Occidental Petroleum Corporation Q2 FY2025 earnings call

• Generated $2.6 billion of operating cash flow in Q2; first half of 2025 operating cash flow higher than first half of 2024 despite lower oil prices. • Repaid $7.5 billion of debt, well ahead of CrownRock acquisition target. • STRATOS on track to start capturing CO2 in 2025, with commercial agreements signed. • Onshore U.S. operations achieved $150 million in operating cost savings, with 40% of onshore production transitioned to ruthless operations. • International operations reduced OpEx by an estimated $50 million. • Permian well costs reduced by 13% year-to-date; Midstream & Marketing segment benefited from enhanced crude marketing margins, gas marketing optimization, and higher sulfur prices. • Announced agreement to evaluate a potential joint venture for a DAC facility in South Texas with XRG.

The oil and gas business produced 1.4 million BOE per day in the second quarter, exceeding the midpoint of production guidance. The Midstream & Marketing segment generated positive earnings on an adjusted basis of approximately $206 million above the midpoint of guidance in the second quarter, leading to a raise in full-year guidance by $85 million. OxyChem pre-tax income came in below guidance due to weaker pricing for caustic and PVC, resulting in a lowering of full-year guidance range to $800 million to $900 million.

• Total company production range for Q3 expected to be 1.42 million to 1.46 million BOE per day; maintained full-year production guidance as stronger U.S. onshore and Oman production offset Gulf of America volumes. • Raised full-year Midstream & Marketing Guidance by $85 million. • Lowered OxyChem's full year guidance range to $800 million to $900 million. • Remaining 2025 capital spend more weighted to Q3; reduced 2025 capital guidance range by $100 million. • Anticipate $700 million to $800 million in cash tax benefits from One Big Beautiful Bill, with 35% in 2025 and balance in 2026.

• Market volatility and lower oil prices could impact financial performance. • Production constraints in the Gulf of America, including third-party constraints and pipeline issues, affected volumes. • Oversupply in global and domestic markets compressed margins for OxyChem products like caustic and PVC.

Q: Follow up on cash tax rate tailwinds from One Big Beautiful Bill.

A: Sunil Mathew stated 35% of $700 million to $800 million benefit in 2025 and balance in 2026, with adjusted income effective tax rate not impacted but deferred tax expense increasing due to benefit.

Q: Thoughts on production capacity in Gulf of America trending multiyear?

A: Kenneth Dillon mentioned water floods will reduce decline rates, with projects lined up and plans for turnarounds every 2 years starting next year.

Q: Trajectory of OxyChem income and PVC oversupply?

A: Kenneth Dillon noted global supply-demand for PVC and caustic burdened by Chinese capacity, with no meaningful impact on 2026 margins expected.

Q: EOR opportunity in shale, economic viability and timing?

A: Vicki Hollub stated it's about CO2 availability, with teams preparing for a project in Delaware Basin within 1-2 years, and pilots showing positive results.

Q: Second DAC facility in South Texas, sanctioning timing?

A: Vicki Hollub stated they intend to FID the facility, with timing not set yet but will presell credits and take advantage of innovations.