Occidental Petroleum Corporation: Recent Corporate Developments and Financial Performance#
Occidental Petroleum Corporation (OXY has recently showcased a strategic balancing act between maintaining its core oil and gas business and aggressively investing in carbon capture technologies. As of late July 2025, the company’s stock closed at $45.55, reflecting a +1.88% intraday gain, buoyed by solid operational results and investor confidence in its long-term energy transition strategy.
Key Financial Highlights and Earnings Performance#
The company’s fiscal year 2024 results, reported in February 2025, reveal a revenue of $26.73 billion, down -5.42% from the previous year’s $28.26 billion, marking a continuation of a recent downward trend in revenue. This contraction accompanies a net income decline of -34.92% to $3.06 billion, reflecting pressures from fluctuating commodity prices and higher operating costs. Occidental’s earnings per share (EPS) similarly decreased by -37.44% to $2.47, with the company maintaining a price-to-earnings (P/E) ratio of 18.44x, signaling moderate valuation relative to earnings.
Despite these declines, Occidental has demonstrated operational efficiency with a gross profit margin of 35.73% and an operating margin of 20.93% in 2024. These figures, although lower than 2023’s 35.78% and 22.7% respectively, indicate resilient profitability amid market headwinds.
| Financial Metric | 2024 | 2023 | % Change |
|---|---|---|---|
| Revenue | $26.73B | $28.26B | -5.42% |
| Net Income | $3.06B | $4.7B | -34.92% |
| EPS | $2.47 | $3.95 | -37.44% |
| Gross Profit Margin | 35.73% | 35.78% | -0.05 p.p. |
| Operating Margin | 20.93% | 22.7% | -1.77 p.p. |
Occidental’s cash flow statement highlights a robust net cash provided by operating activities of $11.44 billion in 2024, supporting a healthy free cash flow of $4.42 billion despite significant capital expenditures of $7.02 billion. This capital outlay underscores the company’s commitment to growth initiatives, including carbon capture projects.
Strategic Carbon Capture Initiatives and Financial Implications#
Occidental’s dual strategy leverages its highly profitable Permian Basin operations to fund ambitious carbon capture and direct air capture (DAC) projects through its subsidiary 1PointFive. The recent announcement of the STRATOS DAC facility, scheduled to commence operations in 2025, aims to capture approximately 2.3 million tons of CO2 annually — a substantial scale for environmental impact and a forward-looking revenue source through carbon credits and industrial CO2 sales.
The acquisition of Carbon Engineering for $1.1 billion further cements Occidental’s leadership in DAC technology, accelerating its innovation pipeline and market positioning in carbon removal. This strategic investment, while capital-intensive, is a forward bet on regulatory incentives and growing demand for verifiable carbon removal credits, which could emerge as a meaningful revenue stream.
Financially, these initiatives represent a significant commitment, with capital expenditures and investments in property, plant, and equipment reflecting a nearly 12% increase year-over-year. However, the company’s strong operating cash flow and free cash flow generation provide a solid financial foundation to absorb these costs without jeopardizing liquidity.
Permian Basin Operations: The Backbone of Financial Strength#
Occidental’s Permian Basin assets continue to deliver high-margin production with relatively low extraction costs, underpinning the company’s cash flow stability. This region’s output not only supports ongoing dividend payments but also finances carbon capture investments, creating a synergistic model of value creation.
Enhanced Oil Recovery (EOR) using captured CO2 represents a strategic synergy by extending the life of oil reservoirs while simultaneously reducing net emissions. This approach exemplifies Occidental’s pragmatic integration of traditional hydrocarbon extraction with innovative carbon management.
Balance Sheet and Financial Health Analysis#
Occidental’s balance sheet as of December 2024 shows total assets of $85.44 billion against total liabilities of $50.97 billion, resulting in a stockholders’ equity of $34.16 billion. The company has increased its long-term debt to $25.59 billion, up from $19.26 billion the previous year, reflecting financing for capital-intensive projects.
Despite this increase, the net debt to EBITDA ratio remains a manageable 1.77x, demonstrating disciplined leverage relative to earnings before interest, taxes, depreciation, and amortization. The current ratio stands at 1.01x, indicating sufficient short-term liquidity to cover liabilities.
| Balance Sheet Metric | 2024 | 2023 | % Change |
|---|---|---|---|
| Total Assets | $85.44B | $74.01B | +15.45% |
| Total Liabilities | $50.97B | $43.66B | +16.79% |
| Stockholders' Equity | $34.16B | $30.25B | +12.91% |
| Long-Term Debt | $25.59B | $19.26B | +32.91% |
| Net Debt / EBITDA | 1.77x | 1.47x | +0.30x |
Dividend Sustainability and Capital Allocation#
Occidental maintains a quarterly dividend of $0.24 per share, totaling approximately $0.92 annually, with a payout ratio near 48.13%. This payout reflects a balanced approach, preserving capital for growth while delivering shareholder returns. The dividend yield stands at about 2.02%, supported by stable cash flow from core operations.
Capital allocation has seen a shift towards growth investments, notably in carbon capture, while continuing moderate share repurchases, evidenced by a reduction in common stock repurchased from $3.46 billion in 2023 to $27 million in 2024. This shift signals management prioritizing strategic long-term investments over aggressive buybacks.
Market Position and Competitive Landscape#
Occidental’s strategic positioning is distinctive in the energy sector due to its integrated approach combining traditional oil production with carbon capture technology leadership. This contrasts with peers who either focus exclusively on hydrocarbons or renewable energy, positioning Occidental to capture value across the energy transition spectrum.
The company’s operational excellence in the Permian Basin provides a competitive cost advantage, enabling sustained cash generation to fund innovation. The commitment to DAC technology through 1PointFive and strategic partnerships, including potential collaborations with ADNOC and DOE funding, places Occidental at the forefront of emerging carbon markets.
What This Means for Investors#
- Occidental’s robust cash flow supports a sustainable dividend and capital investments in growth areas, particularly carbon capture.
- The decline in revenue and net income reflects current commodity price pressures but is partially offset by operational efficiency and strategic diversification.
- Investments in DAC and carbon credits could unlock new revenue streams, adding resilience against fossil fuel market volatility.
- The balance sheet remains solid, with manageable leverage and sufficient liquidity despite increased debt to fund expansion.
- Warren Buffett’s ongoing stake reinforces investor confidence in Occidental’s strategic direction and financial discipline.
Summary Table: Key Financial Metrics (2024 vs 2023)#
| Metric | 2024 | 2023 |
|---|---|---|
| Stock Price | $45.55 | N/A |
| Market Capitalization | $44.83B | N/A |
| Revenue | $26.73B | $28.26B |
| Net Income | $3.06B | $4.7B |
| EPS | $2.47 | $3.95 |
| Dividend Yield | 2.02% | N/A |
| Free Cash Flow | $4.42B | $6.06B |
| Debt to Equity | 0.75x | N/A |
| Net Debt to EBITDA | 1.77x | 1.47x |
Conclusion#
Occidental Petroleum is navigating a complex energy market by leveraging its Permian Basin strength to fund pioneering carbon capture technologies. While recent financial results show pressure on traditional earnings, the company's strategic investments in DAC and enhanced oil recovery create a diversified growth platform.
This integrated approach balances near-term cash flow generation with long-term positioning in the energy transition, supported by a solid balance sheet and prudent capital allocation. For investors, Occidental represents a unique blend of traditional energy resilience and forward-looking climate innovation, poised to adapt as market dynamics evolve.