to $5.5-5.9B, while introducing new incremental free cash flow and cost savings targets for 2026.

Guidance is issued for the full year only, refreshed each quarter. Prior and new below are the same FY updated this quarter.

Actuals vs prior guidance

Metric	Period	Prior guide	Actual	Δ	Result
Total company production	Q1 FY2026	Not explicitly quantified in prior quarter next-quarter guidance	1,426 Mboed	Exceeded high end of guidance	Beat

New guidance

Metric	Period	Guide	YoY
2026 incremental free cash flow target	FY 2026	More than $1.2 billion relative to 2025 before higher price impacts	—
2026 oil and gas cost savings target	FY 2026	Additional $500 million in cost savings across new well and facility costs, operating costs, and transportation	—
2026 new oil cost improvement	FY 2026	Approximately 7%	—
Midstream earnings	Q2 FY2026	Expected to remain strong in Q2, driven by gas marketing optimization opportunities	—

Changes to prior guidance

Metric	Period	Prior guide	New guide	Δ	Result
production guidance (adjusted midpoint)	FY 2026	Implied ~1.46 million BOE per day (from Q4 FY2025 guidance)	1.44 million BOE per day	-0.02 million BOE per day	Lowered
midstream earnings guidance	FY 2026	$300 million (implied from 'approximately $400 million above original guidance')	$1.1 billion	+$800 million	Raised
capital expenditure guidance	FY 2026	$6.3 to $6.7 billion	$5.5 to $5.9 billion	-$0.8 to $1.2 billion (midpoint -$1.0B)	Lowered

Reaffirmed unchanged this quarter: Domestic lease operating expense guidance (Maintaining previous guidance; CO2 cost pressure offset by EOR optimization benefits)

Segment KPIs

Q1 FY2026

Segment	Q1 FY2026
Permian Production	787 Mboed

Other KPIs

Q1 FY2026

Segment	Q1 FY2026
Total Company Production	1,426 Mboed
Worldwide Realized Crude Oil Price	$69.91/bbl
Worldwide Realized NGL Price	$18.99/bbl
Domestic Realized Gas Price	$1.01/Mcf
Operating Cash Flow Before Working Capital	$3.251 billion
Free Cash Flow Before Working Capital	$1.747 billion
Principal Debt Outstanding	$13.3 billion

Management tone

Narrative arc: Crown Rock debt paydown → OxyChem sold, portfolio declared complete → cost-and-cash story formalized → 2026 as "first step" toward 2029 value creation, with CEO succession announced

The time horizon has stretched from "next year" to "by 2029." A year ago the conversation was about Crown Rock debt retirement on a 12-month clock. Two quarters ago Holub formally retired the M&A chapter. This quarter, the framing pushes the value-creation argument out to 2029 — incoming CEO Richard Jackson (effective June 1), still COO at the time of the print, explicitly frames 2026 as the "first step" of a multi-year program targeting decline-rate reduction below 20% by end of decade. "Advantaged resources, lower costs, and lower decline rates drive lower sustaining capital and durable free cash flow to grow value in any cycle." The lengthening horizon is consequential: it tells investors the cost-savings flywheel is now the primary value engine, not a tactical assist. The risk is that 2029 is far enough out to be impossible to falsify on any single print.

Cost savings have been escalated from "structural" to "price-neutral." Q2 introduced the structural-savings frame. Q4 quantified $900M of run-rate. This quarter the new disclosure is a >$1.2B incremental FCF target for 2026 "before the positive impacts of higher prices," with an additional $500M of cost savings on top of what was already in the 2025 baseline. Isolating cost wins from commodity tailwinds is a deliberate rhetorical move — it makes the bull case independent of WTI, which is exactly the framing a generalist investor needs to underwrite an E&P at $55–60 planning prices.

Middle East repositioning is now explicit. Last quarter the international portfolio was a footnote; this quarter Al Hosn operational constraints get airtime, PSC volume mechanics at higher prices get explained, and the Middle East goes from "core strategic asset to defend" (the historical posture) to a secondary portfolio component with constrained near-term upside. "Higher prices under PSE terms will result in lower net production." For a company that spent a decade building Oman, this is a meaningful demotion in narrative weight — and a tell that the 83% domestic production mix from Q3 is being further reinforced.

Stratos has quietly moved from upside to operational issue. Q2 framed Stratos as on-track for first CO2 capture in 2025 with majority of 2030 volumes contracted. Q4 reframed it as a 2027 ramp story. This quarter introduces a new disclosure: "we identified an issue related to non-processed components of the facility unrelated to the technology. We are currently evaluating the repair timeline and assessing the impact on the operation schedule." Management says it doesn't impact FY2026 capital range, but the language ("while still early in our assessment") is the most hedged Stratos commentary in two years. The DAC narrative has gone from commercial proof point to execution risk.

Volatility reframed as validation, not headwind. "Recent global events reinforce the importance of those decisions… we demonstrated that the strategy we have built over more than a decade can perform well through disruption." This is rhetorical jiu-jitsu — geopolitical and commodity volatility, which would historically be a defensive talking point, is now being used as proof that the portfolio transformation worked. It's a confident posture, and matches the FCF beat and production beat this quarter. It is also the kind of frame that ages poorly if the next shock breaks the other way.

Recurring themes management leaned on this quarter:

Portfolio transformation toward domestic high-margin, low-decline assetsStructural cost efficiency as multi-cycle competitive moat ($2B saved 2023-2025, $500M targeted 2026)Base decline reduction and sustaining capital efficiency as value drivers through 2029+Balance sheet deleveraging pathway to $10B principal debt with disciplined cash deploymentSubsurface technical excellence and AI/analytics integration unlocking resource base expansionLeadership succession and organizational continuity under Richard Jackson

Risks management surfaced:

Middle East geopolitical disruptions impacting volumes and PSC economicsStratos Phase 2 non-technology facility issue requiring repairs with uncertain timelineWaha-to-Gulf Coast natural gas spread normalization as pipeline capacity comes onlinePSC volume reductions at higher prices in international operationsTropical weather season impact on Gulf of America platform availability

Q&A highlights

Doug Legate · Wolf Research

What are Richard Jackson's top strategic priorities as new CEO, and what does the strategy look like under his tenure?

Richard outlined near-term execution focus (2026-2027 programs), free cash flow improvement through cost efficiency and low production decline, debt reduction to $10B principal debt target, and dividend growth. Long-term strategy centered on driving sustainable cash flow at any price, with reinvestment and opportunistic buybacks at higher prices.

26-27 program execution criticalFree cash flow improvement through cost efficiency, low decline, GOA water floods, EOR optimizationMidstream and LCV improvementsDebt/interest reduction focus

Doug Legate · Wolf Research

What does 'ongoing net debt reduction' on slide 20 mean? Is management positioning for zero net debt to redeem preferred stock when due?

Sunil explained $7.5B principal debt paid down since December; principal debt now $13.3B (below $14.3B target). Near-term focus is reducing to $10B, after which multiple options exist: build cash to redeem preferred in August 2029, reduce debt further, or pursue opportunistic buybacks. No specific net debt target; decision dependent on macro conditions. Post-2029 preferred redemption, $1.2B annual cash flow improvement enables sustainable growing dividend even at low oil prices.

Principal debt reduced from $20.8B (Q3 2023) to $13.3B currently$7.5B paid down since December$10B principal debt target in near termPreferred redemption option in August 2029

Nitin Kumar · Mizuho

Why does Oxy prefer opportunistic buybacks over formulaic return of cash programs like peers, and are inflationary pressures on services (rigs, frack, consumables) impacting capex guidance?

Richard explained flexibility through uncertainties provides advantages; fundamentals remain cost efficiency, capital efficiency, lower opex, and lower decline. Dividend is priority; continuous share repurchases after stronger balance sheet help dividend growth. On inflation: new well costs down 7% due to efficiencies; service partnerships focused on performance alignment; pricing largely holding flat despite some ups and downs. Supply chain strong with no material cost impacts; vendors interested in market share and utilization.

Dividend prioritized in cash flow allocationContinuous share repurchases after balance sheet strengtheningNew well cost improvements of 7%Service pricing largely flat despite inflation

Arun Jayarana · JP Morgan

How will capital allocation shift post-$10B debt target, and could measured reinvestment occur in 2026 or is it longer-dated? Where is focus: short-cycle vs long-cycle?

Richard noted 2026 focus on demonstrating capital efficiency before reinvestment pivot. Reinvestment conditions require: clearer macro environment, proven development efficiencies (more wells per pad, longer laterals, simulfrac), decline rate progress (targeting mid-20s toward 20% or less via EOR/water floods), and clear outcome documentation (returns, cash flow timing, decline rate). Sunil added 2027 sustaining capex starting point of $5.9B (U.S. onshore flat to 2025, growth via efficiency). GOA increase for Horn Mountain water flood injectors; exploration back to ~$150M; LCV capital rolling off.

2027 sustaining capex starting point: $5.9BU.S. onshore capital assumed flat vs. 2025GOA water flood: two injectors drilling in 2027Exploration participation: ~$150M annually

Betty Jeong · Barclays

Where is the biggest opportunity to extract value from current portfolio in execution phase? What's needed to scale unconventional EOR projects and what are limiting factors?

Richard identified key value drivers: advanced recovery (GOA water floods, CO2 EOR conventional and unconventional, international), operational excellence (production uptime, base production), workforce efficiency with AI deployment, and partnership model. On unconventional EOR: three commercial projects with construction/long-lead compression items moving; expected online in 2028. Continued demo success in Midland Basin (Barnett CO2 EOR with strong first-cycle results) and successful sidetracks in St. Andrews (central basin platform edge). EOR currently ~100K barrels/day; concentrated working interest improves cost structure for both conventional and unconventional assets.

Three commercial unconventional EOR projects expected online in 2028Barnett CO2 EOR demo showing strong first-cycle resultsSt. Andrews sidetrack success optimizing productionEOR current production: ~100K barrels/day

Answers to last quarter's watch list

Q1 production print vs. FY ~1.45 MMBoe/d average — Beat: 1,426 Mboed cleared the high end of the Q1 guide despite winter storm Fern, Gulf turnarounds, and the Al Hosn constraints. The FY midpoint was nonetheless adjusted to 1.44 MMBoe/d, which is the real signal — Q1 strength was not extrapolated into a higher FY number. Status: Resolved positively on the print, Continue monitoring on the FY trajectory.

Realization of structural cost savings cadence — Partially answered: management quantified an additional $500M of 2026 cost savings on top of prior commitments, plus ~7% new oil cost improvement, with new well costs down 7% per Q&A. Domestic LOE guidance was maintained with CO2 cost pressure explicitly offset by EOR optimization benefits — a noteworthy detail given higher oil prices typically lift CO2 input costs. Unit-cost specifics (LOE/Boe by region) were not broken out in the press release. Status: Continue monitoring.

Capital returns beyond the dividend raise — Answered, and the answer remains debt-first. The $10B principal debt milestone is now the explicit near-term gate; buybacks are positioned as "after balance sheet strengthening" and "opportunistic." No buyback announcement, no accelerated debt schedule beyond the $10B target. Less aggressive than the Q4 framing implied. Status: Resolved negatively on the buyback timing question.

Sustaining capital sensitivity to oil price — Partial answer: 2027 sustaining capex starting point is $5.9B per Mathew in Q&A, U.S. onshore assumed flat to 2025. Service pricing flat despite higher oil prices; supply-chain strength holding. The $4.1B-at-$40-oil figure from Q4 was not re-tested, but the implication is the sustaining floor has not moved up despite stronger prices. Status: Resolved positively on the short term; the longer-cycle sensitivity remains untested.

Stratos/LCV execution milestones — Resolved negatively in detail: management disclosed a non-process facility issue at Stratos Phase 2 requiring repair, with timeline being evaluated. No confirmed first CO2 capture event, no new DAC partnership announcements, no confirmation of the ~$100M 2027 LCV capex step-down (though Mathew implied LCV capital is "rolling off" in 2027 per Q&A). The narrative weight on Stratos has clearly diminished. Status: Resolved negatively on commercialization cadence.

Reserves replacement trajectory — Not addressed in this disclosure. With M&A formally off the table, organic reserves replacement remains a long-cycle valuation question that wasn't called out on the print. Status: Continue monitoring.

What to watch into next quarter

Stratos Phase 2 repair timeline and cost. Management's "we do not expect this to impact Oxy's capital range for the year" is conditional language. Watch whether the Q2 print confirms no capex impact, gives a repair-completion date, or — if silent — implicitly extends the timeline into 2027. A specific dollar figure or schedule would resolve the new operational overhang.

Midstream FY guidance durability post-Waha spread normalization. The $800M raise to $1.1B is heavily weighted toward gas marketing optimization on the Waha-to-Gulf Coast spread. As Matterhorn, Blackcomb, and other Permian gas takeaway projects come online through 2026, that spread mechanically compresses. Watch whether management trims the FY midstream number on the Q2 call or signals a structural offset.

Path to $10B principal debt and first buyback signal. $13.3B current, $10B near-term target — at the current ~$3.25B quarterly operating cash flow pace, the gap closes inside 2026 if prices hold. Watch whether the Q2 call introduces a buyback authorization, a specific net-debt target, or a calendar commitment toward the August 2029 preferred redemption.

FY2026 production trajectory and the 1.44 MMBoe/d midpoint. Q1 beat, Al Hosn supposed to normalize before end of Q2, Permian unconventional expected to step up. Watch whether the Q2 print clears the implied ~1.43 MMBoe/d quarterly average needed to land FY at 1.44 — and whether the FY midpoint gets restored higher if Q2 delivers, or trimmed further if Al Hosn drags.

Unconventional EOR project FID detail ahead of 2028 startup. Three commercial projects guided for 2028 commissioning with long-lead compression items moving. Watch for specific dollar figures, location, and operator working interest — the 100K barrels/day current EOR base needs a quantified expansion path to support the decline-rate-below-20%-by-2029 thesis.

2027 sustaining capex confirmation at $5.9B. Mathew's Q&A figure is the first explicit forward-year capital anchor. Watch whether subsequent prints reaffirm or revise it — a move above $5.9B without commensurate production growth would meaningfully change the sustaining-cash-flow math.

CEO transition execution. Richard Jackson assumes the CEO role June 1. Watch the Q2 call for any shift in messaging cadence, capital allocation emphasis, or strategic priorities under his stewardship vs. the Hollub framework.

Sources

Occidental Petroleum Q1 2026 earnings press release, filed May 5, 2026 — https://www.sec.gov/Archives/edgar/data/797468/000162828026030567/oxyex9913-31x26earningsrel.htm
Occidental Petroleum Q1 2026 earnings conference call — prepared remarks and Q&A from Vicki Hollub (CEO), Richard Jackson (COO and CEO-designate effective June 1), Sunil Mathew (CFO), and operating leadership. Forward guidance, Stratos commentary, debt-reduction milestones, and 2027 sustaining capex anchor sourced from the transcript.

Get the next brief, free.

We publish analyst-grade earnings briefs the same day or morning after every call — headline numbers, segment KPIs, Q&A highlights, and tone analysis. Free during beta.

This is not investment advice.