Oxy cutting oil-and-gas capex by $300 million, eyes 1% production growth
Occidental Petroleum Corp., Houston, will spend $5.5-5.9 billion on capital projects this year, an 8% drop from 2025 and $800 million less than executives’ early forecast late last year, as the company continues to emphasize efficiency gains. Spending on oil-and-gas operations will be $300 million less than last year.
Sunil Mathew, chief financial officer, late last week told investors and analysts that Occidental’s capital spending budget for 2026 (adjusted for the recently completed divestiture of OxyChem) will focus on short-cycle projects and be roughly 70% devoted to US onshore assets. Still, onshore capex will drop by $400 million from last year in part because of a drop in Permian basin activities and efficiency improvements.
Other elements of Occidental’s spending plan include:
- A reduction of about $100 million compared to last year for exploration work
- A $250 million drop in spending at the company’s Low Carbon Ventures group housing Stratos
Mathew said capex, which will be weighted a little to the first half, sets up Occidental’s production to average 1.45 MMboe/d for the full year, a tick up from 2025’s average of 1.434 MMboe/d but down from the roughly 1.48 MMboe/d during the fourth quarter. The 1% production growth outlook is also a percentage point less than executives’ forecast from 3 months ago. Mathew noted that first-quarter production will come in below the full-year forecast in part because of the recent winter storm as well as planned Gulf of Mexico turnarounds.
Incorporated in the $300 million year-over-year drop in oil-and-gas capex is a big jump in realized efficiencies of the kind many other large operators also are scoring. Richard Jackson, chief operating officer, told analysts on a Feb. 19 conference call that Occidental teams are notching gains on top of the $2 billion they accumulated from 2023 through last year. That means executives have been able to trim about $400 million from the early guidance they gave in November.
“This is an additional 7% on well cost, an additional 5% on facilities and construction,” Jackson said. “These are really development efficiencies. These are more wells per pad, a bit longer laterals. But from an activity standpoint, we’re actually able to achieve this with lower activity […] The other really important part is the production improvement. Base production had a significant beat in the fourth quarter that rolls into 2026 and then our new wells continue to deliver—not only the primary benches, but the secondary benches.”
In the last 3 months of 2025, Occidental posted a net loss of about $68 million that was influenced by some one-time charges and costs related to the sale of OxyChem. Adjusted income was $315 million and revenues totaled $5.42 billion.
Shares of Occidental (Ticker: OXY) popped 9% to $51.53 on the heels of the Feb. 19 earnings report and conference call and were changing hands around $52.40 in midday trading Feb. 23. They’re up about 14% over the past 6 months and the company’s market capitalization now stands at about $51.5 billion.
About the Author
Geert De Lombaerde
Senior Editor
A native of Belgium, Geert De Lombaerde has more than two decades of business journalism experience and writes about markets and economic trends for Endeavor Business Media publications Healthcare Innovation, IndustryWeek, FleetOwner, Oil & Gas Journal and T&D World. With a degree in journalism from the University of Missouri, he began his reporting career at the Business Courier in Cincinnati and later was managing editor and editor of the Nashville Business Journal. Most recently, he oversaw the online and print products of the Nashville Post and reported primarily on Middle Tennessee’s finance sector as well as many of its publicly traded companies.