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Warren Buffett·OCCIDENTAL PETE CORP
OXY

Occidental Pete — Income Statement, Cash Flows & Balance Sheet

AI Overview

Is Occidental Petroleum profitable?

Occidental remained profitable in 2025, but earnings declined meaningfully as lower oil prices squeezed margins.

Metric20242025Change
Net sales (continuing ops)$22,019M$21,593M-2%
Operating income (pre-tax, continuing)$4,024M$3,128M-22%
Net income (GAAP)$3,078M$2,369M-23%
Net income to common shareholders$2,377M$1,647M-31%
Diluted EPS (common)$2.44$1.61-34%

Revenue slipped modestly, but profits fell much harder — a sign that costs are relatively fixed while oil prices dropped (average WTI fell from roughly $75 to $65 per barrel). The preferred stock dividend to Berkshire Hathaway ($679M annually) further reduces what flows to common shareholders.

Rising depreciation and a higher effective tax rate added to the earnings pressure.

Cost item20242025Change
DD&A (depreciation, depletion & amortization)$6,951M$7,533M+8%
Effective tax rate (continuing ops)29%33%+4 pts

DD&A climbed because of the large CrownRock acquisition in 2024, which added significant assets being depreciated. The higher tax rate partly reflects that international income — taxed at rates as high as 55% — made up a larger share of the mix after OxyChem (a domestic business) was classified as discontinued.

Where does Occidental's revenue come from?

Oil production is the engine — it drives roughly 80% of oil-and-gas segment revenue, and U.S. operations dominate.

Revenue source20242025Change
Oil (O&G segment)$18,544M$17,174M-7%
NGL$2,255M$2,249M~flat
Natural gas$875M$1,369M+56%
Midstream & marketing$1,577M$1,255M-20%

Lower oil prices were only partially offset by a surge in natural gas revenue (Henry Hub averaged $3.39/MMbtu vs. $2.13 in 2024). Midstream & marketing revenue fell sharply, though that segment still turned profitable at the pre-tax level after losing money in prior years.

Production volume growth cushioned the price decline — Occidental pumped meaningfully more barrels in 2025.

Volume metric20242025Change
Total sales (Mboe/d)1,3281,434+8%
U.S. volumes (Mboe/d)1,0991,202+9%
International volumes (Mboe/d)229232+1%

The CrownRock assets — largely in the Permian Basin — drove U.S. volume growth, which is exactly what the acquisition was intended to deliver. More barrels partially offset weaker prices, but couldn't fully make up the gap.

Does Occidental generate cash?

Occidental generates substantial operating cash flow, but it dropped year-over-year alongside weaker earnings.

Cash flow metric20242025Change
Operating cash flow (total)$11,439M$10,532M-8%
Capital expenditures($6,263M)($6,427M)+3%
Free cash flow (approx.)~$5,176M~$4,105M-21%

Free cash flow (operating cash minus capex) remains healthy, but the combination of lower commodity prices and steady capital spending compressed it noticeably. OxyChem's discontinued operations contributed about $926M of operating cash in 2025, which will be absent going forward.

Debt repayment was the top use of cash in 2025, and Occidental accelerated that further after year-end using OxyChem sale proceeds.

Financing item20242025Change
Long-term debt repaid($4,514M)($3,754M)
Asset sale proceeds$1,673M$2,278M+36%
Common & preferred dividends($1,446M)($1,594M)+10%

Selling non-core Permian and DJ Basin assets raised over $2B, which helped fund debt reduction. Subsequent to year-end, the $9.7B OxyChem sale proceeds were used to pay down an additional ~$5B of debt, bringing principal outstanding to roughly $15B.

How strong is Occidental's balance sheet?

Debt remains elevated but is declining rapidly — the OxyChem sale was a pivotal step in the deleveraging plan.

Debt metric20242025Change
Long-term debt, net$24,979M$20,623M-17%
Total debt & finance leases$26,117M$22,396M-14%
Post-close principal (est.)~$15,000M

Debt fell by roughly $4B through 2025 operations and divestitures, then dropped by a further ~$5B after year-end when OxyChem closed. Credit ratings remain split — investment grade at Moody's and Fitch, but sub-investment grade (BB+) at S&P — so fully restoring the balance sheet remains a priority.

Liquidity is adequate, backed by a large undrawn credit facility.

Liquidity item20242025Change
Cash & equivalents$2,125M$1,968M-7%
Revolving credit facility (undrawn)$4,150M$4,150Mflat

With nearly $2B of cash on hand and $4.15B of undrawn revolver capacity, near-term liquidity is comfortable. The $8.3B of preferred stock held by Berkshire Hathaway sits above common equity in the capital structure and carries a mandatory 8% dividend, which is an ongoing fixed obligation investors should keep in mind.