Occidental Petroleum's Q2 2025: Navigating Contradictions in Tax Strategy, Production Efficiency, and CO2 Economics

Tax savings and future capital spending, One Big Beautiful Bill impact on cash taxes, production optimization and efficiency, CO2 availability and EOR economics are the key contradictions discussed in Occidental Petroleum's latest 2025Q2 earnings call.



Operational Performance and Cash Flow:
- Occidental Petroleum reported $2.6 billion in operating cash flow for the second quarter of 2025, which exceeded the average for the first half of 2025 despite much lower WTI prices.
- The strong cash flow was attributed to increased production from CrownRock acquisitions, operational efficiencies, and cost reductions across both U.S. onshore assets and international operations.

Debt Repayment and Portfolio Optimization:
- Occidental repaid $7.5 billion of debt since the CrownRock acquisition in less than a year, surpassing the initial target of repaying $4.5 billion within 12 months.
- This significant reduction in debt was achieved through the strong performance of their oil and gas business and strategic portfolio optimization, including the divestiture of noncore assets valued at nearly $4 billion since January 2024.

Technological Advancements in Carbon Management:
- STRATOS, Occidental's direct air capture project, achieved a significant milestone with the commencement of wet commissioning and is on track to start capturing CO2 this year.
- Technological progress and continuous evaluation have improved project economics and economics down curves, positioning STRATOS for future growth and cost reductions in direct air capture technology for the DAC industry.

Impact of the One Big Beautiful Bill:
- The recently enacted bill provides significant cash tax benefits, with estimated reductions of $700 million to $800 million for Occidental.
- The bill preserves 45Q credits, levels the playing field between carbon storage and utilization pathways, and supports the economic viability of carbon capture, utilization, and storage, crucial for Occidental's carbon management strategy.