Breaking Down Occidental Petroleum Corporation (OXY) Financial Health: Key Insights for Investors

You're looking at Occidental Petroleum Corporation (OXY) right now and wondering if the recent earnings beat is a true signal of financial health or just a temporary spike in a choppy energy market, and honestly, that's the right question to ask. The headline numbers for the 2025 fiscal year tell a story of strategic decisiveness, not just commodity price luck, so you defintely need to look closer. For example, the company's Q3 2025 adjusted earnings per share of $0.64 significantly surpassed the $0.52 consensus estimate, driven by strong operational performance, especially in the Permian Basin where production hit 800,000 barrels of oil equivalent per day (boepd). But the real action is on the balance sheet: Occidental Petroleum Corporation aggressively cut its long-term net debt to $20.84 billion as of September 30, 2025, a massive reduction from the end of 2024, plus the October 2025 sale of OxyChem to Berkshire Hathaway for $9.7 billion in cash is a game-changer for debt reduction and capital structure. Still, they are forecasting a substantial capital expenditure (Capex) of around $7.1 billion to $7.3 billion for the full year, so the question becomes: how effectively is that capital deployment driving future returns versus just maintaining their current 1.47 million MMboepd production rate? That's what we need to break down.

Revenue Analysis

You're looking for a clear picture of where Occidental Petroleum Corporation (OXY) makes its money, especially with the market's focus on energy transition and debt reduction. The direct takeaway is that OXY remains overwhelmingly an upstream oil and gas play, but the recent TTM (Trailing Twelve Months) revenue of approximately $26.601 billion (ending September 30, 2025) shows a slight contraction, signaling the impact of fluctuating commodity prices and strategic divestitures.

Here's the quick math on the near-term trend: OXY's TTM revenue as of Q3 2025 reflects a 1.98% decline year-over-year. This isn't a collapse, but it is a deceleration from the massive growth seen in 2021 and 2022, and it's a trend you need to monitor. The primary revenue sources are crude oil, natural gas liquids (NGLs), and natural gas, all bundled under the Oil and Gas segment. Still, the Chemical and Midstream segments offer important diversification.

The core of the business is clear. In the third quarter of 2025 alone, the Oil and Gas segment brought in $5.4 billion in revenue, which is the lion's share of the total $6.71 billion in revenue for the quarter.

What this estimate hides is the volatility in the smaller segments. The Oil and Gas segment saw a year-over-year decline of 5.14% in Q3 2025, mainly due to lower realized commodity prices, even though production volumes were strong.

The segment contribution to overall revenue for the third quarter of 2025 breaks down like this:

• Oil and Gas: $5.4 billion
• Chemical: $1.17 billion
• Midstream & Marketing: $306 million

The Midstream & Marketing segment, which handles transportation, processing, and marketing of oil, natural gas, and NGLs, saw the steepest year-over-year decline in Q3 2025, dropping nearly 30.5% to $306 million. That's a defintely a risk to watch, as it can reflect lower Waha-to-Gulf-Coast gas spreads and higher expenses related to their low-carbon venture businesses.

A significant change that will reshape the revenue mix is the strategic transformation involving the potential sale of the OxyChem business, which manufactures basic chemicals like chlorine and caustic soda. Management has cited this as an important milestone to further strengthen the balance sheet and accelerate shareholder returns. While the Chemical segment still contributed $1.17 billion in Q3 2025, its eventual sale will reduce OXY's overall revenue base but increase the concentration on the high-return Oil and Gas core. You can dig deeper into the full picture in our full post: Breaking Down Occidental Petroleum Corporation (OXY) Financial Health: Key Insights for Investors.

Profitability Metrics

You need to know where Occidental Petroleum Corporation (OXY) is making and losing money, especially as the energy market tightens. The direct takeaway is that while the company's gross profitability is holding up, its net profit margin has compressed significantly from its 2022 peak, reflecting lower realized prices and higher non-operating costs like interest and taxes.

For the trailing twelve months (TTM) ending September 30, 2025, Occidental Petroleum Corporation (OXY) reported $26.60 billion in revenue, yielding a gross profit of $9.02 billion. This translates to a Gross Profit Margin of 33.91%. This margin is strong, but it's important to see it in context. The broader Energy Sector average Gross Profit Margin is around 43.6%, which suggests Occidental Petroleum Corporation (OXY) is lagging its peers on a pure cost-of-goods-sold basis, likely due to its diversified, and sometimes lower-margin, segments like OxyChem.

Here's the quick math on profitability for the TTM ending September 30, 2025:

Trends in Profitability and Operational Efficiency

The trend in Occidental Petroleum Corporation's (OXY) profitability is a story of moderation from a historic high. The company's Net Income for the TTM ending September 30, 2025, was $1.385 billion, which is a sharp 62.39% decline year-over-year. This is a massive drop-off from the 2022 peak, where the Net Profit Margin reached 36.32%. Simply put, the windfall profits from the 2022 energy price surge are gone.

The biggest squeeze happens between the operating and net lines. Operating Income for the TTM was $4.80 billion, an 18.05% Operating Margin. When you factor in significant non-operating expenses, particularly interest on debt-which Occidental Petroleum Corporation (OXY) is defintely focused on reducing-the Net Profit Margin drops to 8.03%. This spread highlights the cost of capital as a primary drag on bottom-line results.

The company is taking clear actions to manage costs and improve operational efficiency, which is a key opportunity for margin improvement in the near-term. They have:

• Cut the mid-point of 2025 capital guidance by $200 million.
• Reduced domestic operating costs by $150 million.
• Targeted a 7% reduction in well costs for 2025.

These are concrete steps to push the Gross Margin back toward the Energy Sector average. If oil and gas prices stabilize, these efficiency gains will translate directly into a stronger Operating Margin. To understand the drivers behind these shifts, you should check out Exploring Occidental Petroleum Corporation (OXY) Investor Profile: Who's Buying and Why?

Debt vs. Equity Structure

You need to know how Occidental Petroleum Corporation (OXY) funds its massive operations, and the short answer is: they are still working to pay down debt, but their leverage is manageable for a capital-intensive business. As of September 2025, Occidental Petroleum Corporation's debt-to-equity (D/E) ratio stood at approximately 0.63. This means the company uses about 63 cents of debt for every dollar of shareholder equity. This is higher than the average D/E ratio of 0.48 for the Oil & Gas Exploration & Production (E&P) sub-sector, suggesting OXY is more leveraged than its typical E&P peer, which is a direct result of its major acquisitions.

Here's the quick math on their balance sheet structure, using the latest available figures from the third quarter of 2025. The company's focus on deleveraging is clear, with the principal debt balance reduced to $20.8 billion as of November 10, 2025, following a $1.3 billion repayment in Q3 2025. This is a defintely a positive trend.

• Total Stockholders' Equity (Sep 2025): $36.261 billion
• Long-Term Debt (Sep 2025): $20.846 billion
• Short-Term Debt (Sep 2025): $2.030 billion

The company is actively balancing debt financing and equity funding, but the near-term strategy is all about debt reduction. Occidental Petroleum Corporation has made significant strides, achieving a near-term debt repayment target of $4.5 billion in late 2024, ahead of schedule. They also announced the sale of the OxyChem segment, with proceeds of approximately $8 billion earmarked to reduce debt by about $6.5 billion, with a clear goal to get the principal debt level below $15 billion. That's a huge, actionable target that will fundamentally change their risk profile.

What this estimate hides is the impact of recent financing activity. The company did take on more debt to fund the cash portion of its CrownRock acquisition, which included a proposed $5 billion senior unsecured notes offering in 2024. S&P Global Ratings assigned a 'BB+' issue-level rating to these notes, which is a non-investment grade rating but reflects a stable outlook as the company prioritizes debt pay-down. Their strategy is to use the massive cash flow generated from their high-quality Permian Basin assets, plus strategic divestitures like the $1.2 billion in upstream assets sold in Q1 2025, to pay down debt rather than issue new equity, which would dilute existing shareholders. You can see more on the ownership dynamics in Exploring Occidental Petroleum Corporation (OXY) Investor Profile: Who's Buying and Why?

The table below summarizes the key leverage metrics for a quick comparison:

Finance: Track the progress toward the sub-$15 billion debt target quarterly.

Liquidity and Solvency

You need to know how easily Occidental Petroleum Corporation (OXY) can cover its short-term bills and whether its cash flow engine is strong enough to handle its debt load. The short answer is that OXY's liquidity is stable but not excessive, while its long-term solvency is defintely improving due to aggressive debt reduction.

In mid-2025, Occidental Petroleum Corporation (OXY)'s liquidity ratios show a moderate position. The Current Ratio-which measures current assets against current liabilities-was just above 1.0 in mid-2025, indicating that the company has just enough liquid assets to cover its obligations coming due within a year. The Quick Ratio (or acid-test ratio), which excludes less-liquid inventory, was lower at approximately 0.75 in the second quarter of 2025. That ratio is the real test of immediate liquidity. It means for every dollar of immediate liability, the company has 75 cents in highly liquid assets (cash, receivables, etc.).

• Current Ratio (Mid-2025): ~1.0. Stable, but no large buffer.
• Quick Ratio (Q2 2025): 0.75. Suggests reliance on inventory conversion.

Analyzing working capital trends reveals a gradual recovery, with the current ratio moving back above the 1.0 benchmark by mid-2025. However, working capital changes can be a headwind in the short term; for instance, the first quarter of 2025 saw a negative working capital change of $439 million, which reduced the reported operating cash flow. This volatility is common in the commodity space, so you need to look past the quarter-to-quarter noise and focus on the underlying cash generation.

The cash flow statement for the first nine months of 2025 tells a much clearer story of financial strength. Operating Cash Flow (OCF) for the first nine months of 2025 was robust at $7.89 billion. This is the core engine, and it's what funds everything else. For the third quarter of 2025 alone, OCF was $2.8 billion, or $3.2 billion before working capital changes. This strong operational cash generation is the company's biggest liquidity strength.

On the investing side, net capital expenditures are projected to be between $7.2 billion and $7.4 billion for the full 2025 fiscal year, which is a significant use of cash. Still, the company is generating substantial Free Cash Flow (FCF). The trailing twelve months (TTM) ended June 2025 saw FCF of $4.776 billion. This FCF is being strategically directed toward financing activities, specifically debt reduction.

The financing cash flow trends are overwhelmingly positive for solvency. Occidental Petroleum Corporation (OXY) has been laser-focused on debt repayment, having retired $8.1 billion in debt over the 18 months leading up to September 30, 2025. In the third quarter of 2025 alone, the company repaid $1.3 billion of debt. This effort has reduced the long-term debt (net of current portion) to $20.84 billion as of September 30, 2025, which also lowered the annual interest expense burden. The full-year 2025 interest expense is forecasted to be approximately $1.2 billion. Exploring Occidental Petroleum Corporation (OXY) Investor Profile: Who's Buying and Why?

Here's the quick math on the cash flow components:

The main liquidity strength is the high OCF, which creates a resilient Free Cash Flow stream. The primary concern is the moderate current ratio, meaning any sudden, large-scale, short-term obligation could require tapping into credit lines or selling assets quickly. But, the consistent debt paydown has created a massive long-term solvency strength, reducing future interest risk and freeing up cash for dividends or further investment down the line.

Valuation Analysis

You're looking at Occidental Petroleum Corporation (OXY) and wondering if the current price reflects its true value. My analysis, grounded in 2025 fiscal year estimates, suggests the stock is currently priced as a Hold by the street, but with a clear upside potential if operational performance holds steady.

The consensus among 23 Wall Street analysts is a Hold rating, with an average 12-month price target of $51.19. This implies a potential upside of approximately 20.35% from the recent price of around $42.52 as of mid-November 2025. Honestly, that's a decent return for a major energy player, but it's not a screaming buy. The highest target is $64.00, and the low is $38.00.

Here's the quick math on the key valuation multiples for the 2025 fiscal year, which help us map where Occidental Petroleum Corporation (OXY) sits relative to its earnings, assets, and cash flow before debt.

• Price-to-Earnings (P/E) Ratio (2025E): 20.6x. This is higher than the broader Energy sector average, suggesting investors are pricing in future growth or a premium for their asset base.
• Price-to-Book (P/B) Ratio (2025E): 1.11x. A P/B near 1.0x suggests the stock is trading close to its net asset value, which is a defintely a healthy sign for a capital-intensive business.
• Enterprise Value-to-EBITDA (EV/EBITDA) (2025E): 4.57x. This multiple is a cleaner look at valuation, as it accounts for debt. A figure under 5.0x is generally considered attractive in the Oil & Gas exploration and production space.

Looking at the stock price trend over the last 12 months, the picture is mixed. Occidental Petroleum Corporation (OXY) has delivered a negative return, with a change of about -16.04% over the past year. The 52-week range has been volatile, swinging between a low of $34.78 and a high of $53.20. This volatility is typical for the energy sector, but still, it shows the risk you take on. You can dive deeper into this analysis in our full post: Breaking Down Occidental Petroleum Corporation (OXY) Financial Health: Key Insights for Investors.

On the income front, the company's commitment to returning capital is clear, but their yield is still below the sector average. The annual dividend per share is estimated at approximately $0.94 to $0.96. This translates to a dividend yield of about 2.22% for 2025. While this is lower than the sector average of around 4.62%, the dividend payout ratio is projected at a sustainable 45.7% for 2025. That low payout ratio means they have plenty of room to reinvest in the business or increase the dividend later, which is important for long-term investors.

Risk Factors

When you look at Occidental Petroleum Corporation (OXY), you see a company executing a dual strategy: maximizing Permian Basin cash flow while pivoting hard into low-carbon ventures (LCV). But this dual focus creates its own set of risks. The biggest near-term concern is still the volatile commodity market, but the long-term risk is execution on their new strategic bet.

Honestly, the financial risk is a holdover from past acquisitions, but they are tackling it head-on. The aggressive debt reduction is defintely the right move. Since July 2024, Occidental Petroleum Corporation has repaid a massive $7.5 billion in debt, which is projected to cut annual interest expenses by $410 million. This is crucial because, despite the progress, the Altman Z-Score-a measure of a company's financial health-still sits in the distress zone at 1.39, suggesting potential financial instability if market conditions turn sharply against them. It's a work in progress, not a done deal.

External and Financial Headwinds

The core business remains exposed to oil price swings. For example, in Q2 2025, Occidental Petroleum Corporation's realized crude oil price dropped to $63.76 per barrel, contributing to a 60% year-over-year decline in net income to $288 million. That's a brutal reality check on the oil and gas model.

Plus, their non-core segments are facing pressure. The Midstream segment is forecasted to incur a pre-tax loss ranging from $10 million to $210 million in the 2025 fiscal year, and the OxyChem segment's pre-tax income is expected to be lower, between $900 million and $1.1 billion, due to higher raw material costs and an oversupplied market. Here's the quick math: lower oil prices hit the top line, and segment-specific issues erode the margins.

• Commodity volatility: Oil price drops directly impact revenue.
• Regulatory shifts: New carbon taxes or stricter drilling rules could raise costs.
• Geopolitical instability: International operations are always vulnerable to regional conflicts.

Operational and Strategic Execution Risk

The strategic risk centers on their big bet on Direct Air Capture (DAC) technology. The flagship STRATOS DAC project, aiming to capture 500,000 metric tons of CO₂ per year, is capital-intensive. The total 2025 capital expenditure guidance is high, between $7.1 billion and $7.3 billion, with a significant portion going to these low-carbon ventures. If the technology deployment hits snags or the market for carbon removal credits doesn't scale as fast as anticipated, that capital becomes a drag.

The good news is their core operational efficiency is strong. Their Permian Basin breakeven cost is a low $25-$30 per barrel, which provides a solid buffer against market dips. But that advantage is tenuous; a new, lower-cost basin could emerge anytime, making their current assets less competitive.

Mitigation Strategies and Financial Discipline

Occidental Petroleum Corporation isn't just sitting back. They are actively mitigating these risks with clear, actionable steps:

• Deleveraging: The sale of the chemicals business to Berkshire Hathaway for $9.7 billion is a major step toward reducing debt to target levels.
• Cost Control: They have slashed $500 million in 2025 costs through operational improvements.
• Efficiency Gains: Operational improvements in the Delaware Basin have reduced drilling duration per well by 20%, cutting per-well costs by 14%.
• New Revenue Streams: Securing offtake agreements, like the multi-year deal to sell 500,000 metric tons of carbon removal credits to Microsoft, validates the commercial viability of their LCV business.

For a deeper dive into the long-term vision that underpins this strategy, you should review the Mission Statement, Vision, & Core Values of Occidental Petroleum Corporation (OXY).

Key Financial & Operational Metrics (FY 2025)

To keep a clear picture of the risks and the company's response, here are the critical numbers to watch for the 2025 fiscal year:

The next concrete step for you is to monitor the Q4 2025 earnings release for updates on the debt-to-equity ratio and the first commercial milestones for the STRATOS project.

Growth Opportunities

You're looking at Occidental Petroleum Corporation (OXY) and wondering if the growth story is real, or just a Permian Basin mirage. Honestly, it's a clear, two-part strategy: double down on high-return oil and gas while building a first-mover advantage in carbon management. That's a powerful combination.

The core driver is the Permian Basin, where the $12.4 billion CrownRock acquisition in late 2024 cemented their position. This move makes Occidental Petroleum Corporation a top-three producer in the basin, giving them massive scale and efficiency gains. Here's the quick math: the company is allocating between $5.8 billion and $6 billion of its 2025 capital expenditure to oil and gas assets, with a substantial $3.7 billion focused specifically on the Permian. This focus is already translating to operational wins, like 15% faster drilling times and 11% lower well costs in the Permian, which is defintely a competitive edge. Exploring Occidental Petroleum Corporation (OXY) Investor Profile: Who's Buying and Why?

On the financial front, the market is seeing the results. Occidental Petroleum Corporation reported Q3 2025 adjusted earnings per share (EPS) of $0.64, beating the analyst consensus. The full-year 2025 consensus EPS forecast sits at approximately $2.18. This is a strong signal that operational improvements are offsetting commodity price volatility. For production, the company is guiding for Q4 2025 global average production of 1.44 million to 1.48 million barrels of oil equivalent per day (MMboepd), up from 1.46 MMboepd in Q3 2025. Higher volumes, lower costs-that's the playbook.

The second, and more unique, growth pillar is Low Carbon Ventures (LCV). This isn't just a side project; it's a strategic initiative to monetize carbon dioxide management. Occidental Petroleum Corporation is investing around $450 million of its 2025 capital budget into LCV projects like the STRATOS Direct Air Capture (DAC) facility and Gulf Coast sequestration initiatives. They even acquired the carbon removal startup Holocene in April 2025 to boost their DAC capabilities.

This LCV focus directly feeds into a major competitive advantage: Enhanced Oil Recovery (EOR). Occidental Petroleum Corporation is a long-time leader in this space, and the plan is to use captured carbon dioxide for EOR in unconventional fields. This not only boosts recovery from existing wells but also permanently sequesters the CO2, creating an unexpected upside potential in the low-carbon economy.

Key growth drivers and initiatives for Occidental Petroleum Corporation:

• CrownRock Acquisition: Increased Permian scale and efficiency.
• Debt Reduction: Repaid $3.0 billion of debt year-to-date through Q2 2025, reducing interest expense.
• Low Carbon Ventures: Investing $450 million in DAC and Carbon Capture and Storage (CCS).
• EOR Expansion: Leveraging CO2 for Enhanced Oil Recovery in unconventional assets.

To be fair, this aggressive capital plan-total 2025 capex is projected at $7 billion to $7.2 billion-has temporarily compressed free cash flow, but it's a calculated trade-off to secure long-term value. They are using asset sales, like the planned $9.7 billion sale of the chemicals business (OxyChem) to Berkshire Hathaway, to accelerate debt reduction and fund this growth.

Here's a snapshot of the core financial drivers for the year:

The action for you is clear: monitor the integration of CrownRock and the progress of the STRATOS DAC project. If those two initiatives deliver on their efficiency and revenue promises, the growth story holds up.