Occidental Petroleum predicts flat production and lower spending in 2026

Occidental Petroleum, an oil and gas company, said Tuesday that it expects a flat growth in production and lower spending than the current year levels by 2026 as crude prices fall.

The U.S. shale oil producers are coping with a global oil crisis, as prices remain in the $60 per barrel range. This is due to OPEC+ production increases and a slowing of global demand. Benchmark Brent crude prices have fallen by about 12.7% this year.

Sunil Mathew, Chief Financial officer of Occidental, said in a conference call that the company expects production to remain flat or increase by 2% between 2026 and 2027, mainly due to unconventional Permian activities. This comes a day after Occidental beat its third-quarter profit targets on higher output.

Hydrocarbons are tightly trapped in layers of rock. They can only be accessed by advanced techniques, such as horizontal drilling or hydraulic fracturing.

The company expects to spend between $6.3 and $6.7 billion in capital expenditures by 2026, compared to its projection of $7.1-$7.3 billion for 2025.

Occidental intends to invest $400 million in U.S. Onshore Operations in 2026. This will be primarily in the Permian basin and Rockies region. Mathew stated that allocating more capital to these projects will likely provide greater flexibility in the event macro conditions worsen.

The company will also increase its investment in "Gulf of America", which refers to the Gulf of Mexico and Oman, by $250 million while decreasing allocations to its low carbon portfolio.

Mathew also said that Occidental is focused on reducing its debt, which was built up following the acquisition of Anadarko Petroleum, CrownRock and other large-scale companies.

Mathew stated that "we will be opportunistic in our share repurchase plan... We plan to continue redemption of preferred (shares)," starting August 2029.

The shares of the company ended marginally higher at $41.85. Reporting by Vallari Shrivastava, Bengaluru. Editing by Shilpa Majumdar.

(source: Reuters)