Occidental Petroleum walked into its November 9 earnings call having already accomplished something it was not supposed to finish this year. The company retired $10.4 billion in debt through the first nine months of 2026, reaching its $10 billion principal-debt milestone ahead of schedule and immediately setting a new target: get principal debt down to $6 billion.
The earnings numbers were a separate story, and a compelling one. Adjusted EPS came in at $1.91 against a consensus estimate of about $1.46, a beat of roughly 31%. The driving force was a dramatic collapse in interest expense, which fell to $78 million in Q3 from $266 million in the same quarter a year ago. Free cash flow reached approximately $2.8 billion. Total production averaged 1.427 million barrels of oil equivalent per day, exceeding the midpoint of guidance.
The $6 Billion Target Changes the Math
Reaching $6 billion in principal debt would bring annual interest expense down further from current levels. Management has framed the milestone as part of a path to meaningfully lower cash interest versus 2025, and it also said $6 billion in principal debt implies a debt-to-EBITDA ratio of approximately 1 at $50 per barrel WTI, a floor they intend to maintain through the cycle. The company may reach that target and potentially a net cash position in 2027.
Beyond debt reduction, Occidental is targeting more than $4 billion in additional annual sustainable cash flow by 2030 versus 2025, roughly a 95% increase, through lower decline rates, reduced interest costs, and operating efficiencies. Its STRATOS direct-air-capture facility remains on track to begin full operations in 2027, with expected EBITDA of $90 million to $130 million in 2028.
Why Wall Street Is Watching
Berkshire Hathaway, the company Warren Buffett built, owned 26.5% of Occidental’s common stock as of September 30, 2026, in its most recent quarterly report, plus additional preferred shares and warrants. That stake did not emerge from a passive index position: the relationship deepened when Berkshire completed the $9.7 billion cash acquisition of OxyChem on January 2, 2026, giving Occidental immediate proceeds to accelerate its debt paydown. Wells Fargo maintained an Overweight rating on November 11, though it trimmed its price target to $76 from $82. The street average target sits around $71, against a recent price around $57 to $58.
The stock has recently traded with a 52-week range of $38.80 to $67.45, and its dividend yield has been about 2%. Oil above $85 per barrel supported free cash flow this quarter. In its Q3 release, Occidental reported an average WTI marker price of $85.79 per barrel during the quarter.
What Could Go Wrong
Oil price is the master variable. The 2027 capital budget of approximately $5.9 billion is framed by management as sustaining capital with production roughly flat, meaning cash flow improvement depends on commodity prices cooperating. A sustained move below $70 WTI pressures the debt reduction timeline and reduces the dividend cushion. Preferred equity redemption is due to begin in August 2029, constraining how management allocates cash in the interim. Around $57 to $58, OXY sits roughly 15% below its 52-week high, making it neither obviously cheap nor obviously expensive without a view on oil.
The Bottom Line
Occidental just beat earnings by about 31%, hit a major debt milestone ahead of schedule, set a new $6 billion principal-debt milestone, and outlined a path to $4 billion in additional sustainable cash flow by 2030. With Berkshire as a 26% plus anchor shareholder, the stock is not priced for that outcome yet. The risk is oil, and that is not a small risk. But the operational case has rarely been cleaner than it is today.
