After a defining year in 2025, Occidental Petroleum enters 2026 with momentum few U.S. operators can match.
Across drilling efficiency, balance sheet repair, carbon capture, and integrated infrastructure, Oxy proved it can grow production, cut costs, and prepare for the next energy cycle — all at the same time.
Based on a full review of Oxy’s 2025 activity, permitting data, earnings commentary, and project developments, five priorities clearly emerge for 2026.
1. Maximize Permian Value — Not Volume
The Permian Basin remains the cornerstone of Occidental’s portfolio.
In 2025 alone, Oxy drilled more than 590 wells in the Permian, accounting for over 80% of total company drilling activity Oxy B;og Summary. But the story wasn’t about adding rigs — it was about extracting more value from each one.
Key takeaways heading into 2026:
- Drilling times fell 15–20% across Delaware and Midland assets
- Average unconventional well costs dropped 13–18% year over year
- Fewer rigs delivered equal or higher production
- Pad optimization expanded from 2–3 wells to 4–6 well pads
For 2026, Oxy’s priority is clear:
Hold activity flat while increasing barrels per rig.
This “smarter, not faster” model allows Oxy to protect margins in a $55–$65 oil environment while retaining upside leverage if prices strengthen later in the decade.
2. Scale CO₂ Reinjection and Residual Oil Zone (ROZ) Development
If 2025 proved anything, it’s that carbon management is no longer an ESG experiment for Oxy — it’s a core production strategy.
Throughout West Texas, the company expanded:
- CO₂ reinjection stations
- Water supply and injector drilling
- ROZ (Residual Oil Zone) pilots tied to legacy San Andres fields
Projects such as the Goldsmith Landreth Deep Gas Reinjection Station highlight how Oxy is extending the life of mature Permian fields while increasing recovery by an estimated 12–17% per reservoir Oxy B;og Summary.
Why this matters for 2026:
- ROZ resources in the Permian are estimated at 100+ billion barrels in place
- Existing CO₂ networks from McElmo and Bravo Dome already supply ~1.3 Bcf/d
- These systems support both enhanced recovery and future carbon storage
In 2026, expect Oxy to:
- Convert additional legacy waterfloods into CO₂ floods
- Expand injector well counts
- Continue integrating EOR and sequestration under a single infrastructure strategy
This dual-use model is one of Oxy’s strongest competitive advantages.
3. Advance Direct Air Capture from Concept to Cash Flow
Occidental is now the global leader in Direct Air Capture — and 2026 is when that leadership begins to commercialize.
Major milestones already in motion:
- STRATOS DAC Facility (West Texas) — first-of-its-kind plant targeting 500,000 tCO₂/year
- South Texas DAC Hub (King Ranch) — $500M joint development with ADNOC’s XRG
- Up to $650M in U.S. DOE support for DAC scale-up
Unlike many low-carbon ventures, Oxy’s DAC strategy is integrated directly into its upstream business:
- Captured CO₂ feeds EOR operations
- Long-term sequestration creates durable carbon credit revenue
- Corporate offtake agreements already signed with Microsoft, Amazon, and Airbus
For 2026, the priority shifts from construction to execution:
Prove DAC can generate repeatable revenue, not just headlines.
If successful, DAC becomes both a hedge against long-term oil demand risk and a high-margin growth platform independent of commodity prices.
4. Maintain Relentless Balance Sheet Discipline
Few themes appeared more consistently in Oxy’s 2025 narrative than debt reduction.
Key achievements include:
- $7.5 billion in debt repaid in 13 months
- No major maturities remaining in 2025
- Only ~$2.2 billion due in 2026
- Potential $10+ billion OxyChem divestiture under evaluation Oxy B;og Summary
CEO Vicki Hollub has been explicit:
Oxy does not need acquisitions — it needs flexibility.
Heading into 2026, priorities include:
- Continued deleveraging toward investment-grade resilience
- Reduced interest expense supporting free cash flow
- Optionality for shareholder returns once targets are achieved
In a volatile macro environment, balance sheet strength may be Oxy’s most valuable asset.
5. Use AI and Automation as a Structural Advantage
Artificial intelligence is no longer theoretical inside Occidental’s operations.
By the end of 2025:
- ~40% of onshore production operated “route-less”
- Predictive maintenance reduced downtime and LOE
- AI-driven subsurface modeling improved drilling placement
- Real-time optimization enhanced CO₂ flood performance
AI is now embedded across:
- Drilling parameter optimization
- Equipment health monitoring
- Supply chain logistics
- Reservoir characterization under complex salt structures
For 2026, the focus is scale:
- Expand AI workflows across CrownRock assets
- Apply machine learning to ROZ development
- Improve offshore Gulf imaging beneath salt domes
- Reduce non-productive time across completions
As U.S. shale approaches maturity, data — not acreage — becomes the differentiator.
Final Takeaway: Oxy’s 2026 Playbook
Occidental is no longer operating like a traditional shale producer.
Its 2026 priorities reflect a company transitioning into a hybrid energy platform:
Priority Strategic Objective Permian efficiency Higher output per rig CO₂ reinjection Unlock stranded legacy oil DAC deployment Monetize carbon at scale Debt discipline Maximize long-term flexibility AI integration Extend U.S. production plateau
With U.S. oil supply expected to peak later this decade, Oxy’s strategy isn’t about chasing growth — it’s about extending relevance.
By combining low-cost barrels, advanced recovery, carbon infrastructure, and digital execution, Occidental is positioning itself not just for 2026 — but for whatever energy market follows next.
