Occidental Petroleum Corp (OXY.N): How Much Further Could Costs/Capex Fall? Model Update

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Occidental Petroleum Corp (OXY.N): How Much Further Could Costs/Capex Fall? Model Update

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16 Jul 2026 07:02:52 ET │ 19 pages

Occidental Petroleum Corp (OXY.N)

How Much Further Could Costs/Capex Fall? Model Update

CITI'S TAKE

On their 2q conference call, we believe OXY’s new CEO will set out a more

aggressive agenda for cost cuts and outline how base decline management

can squeeze maintenance capex lower over time. Based upon a peer Neutral

analysis, we see potential to shave 5-8% or $300-500mm off of LOE+GPT, Short-Term View: Upside

although new technology could enhance this figure. Attenuating base

Price (15 Jul 26 16:00) US$53.77decline beyond the natural rate could offer $300-700mm of annualized

capex savings (5-11%). Improving FCF generation into 2029 in order to Target price US$60.00↓

accelerate paydown of the outstanding preferreds would be beneficial for from US$62.00the stock. Investors are anticipating additional cost out details on the call

so the order of magnitude will be key for the stock. Expected share price return 11.6%

Expected dividend yield 1.8%

Model Update — We mark-to-market our model for actual commodity prices and Expected total return 13.4%

realizations during the quarter, updated hedge losses, and other modeling changes.

Market Cap US$53,482MWe reset our EBITDAX estimates to $4.99bn in 2q’26, $14.8bn for the full year

(2026), and $11.4bn in FY’27 (incorporating Citi Commodities $61 WTI forecast). We

bump down our target price utilizing a ~6.5x multiple on DACF (up from 6.3x due to

lower oil prices forecast in 2027), resulting in a $60 price, and our DCF, resulting in a

$57 target price, blended at two-thirds and one-thirds to arrive at our new $60 Price Performance

target price. (RIC: OXY.N, BB: OXY US)

Scott Gruber AC