Occidental strengthens financial position with $4.5bn debt repayment and $1.2bn asset sales

Occidental (NYSE: OXY) has made significant strides in its financial restructuring strategy, reaching its near-term debt repayment target of $4.5 billion in the fourth quarter of 2024. The energy company has also moved forward with additional oil and gas asset sales, signing agreements to divest non-core upstream properties for a combined total of $1.2 billion in early 2025. The proceeds from these sales will be allocated toward paying down Occidental’s remaining 2025 debt maturities, reinforcing its broader financial stability strategy and commitment to strengthening its balance sheet.

The transactions, expected to close within the first quarter of 2025, include the sale of non-operated assets in the Rockies and select Permian Basin assets that are not part of the company’s immediate development plans. Occidental’s leadership has emphasized that these moves are in line with its broader efforts to optimize its asset portfolio, focus on high-margin production, and accelerate shareholder value.

How Is Occidental Advancing Its Debt Reduction Strategy?

Occidental’s debt reduction strategy has been a core priority, particularly following its acquisition of CrownRock. The company achieved its near-term deleveraging milestone within five months of closing the acquisition, exceeding its original projections by seven months. President and Chief Executive Officer Vicki Hollub stated that the recent divestitures further support Occidental’s goal of reducing financial leverage, improving liquidity, and maintaining a strong cash flow position.

According to Hollub, these asset sales are aligned with Occidental’s long-term strategic vision of enhancing operational efficiency while positioning itself for sustainable growth. The company remains committed to further debt reduction through free cash flow generation, supported by disciplined capital allocation and continued divestitures of non-core assets.

What Were Occidental’s Fourth-Quarter 2024 Financial Highlights?

Occidental delivered a robust operational and financial performance in the fourth quarter of 2024, generating operating cash flow of $3.6 billion and operating cash flow before working capital adjustments of $3.1 billion. After accounting for capital expenditures of $1.8 billion, Occidental recorded quarterly free cash flow before working capital of $1.4 billion, demonstrating its ability to sustain capital investments while prioritizing debt repayment and shareholder returns.

As part of its ongoing shareholder return strategy, Occidental’s board of directors approved a 9% dividend increase, raising the quarterly payout to $0.24 per share. The dividend is scheduled for distribution on April 15, 2025, to shareholders of record as of March 10, 2025.

Total production for the quarter stood at 1,463 thousand barrels of oil equivalent per day (Mboed), exceeding the company’s midpoint guidance by 13 Mboed. The strong production performance was primarily driven by high output from Occidental’s Permian and Rockies operations, offsetting lower international production.

How Did Market Conditions Impact Occidental’s Earnings?

Despite strong operational results, Occidental reported a net loss of $297 million, or $0.32 per diluted share, for the fourth quarter of 2024. However, adjusted income remained positive at $792 million, or $0.80 per diluted share. The primary factor affecting earnings was a $1.1 billion after-tax charge related to an increase in environmental liability following a federal court ruling.

Occidental has appealed the decision and plans to seek cost recovery from all potentially responsible parties. The company expects the cash outlay for remediation to be spread over the next 10 to 20 years, minimizing the immediate financial burden.

How Did Occidental’s Oil and Gas Business Perform?

Occidental’s oil and gas segment reported pre-tax income of $1.2 billion for the fourth quarter of 2024, consistent with the prior quarter. The company’s realized crude oil prices averaged $69.73 per barrel, marking a 7% decline from the previous quarter, reflecting weaker WTI and Brent benchmark prices.

Despite the decline in oil prices, Occidental benefited from a 215% increase in domestic natural gas prices, which rose to $1.26 per thousand cubic feet (Mcf). The company’s natural gas liquids (NGL) prices also improved by 6%, reaching $21.80 per barrel.

By the end of 2024, Occidental’s proved reserves reached 6 billion barrels of oil equivalent (BOE), supported by successful acquisitions, exploration, and development efforts. The company reported an all-in reserves replacement rate of 230%, with an organic reserves replacement rate of 112%, underscoring its ability to sustain long-term production growth.

What Were the Key Developments in Occidental’s Chemical and Midstream Segments?

Occidental’s chemical division, OxyChem, delivered a pre-tax income of $270 million, exceeding internal guidance despite facing weaker polyvinyl chloride (PVC) pricing and seasonal demand fluctuations. The company was able to mitigate some of these challenges through favorable commercial contracts that improved its revenue margins.

The midstream and marketing segment, however, recorded a pre-tax loss of $134 million, driven by net derivative losses of $88 million. Despite this, Western Midstream Partners (WES), an equity-method investment, contributed $142 million in income during the quarter, providing a partial offset to the segment’s overall decline.

What’s Next for Occidental in 2025?

Looking ahead, Occidental is expected to maintain its financial discipline, leveraging free cash flow and additional divestitures to continue reducing debt and strengthening its balance sheet. The company’s $1.2 billion in asset sales planned for early 2025 signals a continued focus on portfolio optimization and capital efficiency.

Hollub reaffirmed that Occidental remains well-positioned to navigate market uncertainties, emphasizing cost discipline, operational efficiency, and shareholder value as key strategic priorities for 2025. With a strong production base, improving financial health, and ongoing deleveraging efforts, Occidental is aiming to solidify its position as a financially resilient and operationally efficient oil and gas leader.