Occidental Petroleum's Q1 2025: Navigating Contradictions in Drilling Efficiency, CapEx, and Growth Strategy

Permian drilling activity and efficiency, capital expenditure reduction and its impact on production, international oil & gas operations and production growth, and divestiture strategy and asset sales are the key contradictions discussed in Occidental Petroleum's latest 2025Q1 earnings call.



Strong Financial Performance:
- Occidental Petroleum reported operating cash flow of $3 billion in Q1, with a midpoint oil and gas production of 1.39 million BOE per day.
- These results were supported by cost management, operational excellence, and efficiencies across the portfolio.

Permian and U.S. Onshore Operations:
- There was a 15% improvement in drilling duration per well and a 10% reduction in Permian unconventional well costs compared to last year.
- These advances were due to enhanced well designs, operational execution, and efficient completions, allowing for the reduction of two drilling rigs in the Delaware Basin.

International Operations and Oman Expansion:
- Occidental is in advanced negotiations for a 15-year extension of the Block 53 contract in Oman, aiming to unlock over 800 million barrels of additional resources.
- The extension is expected to enhance cash flow beginning in 2025, supporting Oman's national objectives.

Debt Reduction and Financial Management:
- Occidental has retired $2.3 billion in debt year-to-date, with $6.8 billion repaid over the past 10 months, reducing annual interest expenses by $370 million.
- This progress is part of a strategy to strengthen the financial position and support long-term shareholder returns.

Midstream and Chemical Segment Performance:
- The midstream business outperformed high-end guidance, driven by gas marketing optimization and strong sulfur market demand.
- OxyChem's first-quarter results exceeded expectations, overcoming challenges with winter weather and increased raw material costs.