WS Investor
06 May 2026, 10:01
Occidental Petroleum Falls 6% in Premarket Despite Strong Operations as OxyChem Sale Distorts Headline Numbers
May 6, 2026 · Earnings Report
Occidental Petroleum dropped 6% in premarket trading in what appears to be a market reaction to broader energy sector weakness and concerns about the company's adjusted earnings, even as its operational performance in the first quarter came in ahead of expectations on nearly every metric.
The headline figures present a somewhat distorted picture. Reported net income attributable to common stockholders was $3.2 billion, or $3.13 per diluted share, a number inflated by a large gain on the sale of OxyChem, the company's chemical business, which is now classified as a discontinued operation. Stripping that out, adjusted income from continuing operations came in at $1.1 billion, or $1.06 per adjusted diluted share, a more modest figure that likely accounts for much of the premarket pressure.
Operating cash flow from continuing operations was $1.4 billion for the quarter, though that figure was weighed down by a $1.8 billion use of working capital driven by a sharp rise in receivables following a surge in commodity prices in March, alongside typical seasonal cash requirements for employee benefits, interest payments and property taxes. Before working capital movements, operating cash flow from continuing operations reached $3.2 billion, a significantly stronger underlying number. Capital expenditures came in at $1.6 billion, with free cash flow before working capital from continuing operations of $1.7 billion.
On the operational side, Occidental delivered across the board. Total company production averaged 1,426 thousand barrels of oil equivalent per day, exceeding the high end of guidance, led by strong contributions from the Permian, Rockies and Gulf of America business units. Midstream and marketing results also exceeded the high end of guidance on an adjusted basis, driven by higher crude margins, transportation capacity optimizations and stronger sulfur prices at Al Hosn, though the segment reported a headline pre-tax loss of $87 million due to items affecting comparability.
In oil and gas, pre-tax income rose to $1.0 billion from $0.7 billion in the prior quarter, driven by higher realized crude oil prices. Average worldwide realized crude oil prices increased 18% sequentially to $69.91 per barrel, while realized natural gas liquids prices rose 14% to $18.99 per barrel. Domestic natural gas prices fell 10% to $1.01 per thousand cubic feet.
"Our first quarter results reflect our strong operational performance and the outstanding work of our teams executing across our portfolio," said President and CEO Vicki Hollub. "Over the past decade, we have made deliberate, strategic decisions that have transformed Occidental's portfolio into the most resilient, competitive, and high-quality portfolio in our history."
Hollub also acknowledged the challenges posed by the conflict in the Middle East, noting that staff, partners and host governments had remained committed to safety and disciplined execution throughout the quarter.
The debt reduction story remains a central part of Occidental's investment case. The company repaid $7.1 billion in principal debt through May 5, reducing total principal debt to $13.3 billion as it pushes toward its $10.0 billion milestone. The pace of deleveraging reflects the proceeds from the OxyChem divestiture being deployed as intended, and represents a meaningful structural improvement in the company's balance sheet resilience across commodity price cycles.
The 6% premarket decline likely reflects a combination of the soft adjusted EPS figure relative to expectations, ongoing uncertainty around oil prices in a volatile macro environment, and the fact that the headline beat was driven by a one-time asset sale rather than recurring earnings power.
May 6, 2026 · Earnings Report
Occidental Petroleum dropped 6% in premarket trading in what appears to be a market reaction to broader energy sector weakness and concerns about the company's adjusted earnings, even as its operational performance in the first quarter came in ahead of expectations on nearly every metric.
The headline figures present a somewhat distorted picture. Reported net income attributable to common stockholders was $3.2 billion, or $3.13 per diluted share, a number inflated by a large gain on the sale of OxyChem, the company's chemical business, which is now classified as a discontinued operation. Stripping that out, adjusted income from continuing operations came in at $1.1 billion, or $1.06 per adjusted diluted share, a more modest figure that likely accounts for much of the premarket pressure.
Operating cash flow from continuing operations was $1.4 billion for the quarter, though that figure was weighed down by a $1.8 billion use of working capital driven by a sharp rise in receivables following a surge in commodity prices in March, alongside typical seasonal cash requirements for employee benefits, interest payments and property taxes. Before working capital movements, operating cash flow from continuing operations reached $3.2 billion, a significantly stronger underlying number. Capital expenditures came in at $1.6 billion, with free cash flow before working capital from continuing operations of $1.7 billion.
On the operational side, Occidental delivered across the board. Total company production averaged 1,426 thousand barrels of oil equivalent per day, exceeding the high end of guidance, led by strong contributions from the Permian, Rockies and Gulf of America business units. Midstream and marketing results also exceeded the high end of guidance on an adjusted basis, driven by higher crude margins, transportation capacity optimizations and stronger sulfur prices at Al Hosn, though the segment reported a headline pre-tax loss of $87 million due to items affecting comparability.
In oil and gas, pre-tax income rose to $1.0 billion from $0.7 billion in the prior quarter, driven by higher realized crude oil prices. Average worldwide realized crude oil prices increased 18% sequentially to $69.91 per barrel, while realized natural gas liquids prices rose 14% to $18.99 per barrel. Domestic natural gas prices fell 10% to $1.01 per thousand cubic feet.
"Our first quarter results reflect our strong operational performance and the outstanding work of our teams executing across our portfolio," said President and CEO Vicki Hollub. "Over the past decade, we have made deliberate, strategic decisions that have transformed Occidental's portfolio into the most resilient, competitive, and high-quality portfolio in our history."
Hollub also acknowledged the challenges posed by the conflict in the Middle East, noting that staff, partners and host governments had remained committed to safety and disciplined execution throughout the quarter.
The debt reduction story remains a central part of Occidental's investment case. The company repaid $7.1 billion in principal debt through May 5, reducing total principal debt to $13.3 billion as it pushes toward its $10.0 billion milestone. The pace of deleveraging reflects the proceeds from the OxyChem divestiture being deployed as intended, and represents a meaningful structural improvement in the company's balance sheet resilience across commodity price cycles.
The 6% premarket decline likely reflects a combination of the soft adjusted EPS figure relative to expectations, ongoing uncertainty around oil prices in a volatile macro environment, and the fact that the headline beat was driven by a one-time asset sale rather than recurring earnings power.
