Why You Need To Pay Attention To Occidental Petroleum Stock?
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Occidental Petroleum (OXY) pumps carbon dioxide into old Permian Basin fields to get more oil out, through its enhanced oil recovery business. The stock returned 42.3% in twelve months, against 12.2% for the S&P 500. Yet it trades at 4.9 times operating cash flow, against 15.4 for the index. That gap is the surprise. So how much oil is the program adding?
How Much Oil Is Occidental’s Recovery Program Adding?
Management said on the November 10, 2026 call that Occidental’s sidetrack program and new conventional horizontal wells in its enhanced oil recovery business had added 10,000 barrels of oil equivalent a day by the end of the third quarter of fiscal 2026. That is a small slice of the 1.43 million barrels of oil equivalent a day the company produced in the quarter.
Occidental started the sidetracks, new branches drilled from existing wellbores, in late February and had drilled about 80 by the call. Management has already identified 500 more candidates.
The bigger figure is what lies ahead. Management counts 2 billion barrels of oil equivalent of resources identified in unconventional enhanced oil recovery, and Occidental’s first three commercial projects are working toward injection by 2029.
Occidental Is Working To Slow Production Declines
Occidental’s total base decline, which is the yearly fall in output from wells already producing, is about 25%. Management plans to bring it down to 20% by 2030. Over the same years, management aims to bring sustaining capital, the spending needed to hold output level, down to about $4.5 billion. Permian enhanced oil recovery is one of the projects behind that plan, alongside Gulf of America waterfloods and select international opportunities.
Management’s wider plan is to add more than $4 billion a year of sustainable cash flow by 2030, compared with 2025. That sum equals about 7% of Occidental’s $58.5 billion market value.
Occidental’s 2027 spending plan does not aim for growth, though. At a starting point of about $5.9 billion of capital spending for 2027, management expects production to stay relatively flat against 2026. That budget also pays for longer-term projects meant to cut future upkeep spending.
Can Occidental Keep Carbon Dioxide Costs Down?
Occidental has not locked in cheaper carbon dioxide yet, and that cost is large. Power and carbon dioxide make up about 30% of the cost of an enhanced oil recovery barrel, management said on the call. Management already expects domestic lease operating expense to rise in the fourth quarter of fiscal 2026, partly on higher carbon dioxide costs.
Occidental’s answer is new supply. On November 9, 2026, it signed long-term agreements with two developers for carbon dioxide captured at third-party natural gas processing facilities in the Delaware Basin. Those developers will fund and build the infrastructure. Management said the deals would bring a meaningful reduction in cost. The deals cover 2 million metric tons a year, which is about 15% of Occidental’s 2026 purchased carbon dioxide. The agreements still need a final investment decision, which management expects in early 2027.
Occidental’s recovery business is small in today’s output, yet it sits inside management’s plan to slow decline. Domestic lease operating expense, which was $8.54 per barrel of oil equivalent in the third quarter, is the number to watch when Occidental reports in February 2027.
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