Occidental Petroleum Corp "2Q26 Preview - New CEO Takes Center Stage" (Neutral)

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Occidental Petroleum Corp "2Q26 Preview - New CEO Takes Center Stage" (Neutral)

things like 12/26E

EOR and well failures, and more effort on base management across the asset base. From To % ch Cons.

The Horn Mountain Waterflood will also be a key driver in the GoA. Outside of Q1 1.06 1.06 0 1.06

O&G, further FCF growth is expected from corporate cost optimization, interest Q2E 1.96 1.80 -8 1.76

reduction, lowering LCV spend, and further improvements within Midstream. Q3E 1.43 1.14 -20 1.18

Q4E 1.28 1.34 5 1.13

Well Costs. OXY continues to target a 7% Y/Y reduction in well costs for 2026. 12/26E 5.74 5.35 -7 5.31

These savings have been more structural driven, including increasing simufracs to 12/27E 5.30 4.39 -17 3.85

>45% and increasing the number of wells/pad. As it pertains to service costs, OXY 12/28E 4.60 4.76 3 3.76

is relatively insulated at the moment, with it benefiting from longer-duration Josh Silverstein

performance-based contracts where efficiency gains benefit both parties. On the Analyst

frac side, while diesel costs are up, OXY was able to substitute this with CNG. josh.silverstein@ubs.com

+1-212-713 3513

Balance Sheet. Higher oil prices in 2Q26 help to accelerate OXY on its path

towards $10Bn gross debt. With continued debt reduction in 2H26, we see Peyton Dorne

OXY having reached this target by YE26, setting up for the ability to ramp Analyst

peyton.dorne@ubs.com

buybacks in 2027 or build cash ahead of the 2029 preferred redemption.

+1-212-713 4359

Updating Estimates and PT. We lowered our FY26/FY27 WTI forecast to $79/ William Barber

$71/bbl and our FY26 HH forecast to $3.75. As a result, our FY26/FY27 Adj. Associate Analyst

EBITDAX forecasts decrease by 3%/8% to $15.48/$15.52Bn. We maintain our william.barber@ubs.com