OXY · Q4 2025 Earnings

Bullish

Occidental Petroleum

Reported February 18, 2026

30-second summary

Occidental beat its own Q4 production guide by 21 Mboed (1,481 Mboed vs. 1.42–1.46 midpoint) and used the call to formally retire the M&A chapter — Holub said the company "no longer require[s] transformative acquisitions" with the OxyChem sale closing out a ten-year portfolio build. The 2026 setup is unusual for an E&P: capex cut $550M to $5.5–5.9B, production grows just ~1%, and management is pointing to $900M of structural operating savings plus $365M of interest savings as the engine for >$1.2B of FCF improvement. The bull read is that this is a deliberate pivot to cash returns over volumes; the bear read is that 1% growth with Q1 already flagged as a winter-storm air-pocket leaves little margin for commodity disappointment.

Headline numbers

EPS

Q4 FY2025

$0.31

Revenue

Q4 FY2025

$5.11B

-9.3% YoY

Free cash flow

Q4 FY2025

$0.96B

Key financials

Q4 FY2025

Metric	Q4 FY2025	YoY	Q3 FY2025	QoQ
Revenue	$5.11B	-9.3%	$6.62B	-22.8%
EPS	$0.31	—	$0.64	-51.6%
Free cash flow	$0.96B	—	$1.50B	-35.8%

Guidance

Company beat Q4 production guidance and issued 2026 guidance emphasizing $1.2B+ FCF improvement, $900M in combined operational savings, and modest 1% production growth alongside 5% capex reduction.

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
Production	Q4 FY2025	1.42 to 1.46 million BOE/d	1.481 million BOE/d	+21 Mboed above guidance midpoint	Beat
Adjusted Effective Tax Rate	Q4 FY2025	approximately 32%	~32% range	in-line	Met

New guidance

Metric	Period	Guide	YoY
Capital Expenditures	FY 2026	$5.5 billion to $5.9 billion	—
Production	FY 2026	~1.45 million BOE/d (approximately 1% growth)	—
Free Cash Flow Improvement	FY 2026	More than $1.2 billion improvement in 2026	—
Oil & Gas Operational Cost Savings	FY 2026	$500 million	—
Midstream Operational Cost Savings	FY 2026	$400 million	—
Interest Savings	FY 2026	~$365 million	—

Segment KPIs

Q4 FY2025

Segment	Q4 FY2025	YoY
Midstream & Marketing	$0.451B	+196.7%

Other KPIs

Q4 FY2025

Segment	Q4 FY2025
Worldwide Production	1,481 Mboed
Worldwide Oil Realized Price	$59.22/bbl
Worldwide NGL Realized Price	$16.68/bbl
Domestic Gas Realized Price	$1.12/Mcf
Proved Reserves	4.6 billion BOE
Operating Cash Flow Before Working Capital	$2.7 billion
Free Cash Flow Before Working Capital	$1.0 billion
Quarterly Dividend Per Share	$0.26

Management tone

Narrative arc: Crown Rock debt paydown → balance sheet cleared, DAC commercialized → portfolio completion declared → execution and cash story

M&A as a strategic lever has been formally retired. Two quarters ago Holub was still describing Oman as a platform with optionality and the OxyChem sale as a balance-sheet move; on this call the portfolio is declared finished. "We no longer require transformative acquisitions. Instead, our teams are focused on what they do best, and that is execution, including cost reduction, capital efficiency, and well performance." This is the most consequential framing shift in two years — it tells investors that excess cash flow is no longer competing with a hypothetical next deal, which materially raises the bar on shareholder-return cadence into 2026.

Cost savings have been relabeled from tactical to structural for a third consecutive quarter — but the dollar figures are now bigger and broader. Q2 introduced the 40% "route-less operations" structural-savings frame; this call extends it to a combined $900M annual run-rate ($500M oil & gas + $400M midstream) plus $365M of interest savings. "These structural savings are a result of a focused cross-functional effort from our teams over the last several years." The Q&A detail — 28% well-cost reduction 2023–2025, simulfrac scaling from 10% to ~40% of U.S. position, drilling 50% more wells per rig per year — gives this claim more substance than the Q2 version. If these hold, sustaining capital at $40 oil drops to $4.1B for a production base 35,000 Boed higher than 2025.

Growth ambition has been explicitly traded for cash generation. In Q2 Holub was still flagging Gulf water floods and Oman as incremental capital destinations. This quarter the message is the opposite: $400M less U.S. onshore capital, 2.5 fewer rigs, 2 fewer frac crews, and still 1% production growth and 4% Permian growth. "Further cost savings and higher productivity from both base and new wells eliminated the need for this reallocation." For an E&P, choosing to take activity down while commodities are uncertain — rather than hold activity and hope for a tape — is a credible discipline signal but also caps the upside leverage if prices firm.

Q1 2026 has been pre-managed lower. Management explicitly flagged Q1 production as below the full-year ~1.45 MMBoe/d average due to winter storm Fern and planned Gulf turnarounds, with recovery promised in Q2. This is preemptive expectations management — the kind that's necessary when the FY production growth is only 1% and a soft Q1 print could otherwise read as a miss against the new guide.

Mid-cycle and EOR projects framed as decline-rate insurance, not growth optionality. The Horn Mountain water flood, Stratos ramp, and shale-EOR work were previously sold as upside. This quarter the same projects are repositioned as the mechanism for lowering corporate decline rate and sustaining capital intensity — a longer-duration but lower-beta story for valuation models.

Recurring themes management leaned on this quarter:

Structural cost reductions becoming embedded in operationsCapital discipline enabling production maintenance despite lower capexPortfolio completion and operational focus replacing M&A strategyMid-cycle project investments to reduce long-term decline ratesFinancial flexibility and balance sheet strengtheningResilient free cash flow generation across price cycles

Risks management surfaced:

Lower realized oil prices impacting cash generationFirst quarter production headwinds from winter storm Fern and planned turnarounds in Gulf of AmericaGas transportation optimization opportunities narrowing with increased takeaway capacityAbility to replace reserves becoming tougher across industryOil price uncertainty requiring capital plan flexibility

Q&A highlights

Arun Jayaram · J.P. Morgan

Walk through the moving pieces of the $800 million lower CapEx guidance versus the soft guide provided last quarter, breaking down the $300 million in efficiency gains and $100 million exploration reduction, plus other changes and activity implications.

Management attributed the reduction primarily to exceptional team work in capital optimization through their structured planning process (June start, three processes before board recommendation). Detailed breakdown: $300M oil & gas reduction (mostly structural cost savings and reallocation), $250M lower LCV, $400M reduction in U.S. unconventional CapEx (70% from well cost continuation of prior $2B savings), $100M exploration reduction, offset by $200M increase for mid-cycle projects. Activity reduced by 2.5 rigs and 2 frac crews while maintaining production through operational efficiency and strong well performance.

$800 million lower CapEx vs. Q3 soft guide$300 million oil & gas reduction$250 million lower LCV$400 million U.S. unconventional capital reduction

Nitin Kumar · Mizuho

What portion of the sub-$30/barrel cost breakeven resources comes from unconventional, given concerns about shale inventory exhaustion, and what is driving this economics improvement?

Management explained that U.S. unconventional represents nearly half of the total resource base with sub-$50 breakeven costs. The economics improvement is driven by continued enhancement of inventory (primary intervals plus secondary benches now providing equivalent value), combined with lower well costs achieved through operational efficiencies. The $38 per barrel average resource breakeven reflects portfolio-wide improvements, with GOA and other areas also achieving lower costs through various operational improvements.

$38 per barrel average resource breakevenU.S. unconventional at sub-$50 breakeven (resources business only)Secondary benches now providing equivalent value to primary intervalsU.S. unconventional approximately 50% of total resources

Betty Jiang · Barclays

How much of the 2026 cost savings are sustainable into 2027? Is any capital being deferred from 2026 to 2027, and how will production flow given front-loaded CapEx but back-loaded activity?

Management emphasized that 2026 capital represents a good sustaining baseline for 2027 with expected modest growth depending on efficiency and well performance. Structural cost savings are sustainable and characterized as ongoing, not one-time. Savings are not deferrals but optimizations (e.g., Horn Mountain water flood injection begins late 2027, EOR projects ramp 2027). U.S. unconventional capital can be assumed as sustaining; GOA will see increases for water flood injection wells; International flat; Exploration ~$200M annually; LCV lower post-Stratos completion. Production will grow modestly (4% Permian year-on-year) through combination of cost savings, well productivity, and capital reallocation, not capital increases.

2026 capital as good starting point for 2027 sustaining capitalStructural savings in well costs (28% reduction 2023-2025): drilling 50% more wells per rig per year, wells per pad from 3-4 to 4-6, 10% lateral length improvementSimulfrac scaling from 10% to near 40% of U.S. positionHorn Mountain injection late 2027 with uplift following

Doug Legate · Wolf Research

What would sustaining capital be at current/higher oil prices (not $40), and will LCV capital disappear in 2027? Is LCV now contributing positively to cash flow?

Management explained that sustaining capital of $4.1 billion at $40 assumes ~20% deflation from $55 baseline. At current higher prices, sustaining capital would be higher due to inflation reversal. LCV capital will reduce by ~$100M in 2027 as Stratos completes this year and ramps in 2026-2027. LCV is expected to reach levelized EBITDA of $90-130M range by late 2028 in steady operations. Management emphasizing partnership approach to bring in partners for DAC and sequestration hubs to share capital burden. Focused on continued cost reduction and capacity additions similar to other projects.

$4.1 billion sustaining capital at $40 oil (2026 guidance)$5.7 billion midpoint CapEx guidance for 20262025 sustaining capital $4.5 billion (adjusted ~$4.2B for OxyChem) for 1.42 million BOE/day2026 sustaining capital $4.1 billion for production 35,000 BOE/day higher

Neil Mehta · Goldman Sachs

As new COO, what initial observations on Oxy's operational strengths and areas for improvement, and what is your macro perspective on 2026 oil prices given geopolitical volatility versus fundamental support?

Richard (COO) highlighted outstanding resource base, exciting GOA water flood and EOR opportunities, strong production reliability improvements, and emerging momentum in technology (CO2, power, water, digital/AI). Noted remote operations center deployment resolving 300 issues/day remotely in Rockies with 40% of U.S. production now routeless. Vicky provided cautious 2026 macro view: fundamentals not supporting current prices despite geopolitical premiums; expects balance closer to 2027 as industry reserve replacement ratio globally at <25%. Noted Guyana's 12B barrels barely replace one-third of global annual demand (30B). Emphasized Oxy's unique competitive advantages in CO2-EOR, international presence, and reserve replacement capabilities as industry increasingly facing declining resources.

Answers to last quarter's watch list

OxyChem trajectory — Resolved (and now moot): OxyChem has been sold, ending the segment as a guidance line. Holub characterized the sale as "deliberate" portfolio completion rather than forced disposal. Status: Not resolved (the original watch is no longer applicable; reframed by divestiture).

Q4 production delivery within the 1.42–1.46 MMBoe/d range — Beat: Q4 came in at 1,481 Mboed, 21 Mboed above the midpoint, driven by U.S. onshore overdelivery. Gulf curtailments did not derail the print. Status: Resolved positively.

Stratos commissioning and first CO2 capture milestone — Partial: management referenced Stratos ramp through 2026 with injection beginning 2027 and steady operations mid-to-late 2027; no clean "first capture achieved" milestone was called out on the print. LCV is targeting $90–130M levelized EBITDA by late 2028. Status: Continue monitoring.

Capital return signaling — Dividend raised 8% to $0.26/share and Holub formally retired the M&A pathway. Principal debt expected to fall to $14.3B. Buybacks were not announced. Status: Resolved positively on dividend and capital-allocation framing; buyback question still open.

Cash tax realization from One Big Beautiful Bill — Not called out in this disclosure; FY2025 effective tax rate landed at ~32% in-line with guidance. The 2026 plan does not break out cash tax timing. Status: Continue monitoring.

Permian secondary bench and shale EOR progression — Management said secondary benches now provide value equivalent to primary intervals, supporting the $38/bbl portfolio breakeven. Mid-cycle EOR projects got $200M of incremental 2026 capital. No dated shale-EOR FID. Status: Continue monitoring.

What to watch into next quarter

Q1 2026 production print vs. the FY ~1.45 MMBoe/d average. Management pre-flagged Q1 as below average due to winter storm Fern and Gulf turnarounds. Watch whether the gap is contained to a few percent or runs deeper, which would put the 1% FY growth path at risk.

Realization of structural cost savings cadence. $500M oil & gas + $400M midstream + $365M interest savings should begin showing up in unit-cost metrics by Q1. Watch domestic LOE/Boe and midstream operating costs vs. the FY2025 baseline; a slip below run-rate by mid-year would undermine the >$1.2B FCF improvement claim.

Capital returns beyond the dividend raise. With M&A formally retired and debt at $14.3B, the next quarter is the natural window for a buyback announcement or accelerated debt target. Continued silence would be inconsistent with the strategic framing.

Sustaining capital sensitivity to oil price. Management's $4.1B sustaining number assumes ~20% deflation from $55 oil. If oil prices firm and service costs reinflate, watch whether the implied 2026 sustaining capital floor moves up — and whether the $5.5B low-end capex guide gets tested.

Stratos/LCV execution milestones. First CO2 capture event, partnership announcements on DAC/sequestration hubs, and confirmation that LCV capex steps down ~$100M in 2027 are all near-term commercialization tests.

Reserves replacement trajectory. 98% all-in RRR for FY2025 is below the 100% maintenance threshold. Whether 2026 organic adds (mid-cycle projects, EOR) close the gap is a credible long-cycle valuation question now that M&A is off the table.

Sources

Occidental Petroleum Q4 2025 earnings press release, filed February 17, 2026 — https://www.sec.gov/Archives/edgar/data/797468/000162828026009054/oxyex99112-31x25earningsre.htm
Occidental Petroleum Q4 2025 earnings conference call — prepared remarks and Q&A from Vicki Holub (CEO), Sunil Mathew (CFO), Richard Jackson (COO), and Ken Dillon. All forward guidance figures and Q&A content sourced from call 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.