Occidental reaches US$10 billion debt milestone after strong cash quarter

Occidental Petroleum Corporation (NYSE:OXY) has taken its principal debt down to US$10 billion after retiring US$10.4 billion since the start of 2026, giving the oil and gas producer a substantial balance-sheet milestone alongside another strong cash-generating quarter.

Occidental reported net income attributable to common stockholders of US$1.6 billion, or US$1.61 a diluted share, for the September quarter. Adjusted income from continuing operations, a non-GAAP measure, came in at US$2.0 billion, or adjusted EPS of US$1.91. The main difference was attributed to derivatives losses, meaning the adjusted figure should not be treated as a replacement for the GAAP result.

Debt Reduction Becomes the Quarter's Defining Metric

Continuing operations generated US$4.1 billion of operating cash flow during the quarter. Occidental reported US$2.8 billion of free cash flow before working capital, also a non-GAAP measure, after US$1.3 billion of capital expenditure. On a GAAP basis, operating cash flow from continuing operations was US$4.1 billion, while capital expenditure was US$1.3 billion.

The debt reduction was visible in the balance sheet: long-term debt, net, stood at US$11.6 billion at September 30, down from US$13.5 billion three months earlier and US$20.6 billion at the end of 2025. The release says the company is using the stronger balance sheet to advance a plan to add more than US$4 billion in annual sustainable cash flow by 2030, with the stated aim of supporting faster capital returns. That remains a forward-looking management objective rather than a reported outcome.

Production Beats Guidance as Crude Prices Ease

Global production averaged 1,427 thousand barrels of oil equivalent per day, above the midpoint of guidance. Permian and Rockies operations led the performance, offsetting a temporary production curtailment at certain Gulf of America facilities caused by a third-party gas pipeline constraint and maintenance work.

The operating result arrived against a softer quarter for oil and gas earnings. Pre-tax income from the segment fell to US$2.6 billion from US$2.8 billion in the June quarter, primarily because realised crude oil prices declined. Worldwide realised crude prices fell 11% quarter on quarter to US$85.91 a barrel, while domestic realised gas prices recovered to US$1.61 per thousand cubic feet from negative US$1.48.

Midstream Earnings Swing Masks Underlying Volatility

Midstream and marketing reported pre-tax income of just US$55 million, down from US$1.3 billion in the previous quarter. Occidental attributed the fall to narrower Waha-to-Gulf Coast gas spreads and the timing of crude sales, partly offset by higher sulphur volumes and prices at Al Hosn. Excluding items affecting comparability, the business exceeded the high end of guidance, while income from the WES equity-method investment was US$121 million.

The numbers leave Occidental with a favourable but not frictionless investment story: deleveraging and production execution are clear positives, while commodity prices, pipeline constraints and volatile segment earnings remain capable of reshaping quarterly results. The next test is whether cash generation can continue to support debt reduction and the promised path towards greater shareholder returns without relying on unusually favourable market conditions.