Occidental Petroleum Corporation

Company Overview

Business Model: Occidental Petroleum Corporation is an international energy company with diversified assets primarily located in the United States, the Middle East, and North Africa. The company operates through three main segments: oil and gas, chemical, and midstream and marketing. It is one of the largest oil and gas producers in the U.S., with significant operations in the Permian and DJ basins and offshore Gulf of America, and is the largest independent oil producer in Oman. Its midstream and marketing segment supports and enhances the value of its oil and gas and chemical businesses. Oxy Low Carbon Ventures, a subsidiary within the midstream and marketing segment, is focused on advancing decarbonization solutions, including direct air capture, lithium development, and near-zero emissions power. Occidental Chemical Corporation (OxyChem), its chemical subsidiary, is a leading North American manufacturer of basic chemicals and vinyls.

Market Position: Occidental Petroleum Corporation holds a leading position as one of the largest oil and gas producers in the U.S., particularly in the Permian and DJ basins and offshore Gulf of America. Internationally, it is the largest independent oil producer in Oman. OxyChem maintained a market position of either first or second in the United States in 2024 for its principal basic chemical products and vinyl chloride monomer (VCM), and ranks among the top three producers of polyvinyl chloride (PVC) in the United States. The company's competitive strategy in oil and gas emphasizes capital-efficient hydrocarbon production through advanced recovery techniques, leveraging its expertise in carbon dioxide (CO2) separation, transportation, use, recycling, and storage in enhanced oil recovery (EOR). OxyChem competes as a low-cost producer.

Recent Strategic Developments:

• CrownRock Acquisition: On August 1, 2024, Occidental Petroleum Corporation completed the acquisition of CrownRock, L.P. for a total consideration of $12.4 billion, comprising $9.4 billion in cash, 29.6 million shares of Occidental Petroleum Corporation common stock, and the assumption of $1.2 billion of existing CrownRock, L.P. debt. This acquisition significantly enhanced Occidental Petroleum Corporation's oil and gas portfolio in the Permian Basin with high-margin production and low-breakeven inventory.
• Carbon Engineering Ltd. Acquisition: In August 2023, Occidental Petroleum Corporation acquired the remaining 68% interest in Carbon Engineering Ltd. for approximately $1.1 billion in cash, making it a wholly owned subsidiary.
• Oxy Low Carbon Ventures (OLCV) Initiatives: OLCV is actively advancing carbon removal and carbon capture, utilization and storage (CCUS) projects. Construction of STRATOS, the company's first large-scale direct air capture (DAC) facility in Ector County, Texas, is progressing, with commissioning and start-up of operations expected in mid-2025, targeting an initial capacity of up to 250,000 tonnes of CO2 per annum. Occidental Petroleum Corporation has a joint venture agreement with BlackRock Inc. for STRATOS development, with $550 million committed from BlackRock Inc.'s fund. By year-end 2024, OLCV had filed 21 cumulative Class VI CO2 injection well permit applications across its five proposed sequestration hub sites and secured grants from the U.S. Department of Energy (DOE) for two of these hubs.
• Sustainability Goals: Occidental Petroleum Corporation was the first U.S. oil and gas company to announce goals to achieve net-zero greenhouse gas (GHG) emissions from its operations and energy use before 2040 (with an ambition for before 2035) and from its total carbon inventory, including the use of its sold products, before 2050. It also endorsed the World Bank’s initiative for zero routine flaring by 2030 and established a new medium-term 2030 methane intensity target.
• Capital Allocation: The company prioritizes a sustainable and growing dividend and reducing its principal outstanding debt below $15 billion before resuming share repurchases.
• Dividend Increase: On February 18, 2025, the Board of Directors declared a regular quarterly dividend of $0.24 per share on common stock, representing a 9% increase from the previous quarter.

Geographic Footprint: Occidental Petroleum Corporation's primary operational regions include the United States (Texas, New Mexico, Colorado, and offshore Gulf of America) and the Middle East and North Africa (Algeria, Oman, Qatar, and the United Arab Emirates). Non-U.S. operations contributed approximately 16% of consolidated revenue in 2024, consistent with 16% in 2023 and 15% in 2022. As of December 31, 2024, total consolidated assets were distributed as follows: United States ($76,118 million), Canada ($1,650 million), Middle East ($6,568 million), and North Africa and Other ($1,109 million).

Financial Performance

Revenue Analysis

Profitability Metrics:

• Gross Margin: 63.3%
• Operating Margin: 12.0%
• Net Margin: 11.5%

Investment in Growth:

• Capital Expenditures: $7.0 billion
• Strategic Investments:
  • CrownRock Acquisition: $12.4 billion total consideration (including $9.4 billion cash, 29.6 million shares of common stock, and $1.2 billion assumed debt).
  • Carbon Engineering Ltd. Acquisition: Approximately $1.1 billion cash consideration.
  • Construction of STRATOS: Majority of the $880 million capital expenditures in the Midstream and Marketing segment in 2024.
  • Investments in emerging low-carbon businesses: Approximately $350 million in 2022.

Business Segment Analysis

Oil and Gas Segment

Financial Performance:

• Revenue: $21.7 billion (+1.9% YoY)
• Operating Income: $5.2 billion (-16.5% YoY)
• Operating Margin: 24.0%
• Key Growth Drivers: The CrownRock Acquisition on August 1, 2024, significantly contributed to increased U.S. onshore production and added high-margin, low-breakeven inventory in the Permian Basin. Higher production in the DJ Basin from new development activities and the completion of the Al Hosn Gas expansion project in Q2 2023 also drove growth. The segment focuses on capital efficiency, operational excellence, and leveraging CO2 EOR expertise.
• Capital Expenditures: Approximately $5.3 billion in 2024, primarily directed to assets in the Permian Basin, DJ Basin, Gulf of America, and Oman. Planned capital expenditures for 2025 are $5.8 billion to $6.0 billion.
• Proved Reserves: 4,612 MMboe at year-end 2024 (+15.8% from 3,982 MMboe at year-end 2023).
• Production: 1,327 Mboe/d (+9% YoY).
• Lease Operating Expense: $9.75 per Boe in 2024 (decreased from $10.48 per Boe in 2023).

Product Portfolio: The segment explores for, develops, and produces oil (including condensate), natural gas liquids (NGL), and natural gas. It employs primary, secondary (waterflood), and tertiary (CO2 and steam flood) recovery techniques in both conventional and unconventional fields.

Market Dynamics: The oil and gas business operates in a highly competitive global and local market, with financial performance closely tied to volatile commodity prices. Occidental Petroleum Corporation leverages its scale, technical expertise, and competitive advantages in CO2 management for EOR.

Sub-segment Breakdown:

• Permian Basin: Production of 664 Mboe/d in 2024. $2.7 billion of development capital was spent in 2024, with 88% allocated to Permian Resources assets. Permian Resources, focused on unconventional reservoirs, operates approximately 6,100 gross wells across 1.5 million net acres and added 356 MMboe to proved reserves in 2024. Permian EOR, an industry leader with over 50 years of experience, manages 33 active CO2 floods across 1.4 million net acres, operating approximately 12,600 gross wells in 2024.
• Rockies and Other Domestic (DJ Basin, Powder River Basin): Production of 310 Mboe/d in 2024, with $0.8 billion in development capital. The DJ Basin includes approximately 3,700 wells across 0.6 million net acres. The Powder River Basin includes approximately 0.1 million net acres.
• Gulf of America: Production of 125 Mboe/d in 2024 from 82 gross wells. $0.7 billion of development capital was invested in 2024. Occidental Petroleum Corporation operates 8 deepwater floating platforms and holds working interests in approximately 300 blocks (1.1 million net acres). Key development areas include Horn Mountain (100% working interest), Holstein (100%), Marlin (100%), Lucius (67%), K2 Complex (51%), Caesar Tonga (34%), and Constellation (33%). The company was awarded 45 new leases from the U.S. Bureau of Ocean Energy Management (BOEM) Lease Sale 261.
• International (Algeria, Oman, Qatar, UAE): Net production of 228 Mboe/d in 2024.
  • Algeria: Net production of 28 Mboe/d from 205 gross wells in 2024, with $0.1 billion in development capital.
  • Oman: Share of production was 66 Mboe/d in 2024. Occidental Petroleum Corporation operates Blocks 9, 27, 53 (Mukhaizna Field), 62, and 65, and holds interests in Blocks 30, 51, and 72 (exploration phase). $0.4 billion development capital was invested in 2024.
  • Qatar: 24.5% interest in the Dolphin Energy Project, with a net share of production of 39 Mboe/d in 2024.
  • UAE: 40% participating interest in the Shah gas field (Al Hosn Gas), with a net share of production of 293 MMcf/d of natural gas and 42 Mbbl/d of NGL and condensate in 2024. First oil production in Onshore Block 3 commenced in 2023.

Chemical Segment

Financial Performance:

• Revenue: $4.9 billion (-7.5% YoY)
• Operating Income: $1.1 billion (-26.6% YoY)
• Operating Margin: 22.8%
• Key Growth Drivers: Improved demand across most product lines and lower energy costs in 2024 partially offset lower realized pricing. OxyChem's strategy focuses on being a low-cost producer within the chlorovinyls chain, maximizing integration benefits and economies of scale.
• Capital Expenditures: $685 million in 2024. Approximately $0.9 billion is planned for 2025.

Product Portfolio: OxyChem manufactures and markets basic chemicals (chlorine, caustic soda, chlorinated organics, potassium chemicals, ethylene dichloride (EDC), chlorinated isocyanurates, sodium silicates, calcium chloride) and vinyls (vinyl chloride monomer (VCM), polyvinyl chloride (PVC), ethylene). Annual capacities include 3.2 million tons of chlorine, 3.3 million tons of caustic soda, 6.2 billion pounds of VCM, and 3.7 billion pounds of PVC.

Market Dynamics: OxyChem competes with numerous domestic and international chemical producers. Its market position was either first or second in the United States in 2024 for its principal basic chemical products and VCM, and it ranks in the top three producers of PVC in the United States. While domestic demand for most products increased in 2024, global supply exceeding demand led to declining prices and margins for chlorine and chlorinated derivatives. Domestic PVC demand grew 8% in 2024, with exports increasing by 3%.

Midstream and Marketing Segment

Financial Performance:

• Revenue: $962 million (-62.3% YoY)
• Operating Income: $580 million (+2316.7% YoY)
• Operating Margin: 60.3%
• Key Growth Drivers: Increased income in the gas marketing business due to higher gas transportation spreads from the Permian to the Gulf Coast and higher equity method investment income from Western Midstream Partners, LP (WES). This was partially offset by higher activities in Oxy Low Carbon Ventures (OLCV).
• Capital Expenditures: $880 million in 2024, with the majority related to the construction of STRATOS. Approximately $0.8 billion is planned for 2025.

Product Portfolio: This segment optimizes the use of its gathering, processing, transportation, storage, and terminal commitments, providing access to domestic and international markets for Occidental Petroleum Corporation's oil and gas and chemical businesses. It includes equity method investments in Western Midstream Partners, LP (WES) and Dolphin Energy Limited (DEL). OLCV, a part of this segment, focuses on carbon removal and CCUS projects, including DAC technology.

Market Dynamics: The midstream and marketing businesses operate in competitive and highly regulated markets. Performance is influenced by commodity price changes and margins in oil and gas transportation and storage. Midland-to-Gulf-Coast oil spreads increased to an average of $0.49 per barrel in 2024 from $0.21 per barrel in 2023. Waha-to-Gulf-Coast gas spreads increased to an average of $1.49 per MMbtu in 2024 from $0.54 per MMbtu in 2023. OLCV operates in nascent low-carbon markets subject to evolving regulations.

Sub-segment Breakdown:

• Marketing: Markets substantially all of Occidental Petroleum Corporation’s oil, NGL, and natural gas production and optimizes transportation and storage capacity.
• Delivery and Transportation Commitments: Has long-term commitments to deliver approximately 49 MMbbl of oil through 2025, 794 MMbbl of NGL through 2034, and 674 Bcf of gas through 2029. Crude pipeline take-or-pay capacity is approximately 850 Mbbl/d to the Gulf Coast.
• Pipeline: Includes a 24.5% ownership interest in Dolphin Energy Limited (DEL), which operates the Dolphin Pipeline with a capacity of 3.2 Bcf/d.
• Gas Processing, Gathering and CO2: Processes wet gas to extract NGL and other byproducts, including CO2. Holds a 40% participating interest in Al Hosn Gas in the UAE, which processes 1.45 Bcf/d of natural gas. Occidental Petroleum Corporation owns 43.5% of Western Midstream Partners, LP (WES) limited partner units.
• Power Generation Facilities: Operates power and steam generation facilities in Texas and Louisiana (1,218 megawatts of electricity and 1.6 million pounds of steam per hour). Also owns a solar generation facility in Texas (16.8 megawatts of electricity) and has an equity investment in a near-zero emissions natural gas-based power generation demonstration facility (up to 50 megawatts of electricity).
• Oxy Low Carbon Ventures (OLCV): Focuses on CCUS projects and commercializing DAC technology. STRATOS, its first commercial-scale DAC facility, is under construction in Ector County, Texas, with start-up expected in mid-2025. OLCV also holds a 41.6% interest in NET Power Inc., which is developing a low-cost, near-zero emissions natural gas electric power system.

Capital Allocation Strategy

Shareholder Returns:

• Share Repurchases: $27 million was spent on share repurchases in 2024, acquiring 257,787 shares. As of December 31, 2024, $1.2 billion remained under the $3.0 billion share repurchase program authorized in February 2023.
• Dividend Payments: Occidental Petroleum Corporation declared dividends of $814 million ($0.88 per share) in 2024. The Board of Directors declared a regular quarterly dividend of $0.24 per share for April 2025, a 9% increase from the previous quarter.
• Future Capital Return Commitments: Following the CrownRock Acquisition, Occidental Petroleum Corporation's priorities are to provide a sustainable and growing dividend and reduce the principal of outstanding debt below $15 billion before resuming share repurchases.

Balance Sheet Position:

• Cash and Equivalents: $2.1 billion as of December 31, 2024.
• Total Debt: $24.4 billion (face value) as of December 31, 2024.
• Net Cash Position: -$22.3 billion (Net Debt) as of December 31, 2024.
• Credit Rating: As of December 31, 2024, Occidental Petroleum Corporation's long-term debt was rated Baa3 by Moody’s Investors Service, BBB- by Fitch Ratings, and BB+ by Standard and Poor’s. These ratings were reaffirmed concurrent with the issuance of new debt for the CrownRock Acquisition.
• Debt Maturity Profile:
  • 2025: $1.0 billion
  • 2026: $4.1 billion
  • 2027: $1.5 billion
  • 2028: $0.9 billion
  • 2029 and thereafter: $16.9 billion
  • Approximately 89% of outstanding debt was fixed rate as of December 31, 2024, with a weighted-average interest rate of 5.96% for total debt.

Cash Flow Generation:

• Operating Cash Flow: $11.4 billion in 2024.
• Free Cash Flow: Approximately $4.4 billion in 2024 (Operating Cash Flow less Capital Expenditures).

Operational Excellence

Production & Service Model: Occidental Petroleum Corporation's operational philosophy is centered on capital efficiency and maximizing asset value. In oil and gas, this involves developing conventional and unconventional fields using primary, secondary (waterflood), and tertiary (CO2 and steam flood) recovery techniques, with a focus on maximizing field operability and minimizing production downtime. OxyChem operates as a low-cost producer in the chlorovinyls chain, emphasizing integration benefits and economies of scale. The midstream and marketing segment optimizes its infrastructure to provide flow assurance and market access, while Oxy Low Carbon Ventures (OLCV) leverages carbon management expertise to develop CCUS projects and DAC technology.

Supply Chain Architecture: Key Suppliers & Partners:

• Manufacturing Partners: Orbia (50/50 joint venture for ethylene production).
• Technology Partners: BlackRock Inc. (joint venture for STRATOS DAC facility), NET Power Inc. (41.6% equity interest in near-zero emissions power technology).
• Government Partners: U.S. Department of Energy (grants for sequestration hubs), ADNOC (40% participating interest in Al Hosn Gas).
• Midstream Partners: Western Midstream Partners, LP (WES) (Occidental Petroleum Corporation holds 43.5% of limited partner units, 2.3% non-voting general partner interest, and 2% non-voting limited partner interest in WES Operating), Dolphin Energy Limited (DEL) (24.5% interest).

Facility Network:

• Manufacturing (Chemical): 21 domestic sites across 10 U.S. states and 2 international sites in Canada and Chile.
• Production (Oil & Gas): Extensive operations in the Permian Basin, DJ Basin, Gulf of America (8 deepwater floating platforms), Algeria, Oman, Qatar, and the UAE.
• Research & Development (OLCV): Developing DAC technology at STRATOS in Ector County, Texas, and pursuing multiple CCUS sequestration hubs.
• Midstream & Processing: Includes gas plants in Texas, New Mexico, Colorado (2.1 Bcf/d capacity), equity investments in WES gas processing facilities (5.5 Bcf/d), and Al Hosn Gas natural gas processing facilities in the UAE (1.45 Bcf/d). Pipeline infrastructure includes CO2 pipeline systems in Texas, New Mexico, and Colorado (2.8 Bcf/d), an equity investment in the DEL natural gas pipeline (3.2 Bcf/d), and an equity investment in WES gathering and transportation (14,371 miles of pipeline).
• Power Generation: Occidental Petroleum Corporation operates power and steam generation facilities in Texas and Louisiana (1,218 megawatts of electricity and 1.6 million pounds of steam per hour), an Occidental Petroleum Corporation-owned solar generation facility in Texas (16.8 megawatts of electricity), and an equity investment in a near-zero emissions natural gas-based power generation demonstration facility (up to 50 megawatts of electricity).

Operational Metrics:

• Oil and Gas Production: 1,327 Mboe/d in 2024, representing a 9% year-over-year increase.
• Lease Operating Expense: $9.75 per Boe in 2024, a decrease from $10.48 per Boe in 2023, reflecting operational efficiencies.
• Gulf of America Operations: Achieved major equipment uptimes of over 98% and an 80% reduction in annual planned shut-in days compared to 2019, with sustained zero routine flaring and zero cold venting.
• Global Routine Flaring: Achieved an 80% reduction in routine flaring of gas in 2024 from its 2020 baseline, with U.S. oil and gas operations sustaining zero routine flaring.
• Emissions Reductions: Reduced estimated methane emissions by approximately 65% from 2019 and 16% from 2022, alongside a 20% reduction in CO2 equivalent emissions since 2019.

Market Access & Customer Relationships

Go-to-Market Strategy: Distribution Channels:

• Direct Sales: Occidental Petroleum Corporation directly markets substantially all of its oil, NGL, and natural gas production.
• Channel Partners: The company engages in third-party marketing activities, purchasing oil, NGL, and natural gas for resale from parties located near its transportation and storage infrastructure to aggregate volumes and optimize asset utilization.
• Digital Platforms: The marketing business competes on exchange platforms and through bilateral transactions with direct counterparties.

Customer Portfolio: Enterprise Customers: Occidental Petroleum Corporation has long-term commitments to deliver oil, NGL, and natural gas to certain refineries and other buyers. It also maintains strategic partnerships, such as with ADNOC in the UAE and Orbia for ethylene production. Customer Concentration: Not explicitly quantified in the filing.

Geographic Revenue Distribution:

• United States: $23.9 billion (87.1% of total revenue from customers) in 2024.
• International: $4.4 billion (12.9% of total revenue from customers) in 2024.

Competitive Intelligence

Market Structure & Dynamics

Industry Characteristics: The oil and gas industry is highly competitive and subject to significant volatility driven by global and local commodity prices, supply and demand dynamics, geopolitical events, regulatory changes, and the availability of alternative fuels. The chemical industry's performance correlates with the strength of the U.S. and global economies and is influenced by expansion and contraction cycles, as well as feedstock and energy price fluctuations. The midstream and marketing segment operates in competitive and highly regulated markets. The nascent markets for low-carbon products and CO2 removal credits, where Oxy Low Carbon Ventures (OLCV) operates, are subject to rapidly changing laws, regulations, and verification mechanisms.

Competitive Positioning Matrix:

Direct Competitors

Primary Competitors:

• Oil and Gas: Public, private, and nationalized producers, some of which are larger, better funded, or have greater access to capital.
• Chemical: Numerous domestic and international chemical producers.
• Midstream and Marketing: Other market participants on exchange platforms and through bilateral transactions.
• Oxy Low Carbon Ventures: Governments and other companies developing carbon management technologies.

Emerging Competitive Threats: New market entrants, disruptive technologies, and alternative solutions, particularly in the low-carbon sector. The growing sophistication of generative artificial intelligence capabilities also poses an evolving cybersecurity threat.

Competitive Response Strategy: Occidental Petroleum Corporation's strategy includes producing hydrocarbons in a capital-efficient manner, developing conventional and unconventional fields, utilizing advanced recovery techniques like EOR, maintaining a skilled workforce, and partnering with high-quality service providers. The company is investing in and commercializing leading-edge decarbonization solutions, focusing on cost-reduction efficiencies, and implementing a robust cybersecurity program aligned with the NIST framework.

Risk Assessment Framework

Strategic & Market Risks

Market Dynamics:

• Volatile Commodity Pricing: Occidental Petroleum Corporation's financial results are highly sensitive to fluctuations in oil, NGL, and natural gas prices, and to a lesser extent, chemical product prices. These prices are influenced by global and local market forces, including supply and demand, geopolitical events (e.g., Russia-Ukraine war, Middle East conflicts), OPEC and non-OPEC production levels, and the evolving macroeconomic environment. Prolonged declines or sustained market uncertainty could materially and adversely affect financial condition, liquidity, debt reduction, capital expenditures, dividends, share repurchases, and the quantity of estimated proved reserves.
• Low-Carbon Market Development: The success of Oxy Low Carbon Ventures' (OLCV) strategy is dependent on the development of a robust market for carbon sequestration and CO2 removal credits, as well as a supportive regulatory environment. Failure of this market to materialize or adverse regulatory changes could significantly impact OLCV's business.
• Technology Disruption: The rapid pace of technological advancement, including in generative artificial intelligence, could create competitive disadvantages if competitors develop superior technologies, potentially requiring substantial costs for Occidental Petroleum Corporation to adapt.

Operational & Execution Risks

Supply Chain Vulnerabilities:

• Supplier Dependency: Operations are exposed to risks of equipment failures, construction delays, escalating costs, and shortages of services, materials, supplies, equipment, or labor, exacerbated by broad inflation.
• Geographic Concentration: Non-U.S. operations (approximately 16% of consolidated revenue in 2024) expose the company to political, regulatory, economic, and social instability in countries like Algeria, Oman, Qatar, and the UAE. Risks include confiscatory taxation, trade regulation, intellectual property theft, restrictions on capital repatriation, currency fluctuations, and changes in U.S. government policies regarding foreign business.
• Capacity Constraints: Limitations in oil, NGL, and natural gas gathering, transportation, and processing capacity, as well as the availability of sufficient CO2 for EOR operations, could hinder production and profitability.
• Water and Sand Sourcing/Disposal: The ability to obtain water and sand for oil and gas operations and to dispose of produced water is critical. Increased seismic activity in Texas and New Mexico has led to restrictions on water disposal and suspension of permits, increasing operational complexity and costs.
• Offshore Operations: Gulf of America operations are vulnerable to severe weather events (e.g., hurricanes), geological complexities, deepwater challenges, limited partners, service cost volatility, and environmental incidents (e.g., oil spills), which can lead to substantial remediation costs and regulatory changes.
• Catastrophic Events: The company's businesses are exposed to natural disasters (hurricanes, floods, earthquakes), pandemics, industrial accidents (well blowouts, fires, explosions, chemical releases, pipeline ruptures), and cyber attacks, which can cause significant property damage, operational disruptions, environmental harm, regulatory fines, and substantial liabilities. Insurance coverage may not be adequate for all potential losses.

Financial & Regulatory Risks

Market & Financial Risks:

• Indebtedness: Occidental Petroleum Corporation's debt levels, including those incurred for the CrownRock Acquisition, increase its vulnerability to economic downturns. Downgrades in credit ratings or future increases in interest rates could raise the cost of capital and limit access to financial markets.
• Tronox Settlement (Anadarko): There is a risk that the U.S. Tax Court may disallow Anadarko Petroleum Corporation's $5.2 billion deduction for the Tronox settlement payment. If this occurs, Occidental Petroleum Corporation would be required to repay an $881 million tax refund received in 2016, plus approximately $500 million in other cash tax benefits, plus accrued interest, totaling approximately $2.1 billion as of December 31, 2024, which could materially adversely affect liquidity and the consolidated balance sheets.
• Asset Impairments: The company has recorded impairments in the past and may face future impairments of proved and unproved oil and gas properties, equity investments, or low-carbon initiatives due to prolonged commodity price declines, changes in development plans, or negative well results.
• Reserve Estimates: Oil and gas reserve estimates are inherently imprecise and subject to revision based on geological data, production performance, economic conditions, and regulatory changes, which could impact depreciation, depletion, and amortization (DD&A) rates and property valuations.

Regulatory & Compliance Risks:

• Government Actions and Regulations: Occidental Petroleum Corporation is subject to extensive federal, state, local, and international laws and regulations impacting drilling, manufacturing, pipelines, labor, taxes, royalty rates, environmental protection, and climate change. Changes in these regulations or their interpretation, or new enforcement actions, can increase costs, restrict operations, or reduce demand for products.
• Climate Change Regulations: The Inflation Reduction Act (IRA) imposed new corporate alternative minimum tax (CAMT) and a 1% excise tax on share repurchases, while also providing incentives for low-carbon projects, though a recent executive order by the Trump Administration pauses disbursement of IRA funds. The IRA also expanded GHG emissions reporting and imposed a methane emissions charge. The U.S. Environmental Protection Agency (EPA) has issued direct regulations for methane and volatile organic compound (VOC) emissions from oil and gas facilities and amended GHG reporting rules. The U.S. Bureau of Land Management (BLM) has restricted venting and flaring on federal lands. Denial or delays in Class VI CO2 injection well permits could adversely affect OLCV projects.
• Environmental Liabilities: Compliance costs and liabilities associated with health, safety, and environmental laws, including remediation of contaminated sites (e.g., Diamond Alkali Superfund Site (DASS)), can be significant and unpredictable. Occidental Petroleum Corporation's subsidiaries' reasonably possible additional losses for environmental remediation beyond recorded amounts could be up to $1.9 billion.
• Trade & Export Controls: Restrictions on imports/exports, sanctions, and changes in trade relations can limit business activities and increase compliance requirements.

Geopolitical & External Risks

Geopolitical Exposure: Operations in the Middle East and North Africa are exposed to geopolitical risks, including political instability, trade tensions, and the impact of international sanctions or export controls. The U.S. government's authority to restrict business in foreign jurisdictions also poses a risk.

Innovation & Technology Leadership

Research & Development Focus: Occidental Petroleum Corporation's innovation strategy is deeply integrated into its core operations and low-carbon ventures. Core Technology Areas:

• Carbon Capture, Utilization and Storage (CCUS): Leveraging extensive experience in utilizing CO2 for EOR to develop new CCUS projects.
• Direct Air Capture (DAC): Developing and commercializing leading-edge DAC technology, exemplified by the STRATOS facility.
• Low-Carbon Power Sources: Investing in emerging technologies such as NET Power Inc.'s near-zero emissions natural gas electric power system.
• Advanced Subsurface Characterization: Expertise applied in oil and gas operations to optimize development and recovery.
• Enhanced Oil Recovery (EOR): Continuous innovation in CO2 and steam flood EOR, including vertical expansion of CO2 flooded intervals and OXY JETTING™ wellbore stimulation.
• Artificial Lift Projects: Implementing state-of-the-art solutions like down-hole gas-lift and caisson electric submersible pumps to enhance production.

Innovation Pipeline:

• STRATOS DAC Facility: The first commercial-scale DAC facility is under construction in Ector County, Texas, with commissioning and start-up expected in mid-2025, targeting an initial capacity of up to 250,000 tonnes of CO2 per annum.
• Sequestration Hubs: OLCV is actively progressing plans for six sequestration hubs, having filed 21 cumulative Class VI CO2 injection well permit applications and secured grants from the U.S. Department of Energy (DOE) for two hubs.
• NET Power Inc. Plant: The first utility-scale plant is expected to begin power generation in the second half of 2027 or the first half of 2028.
• Oil and Gas Secondary Recovery: Several major secondary recovery uplift projects and new horizontal/extended reach well opportunities are slated for implementation from 2025 onwards in the Gulf of America.

Intellectual Property Portfolio: While specific details on patent strategy or licensing programs are not extensively disclosed, the company acknowledges the risk of theft or lack of sufficient legal protection for proprietary technology and other intellectual property.

Technology Partnerships:

• Strategic Alliances: Occidental Petroleum Corporation has formed a joint venture with BlackRock Inc. for the development of the STRATOS DAC facility.
• Research Collaborations: The company invests in third-party entities developing technologies to advance other low-carbon initiatives.

Leadership & Governance

Executive Leadership Team

Leadership Continuity: The Chief Information Officer (CIO), who has over 20 years of IT and cybersecurity experience, reports directly to the President and Chief Executive Officer, leading a centrally coordinated team for cybersecurity and data protection. Board Composition: The Board of Directors, through its Sustainability and Shareholder Engagement Committee and Environmental, Health and Safety Committee, provides oversight on human capital management. The Audit Committee oversees IT security programs, including cybersecurity, with annual reviews by the full Board.

Human Capital Strategy

Workforce Composition:

• Total Employees: 13,323 as of December 31, 2024.
• Geographic Distribution (as of December 31, 2024):
  • North America: 9,603 (426 Union, 9,177 Non-Union)
  • Middle East: 3,412 (405 Union, 3,007 Non-Union)
  • Latin America: 171 (56 Union, 115 Non-Union)
  • Other (North Africa, Europe, Asia): 137 (all Non-Union)
• Skill Mix: The Strategic Technical Excellence Program (STEP) is designed to recruit, develop, and retain highly skilled geoscientists, engineers, scientists, and other petrotechnical professionals.

Talent Management: Acquisition & Retention:

• Hiring Strategy: Recruitment efforts include job fairs, professional societies, and campus recruiting, with an expanded focus on diverse colleges and universities.
• Employee Value Proposition: Occidental Petroleum Corporation offers programs for flexibility and work-life balance, such as the Balanced Workplace Program, allowing eligible office-based employees to work three days in the office and two days at home weekly. Employees have access to extensive development and training opportunities, including leadership/management training, on-demand professional classes, and mentoring. The compensation and benefits program is designed to attract and retain talent with competitive base salaries, annual bonuses, recognition awards, and long-term performance incentives.
• Retention Strategies: The company provides comprehensive health, welfare, retirement, and savings benefits, professional memberships, and work-life balance benefits. It also offers programs to support overall employee well-being, including an enhanced mental health benefit through Lyra Health.

Diversity & Development:

• Diversity Metrics: Occidental Petroleum Corporation strives to create an inclusive environment that appreciates and encourages employee differences, contributing to an innovative and effective business model.
• Development Programs: The company provides leadership/management training and expanded on-demand professional and development classes. The STEP program offers a technical, non-managerial career path for individual contributors.
• Culture & Engagement: The company's culture is built on core values: Lead with Passion, Outperform Expectations, Deliver Results Responsibly, Unleash Opportunities, and Commit to Good. Eleven voluntary Employee Resource Groups promote peer engagement and inclusion. Quarterly executive virtual conversations with the President and Chief Executive Officer enhance senior leadership engagement.

Environmental & Social Impact

Environmental Commitments: Climate Strategy:

• Emissions Targets: Occidental Petroleum Corporation is committed to achieving net-zero GHG emissions from its operations and energy use before 2040 (with an ambition for before 2035) and from its total carbon inventory, including the use of its sold products, before 2050. It has set interim 2025 carbon and methane intensity targets and a new medium-term 2030 methane intensity target. The company endorsed the World Bank’s initiative for zero routine flaring by 2030.
• Carbon Neutrality: The company's goals include achieving net-zero GHG emissions across its operations and total carbon inventory.
• Renewable Energy: Occidental Petroleum Corporation owns a solar generation facility in Texas with 16.8 megawatts of electricity capacity.
• Recent Progress (2024):
  • Reduced estimated methane emissions by approximately 65% from 2019 and 16% from 2022.
  • Achieved a 20% reduction in CO2 equivalent emissions since 2019.
  • Realized an 80% global reduction in routine flaring of gas in 2024 from its 2020 baseline, through projects like rich gas injection and additional compression in Oman. U.S. oil and gas operations sustained zero routine flaring.
  • Construction of STRATOS, the first large-scale DAC facility, is progressing on schedule for mid-2025 start-up.
  • Actively progressed sequestration hub plans, including drilling stratigraphic data wells and submitting 21 cumulative Class VI CO2 injection well permit applications. Signed award contracts with the U.S. Department of Energy (DOE) for two sequestration hubs.

Supply Chain Sustainability: Not explicitly detailed in the filing.

Social Impact Initiatives:

• Community Investment: Occidental Petroleum Corporation's diverse workforce and business model contribute to local communities. A dedicated stakeholder relations team conducts regulatory and community outreach in operating areas.
• Product Impact: OxyChem produces essential chemicals that are building blocks for life-enhancing products, including those used in drinking water, medical supplies, and construction materials. Oxy Low Carbon Ventures (OLCV) focuses on developing carbon removal and CCUS technologies to reduce emissions, aiming for broader societal benefit.

Business Cyclicality & Seasonality

Demand Patterns:

• Seasonal Trends: Seasonality is not identified as a primary driver of changes in Occidental Petroleum Corporation's consolidated quarterly earnings.
• Economic Sensitivity: The company's operations, financial condition, cash flows, and expenditures are highly dependent on oil prices and, to a lesser extent, NGL and natural gas prices, Midland-to-Gulf-Coast oil spreads, chemical product prices, and broader inflationary pressures. The chemical segment's performance is correlated with the strength of the United States and global economies.
• Industry Cycles: OxyChem's product prices are affected by chemical industry expansion and contraction cycles.

Planning & Forecasting: Occidental Petroleum Corporation's capital plan is designed to allocate capital to high-return assets with the flexibility to adjust based on fluctuations in commodity prices and current economic conditions, such as supply chain constraints, higher interest rates, global logistics, and high inflation.

Regulatory Environment & Compliance

Regulatory Framework: Industry-Specific Regulations:

• Environmental Protection: Occidental Petroleum Corporation and its subsidiaries are subject to numerous federal, state, local, and international laws and regulations concerning public and occupational health, safety, and environmental protection. These include regulations on GHG and other air emissions, water use and discharges, waste management, environmental remediation, and protection of wildlife and ecosystems. Compliance costs are significant and can be unpredictable, with laws often imposing strict or joint and several liability.
• Climate Change & GHG Emissions:
  • U.S. Federal: The Inflation Reduction Act (IRA) imposed new corporate alternative minimum tax (CAMT) and a 1% excise tax on corporate share repurchases, while also providing tax incentives for DAC, CCUS, hydrogen, and other low-carbon projects. The EPA has implemented a methane emissions reduction program, including direct regulations for methane and VOC emissions from oil and gas facilities and amendments to the GHG Reporting Rule. The BLM has issued final regulations restricting venting and flaring on federal lands.
  • State-level: States like Colorado, New Mexico, and Texas have adopted regulations imposing siting requirements, additional permitting, and controls on flaring and methane emissions. Colorado has established GHG intensity targets for DJ Basin operators.
  • International: Global efforts, including the Paris Agreement, and regional initiatives like the EU's Corporate Sustainability Reporting Directive, aim to address climate change and impose emissions reductions.
• Trade & Export Controls: The company is subject to export restrictions, sanctions compliance, and trade relations impacts, particularly for its international operations.
• Legal Proceedings:
  • Diamond Alkali Superfund Site (DASS) Litigation: Occidental Petroleum Corporation's subsidiary, OxyChem, is involved in remediation efforts under CERCLA. In December 2024, the U.S. District Court for the District of New Jersey approved a settlement, accepting the EPA’s revised determination that OxyChem was liable for approximately 85% of cleanup costs for Operable Unit 2 (OU2) and Operable Unit 4 (OU4). OxyChem has appealed this ruling and increased its non-current environmental remediation liability by $925 million.
  • Maxus Litigation: A settlement in August 2023 resolved claims related to Maxus Energy Corporation's bankruptcy, resulting in Occidental Petroleum Corporation receiving approximately $350 million.
  • Andes Arbitration: A final legal settlement in April 2024 resulted in a gain of $182 million, net of taxes, reported in discontinued operations.
  • Tronox U.S. Tax Court Litigation: The IRS has challenged Anadarko Petroleum Corporation's $5.2 billion deduction for the Tronox settlement payment. If the deduction is disallowed, Occidental Petroleum Corporation would be required to repay approximately $2.1 billion (including an $881 million refund, other cash benefits, and interest) as of December 31, 2024.

Tax Strategy & Considerations

Tax Profile:

• Effective Tax Rate: Occidental Petroleum Corporation's worldwide effective tax rate was 29% in 2024 and 27% in 2023, higher than the U.S. statutory rate of 21%. This is primarily due to the jurisdictional mix of income, with international income subject to statutory rates as high as 55%. In 2022, the effective tax rate was 6%, influenced by a $2.7 billion tax benefit from a legal entity reorganization.
• Geographic Tax Planning: A legal entity reorganization completed in Q1 2022 aimed to align Occidental Petroleum Corporation's legal entity structure with its business activities, resulting in a reduction of deferred tax liabilities. This transaction is currently under IRS review.
• Tax Reform Impact:
  • Inflation Reduction Act (IRA): The IRA introduced a new corporate alternative minimum tax (CAMT) and a 1% excise tax on corporate share repurchases. It also provided significant tax incentives for DAC, CCUS, hydrogen, and other low-carbon projects. The ultimate impact depends on final regulatory guidance and potential legislative changes, especially given a January 2025 executive order by the Trump Administration pausing IRA fund disbursements.
  • OECD Pillar Two: Approximately 140 countries support the OECD Pillar Two initiative, proposing a 15% global minimum tax. Widespread implementation is anticipated in 2025, which could increase cash taxes and negatively impact the effective tax rate. However, a January 2025 executive order from the Trump Administration indicates the U.S. will not support Pillar Two and may consider retaliatory measures. Occidental Petroleum Corporation does not expect a material impact from these provisions on its results of operations, financial position, or cash flows.

Insurance & Risk Transfer

Risk Management Framework:

• Insurance Coverage: Occidental Petroleum Corporation acknowledges that third-party insurance may not provide adequate coverage for all losses, and it or its subsidiaries may be self-insured for certain risks, particularly those arising from catastrophic events.
• Risk Transfer Mechanisms:
  • Commodity Price Risk: Historically, Occidental Petroleum Corporation has remained exposed to market prices for commodities but may implement hedging strategies in the future. Risk management activities for marketing and trading are governed by risk control policies, including limits on value at risk, credit, and notional trade value, along with segregation of duties and daily price verifications.
  • Credit Risk: The majority of counterparty credit risk, primarily related to the physical delivery of energy commodities, is managed by selecting financially strong counterparties, utilizing netting arrangements, and requiring collateral. Most credit exposures are with investment-grade counterparties.
  • Foreign Currency Risk: The company has limited foreign currency risk, which is managed by balancing monetary assets and liabilities and restricting foreign currency cash positions to operational necessities. Most international oil sales are denominated in U.S. dollars.
  • Contractual Risk Allocation: Occidental Petroleum Corporation and its subsidiaries have indemnified various parties against specified future liabilities in connection with purchases and other transactions. The company is not aware of circumstances that would reasonably lead to indemnity claims materially exceeding current reserves.