TL;DR - OXY Q2 2026: Adj. EPS $2.40 (+823% YoY, beat $1.92 consensus by 25%); revenue $8.33B on a continuing-operations basis - Principal debt cut to $11.8B — from a roughly $40B total post-Anadarko peak, the lowest level since mid-2019 - OxyChem sold to Berkshire Hathaway for $9.7B (closed Jan. 2, 2026) — the defining deleveraging transaction - Quarterly dividend raised to $0.28/share (+7.7%); OXY targets $4B+ in annual sustainable cash flow by 2030
Part A: The Numbers Behind OXY's Seven-Year Balance Sheet Repair
In 2019, Occidental Petroleum (NYSE: OXY) outbid Chevron for Anadarko Petroleum in a $38 billion deal financed partly by Warren Buffett's $10 billion preferred-stock investment. The acquisition pushed OXY's total principal debt to roughly $40 billion — a burden that defined the company's strategic options for the next seven years.
Now, under CEO Vicki Hollub, the turnaround is measurable:
| Metric | Q2 2026 | YoY / Context |
|---|---|---|
| Revenue (cont. ops) | $8.33B | +57.1% vs. comparable Q2 2025 |
| Adj. EPS (cont. ops) | $2.40 | +823%; beat est. $1.92 by 25% |
| FCF (before working capital) | $3.0B | Highest since Q3 2022 |
| Principal Debt | $11.8B | Lowest since mid-2019 |
| Quarterly Dividend | $0.28/share | +7.7% from $0.26 |
All revenue comparisons are on a continuing-operations basis. Because OxyChem closed on January 2, 2026, the Q2 2025 comparative is restated to exclude it — making the 57.1% gain a like-for-like reflection of higher oil prices and production.
Oil price realizations of $96.78 per barrel exceeded the WTI benchmark of $92.79, reflecting OXY's diversified portfolio of Permian, Gulf of Mexico, and international crude grades. Production of 1,433 Mboed beat the top of guidance by 23 Mboed.
Free cash flow before working capital of $3.0 billion equals operating cash flow before working capital ($4.6B) minus Q2 capital expenditures ($1.6B). OXY maintained its full-year 2026 capex plan of $5.5–$5.9B.
The OxyChem Sale: The Defining Move
On January 2, 2026, Occidental closed the $9.7 billion all-cash sale of OxyChem — a leading U.S. producer of PVC, chlor-alkali, and chlorinated organic chemicals — to Berkshire Hathaway. The proceeds funded the bulk of H1 2026 debt retirement: OXY retired $8.6 billion of principal debt in the first half of 2026, with management citing approximately $630 million in annualized interest expense savings versus 2025.
Principal debt now stands at $11.8 billion — down from an estimated $40 billion peak post-Anadarko and at its lowest since mid-2019, in the months before the Anadarko acquisition closed.
Part B: Investor Analysis — What the Debt Cleanup Means
A Simpler Business, One Key Risk Shift
After the OxyChem divestiture, OXY reports through two segments: Oil and Gas (Permian Basin, Gulf of Mexico, Algeria, and Oman) and Midstream & Marketing (pipelines, gas processing, and trading). The Midstream & Marketing segment contributed a quarterly record of $960 million in Q2 2026, providing a partial buffer against commodity price swings.
The central investment risk has changed. Pre-cleanup, the question was whether OXY could service $40B of debt in a volatile oil market. Post-cleanup, the question is: what is OXY's FCF at different oil price scenarios? That is a more tractable, narrower risk.
The leverage profile illustrates the shift. At $11.8B principal debt and $3.0B quarterly FCF, gross debt equals roughly 3.9x one quarter's FCF — approximately 1.0x on an annualized basis. In the aftermath of the 2019 deal, the equivalent ratio was in the double digits.
Berkshire's Evolving Position at OXY
The Berkshire-OXY relationship has passed through three phases. In 2019, Berkshire provided the $10B preferred-equity financing that enabled the Anadarko bid, collecting an 8% coupon. In subsequent years, OXY reduced portions of that preferred obligation through operating cash flows and asset sales. In January 2026, Berkshire acquired OxyChem outright — a $9.7B cash transaction for an operating asset — accelerating OXY's debt reduction rather than affecting the preferred directly.
After the OxyChem sale: - Berkshire holds approximately 265 million shares (~27%) of OXY common equity, making it the company's largest shareholder - The original $10B preferred equity remains partially outstanding; OXY has flagged preferred redemption as the next major capital allocation priority after reaching the $10B debt target - Management has targeted the preferred redemption as a near-term milestone, and at current FCF levels the debt gap ($11.8B→$10B) is closable within a single quarter, making preferred redemption timing the next logical capital allocation question
The 2030 Cash Flow Roadmap
Management projects "over $4 billion" in annual sustainable cash flow by 2030, measured relative to a 2026 base. Approximately 85% of the improvement is described as achievable at oil prices below current spot — driven by structural efficiencies rather than commodity assumptions.
The operational drivers: 1. Cost discipline: Domestic lease operating expense of $7.80/BOE in Q2 2026, 6% below guidance, continues a multi-year improvement trend 2. Permian productivity: Advanced recovery techniques, including CO2-enhanced oil recovery from OXY's direct air capture program, are expected to improve reservoir recovery rates as scale increases 3. Balance sheet relief: The elimination of interest expense as OXY moves from $11.8B toward $10B in principal debt frees up capital for reinvestment and returns
Risks That Remain
The strength of Q2 2026 reflects oil prices near $93 WTI and $97 Brent — above the $77–80 average that characterized 2023–2024:
- Commodity exposure: With OxyChem gone, oil and gas revenue is the primary driver. A move back toward $75 WTI would materially compress FCF.
- Permian gas drag: OXY realized negative $1.48/Mcf on domestic natural gas in Q2 2026 — the Permian associated gas oversupply continues to subtract from blended per-BOE economics.
- Preferred equity obligation: Remaining Berkshire preferred equity carries an 8% coupon. The preferred redemption is a priority capital allocation item that constrains shareholder returns until addressed.
- Capex commitment: The $5.5–$5.9B 2026 capex plan is a structural commitment that limits near-term FCF flexibility in a downturn.
Dividend and Capital Allocation Priorities
The quarterly dividend increase to $0.28 per share brings the annualized payout to $1.12. At OXY's recent stock price near $52, the forward yield is approximately 2.15%. Share buybacks remain explicitly lower priority than debt reduction and preferred redemption — meaningful repurchases are likely a post-preferred-redemption story.
The Bottom Line
The Anadarko acquisition was one of the most leveraged deals in recent U.S. energy history. The debt journey from a roughly $40B peak to $11.8B — primarily through the OxyChem sale, asset optimization, and operational cash generation — has taken seven years. What remains is the final phase: reducing principal debt below $10B, addressing the Berkshire preferred obligation, and executing a $4B+ sustainable cash flow expansion by 2030.
The risk profile has shifted from solvency to commodity cycle management. Whether the 2030 roadmap holds depends on Permian execution and oil market conditions. For investors who held through the cleanup, the balance sheet is no longer the primary concern. For new investors, the central question is now simpler: what price do you assign to OXY's Permian assets at various WTI levels?
This article is for informational purposes only and does not constitute investment advice. OXY's financial performance is subject to commodity price fluctuations and other risks described in its SEC filings.
Sources: - Occidental Q2 2026 Press Release (oxy.com) - OXY Q2 2026 10-Q (SEC EDGAR) - Occidental Completes Sale of OxyChem — Jan. 2, 2026 - Berkshire Hathaway Completes OxyChem Acquisition (Yahoo Finance) - Occidental Q2 2026 Earnings Highlights (Yahoo Finance) - Financial Times: Occidental tries to free itself from Anadarko legacy (Aug. 23, 2026)
