Occidental Petroleum, one of the most active operators in the Permian Basin, is demonstrating how legacy oil companies can embrace a forward-looking strategy while optimizing traditional production. As the global energy landscape evolves, Oxy is reimagining its role with a focus on operational efficiency, strategic divestitures, and bold moves into carbon capture and AI technologies.
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1. Trimming Fat, Doubling Down on Core Assets
Oxy is aggressively streamlining its portfolio by divesting non-core assets in West Texas. One major step includes the $818 million sale of Delaware Basin assets to Permian Resources, encompassing 29,500 net acres. In line with this, air permits for key facilities were successfully transferred, reflecting a clean operational handover and regulatory diligence.
These divestments are helping finance Oxy’s $12 billion acquisition of CrownRock, expanding its core position in the Permian and reinforcing its shift toward high-margin assets with sub-$40 breakevens.
2. Operational Excellence Under Pressure
Despite budget tightening — with capital expenditures cut by $200 million and domestic operating costs reduced by $150 million in Q1 2025 — Occidental has managed to grow permit activity and maintain production targets. The company filed 387 permits in H1 2025, up 22.5% from the year prior.
Efficiency gains include:
- 17% faster drilling times
- 18% lower drilling costs
- Use of two fewer rigs while preserving output
This performance reflects Oxy’s ability to “do more with less,” an increasingly essential skill in today’s commodity-price-sensitive market.
3. The AI and Carbon Capture Pivot
CEO Vicki Hollub has been vocal about the coming production plateau for U.S. oil, possibly as early as 2027. Her solution? A full-court press into AI and carbon capture.
- Oxy is partnering with ADNOC’s XRG on a $500 million Direct Air Capture (DAC) hub in South Texas targeting 500,000 tCO₂/year.
- The captured CO₂ will be used in enhanced oil recovery (EOR), monetizing carbon and boosting output from aging wells.
- Hollub sees AI as a critical tool for unlocking reserves, especially under salt domes in the Gulf of Mexico — potentially equating to Saudi Arabia-level production if tapped efficiently.
This dual focus not only supports Oxy’s 2050 net-zero ambitions but also positions the company as a tech-forward oil major.
4. Record Production, Resilient Cash Flow
In Q4 2024, Oxy hit record U.S. production of 1.233 million boe/d, driven by its Permian and DJ Basin operations. With $3.6 billion in operating cash flow and $1.4 billion in free cash flow, the company remains fiscally robust despite softer oil prices.
Its reserves replacement rate of 230%—including 623 million boe from CrownRock—highlights a strong foundation for long-term growth.
5. Sustainable Operations: Water Recycling and Lithium Trials
Oxy has also doubled water recycling volumes in the Delaware Basin and recycled over 150 million barrels since 2019. The company’s environmental stewardship now extends to lithium extraction from geothermal brines and CO₂-based bioethylene, underscoring a move toward a diversified, lower-carbon future.
Final Thoughts
Occidental Petroleum is proving that efficiency, innovation, and sustainability are not mutually exclusive. Through disciplined capital deployment, bold M&A, and groundbreaking technology adoption, Oxy is setting a new benchmark in shale leadership.
As the oil industry inches closer to a digital and decarbonized future, Oxy isn’t just adapting — it’s leading.
