Occidental Cuts Debt to $10 Billion After Repaying $10.4 Billion in 2026
Key Facts
Occidental reduced its outstanding debt to about $10.0 billion as of September 30, 2026, after repaying $10.4 billion in the first nine months of the year, according to its filing with the U.S. Securities and Exchange Commission. The company said it used after-tax proceeds from the OxyChem transaction and excess free cash flow to repay debt. It recorded a $129 million loss on debt extinguishment. The reduction puts debt at about half its $20.4 billion level on December 31, 2025. It coincided with a decline in annual interest calculated on outstanding debt to about $655 million from $1.24 billion, reducing the company's financing burden.
Continuing operations generated $4.1 billion in operating cash flow in the third quarter, while free cash flow before working capital was $2.8 billion, according to the company's results. Capital spending totaled $1.3 billion during the period. These figures provide financial context for the pace of debt repayment Occidental has reported since the start of the year. The company also reported $3.9 billion in cash and cash equivalents as of September 30. In addition, it had $4.2 billion available under a revolving credit facility, with no amounts drawn.
Occidental reported net income attributable to common shareholders of $1.6 billion, or diluted earnings of $1.61 per share, in the third quarter. Adjusted income attributable to common shareholders was $2.0 billion, while adjusted earnings per share from continuing operations reached $1.91. The company said derivative losses were the main reason for the difference between reported and adjusted income. These figures offer two measures of quarterly performance: one based on reported net income and the other after the adjustments cited by the company. Operating cash flow stood out alongside these results, enabling the company to repay debt while continuing capital spending.
Worldwide average production was 1.427 million barrels of oil equivalent per day in the third quarter, above the midpoint of the guidance range. Occidental attributed the performance to its operations in the Permian Basin and the Rockies, which offset a temporary production cut in the Gulf of America. The company linked the cut to a third-party gas pipeline constraint and maintenance work. Meanwhile, pretax income from oil and gas operations fell to $2.6 billion from $2.8 billion in the second quarter. The company said lower realized crude prices were the main driver of the decline, partly offset by higher domestic natural gas prices.
Worldwide average realized crude prices fell 11% sequentially to $85.91 per barrel. In the opposite direction, average realized domestic gas prices rose 209% to $1.61 per thousand cubic feet, after being negative at $1.48 in the second quarter. The improvement in gas prices did not prevent a decline in pretax oil and gas income, according to the company's comparison of the two quarters. Pretax income from midstream and marketing operations also fell to $55 million from $1.3 billion in the second quarter. Occidental attributed the decline to a narrower gas price spread between the Waha Hub and the Gulf Coast, and lower crude margins tied to the timing of operations; higher sulfur volumes and prices at the Al Hosn field partly limited the impact.
Chief Executive Richard Jackson linked the stronger balance sheet to the company's plan to add more than $4.0 billion in sustainable annual cash flow by 2030. He said the company "is advancing our plan to add more than $4.0 billion in sustainable annual cash flow by 2030." He said strengthening the financial position provides a path to accelerate capital returns and maximize shareholder value. The plan sets the cash flow target within a timeline extending to 2030, while the third quarter showed the cash flow, capital spending and production figures reported by the company. The reduction in debt to about $10.0 billion is part of the financial progress reported in results on November 9.