Occidental Petroleum Financial Model
Oil and Gas Company Financials Example (Free Excel Download)
Occidental Petroleum (OXY) is a premier international energy company and one of the largest independent oil and gas exploration and production (E&P) companies in the United States.
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About this model
This model provides a comprehensive equity valuation and cash flow forecast to assess Occidental Petroleum's deleveraging trajectory, shareholder return capacity, and free cash flow generation following the integration of the CrownRock acquisition and the strategic divestiture of its OxyChem business.
Occidental Petroleum (OXY) is a premier international energy company and one of the largest independent oil and gas exploration and production (E&P) companies in the United States. Following the January 2026 sale of its chemical subsidiary (OxyChem), the company operates primarily through two segments: Oil and Gas (historically 75-80% of revenue, now over 90% of continuing operations) and Midstream and Marketing. The company's core upstream assets are concentrated in the Permian Basin, the DJ Basin (Rockies), the Gulf of Mexico, and the Middle East (Oman, UAE, Algeria). Occidental operates an asset-heavy E&P business model, highly levered to global commodity prices, while its Oxy Low Carbon Ventures subsidiary is pioneering commercial-scale Direct Air Capture (DAC) technology via its STRATOS facility. The company's recent corporate history is defined by major portfolio transformations, notably the $12 billion acquisition of CrownRock in August 2024 to bolster its Permian inventory, followed by over $4 billion in asset divestitures and the January 2026 sale of OxyChem to accelerate debt reduction.
The downloadable Occidental Petroleum financial model includes SEC-sourced historical financials, forecast assumptions, core operating schedules, and valuation outputs in an Excel workbook built for review and scenario analysis.
A turnkey financial model
Live formulas, no hardcoded values
Outputs are driven by live formulas, so the workbook updates from its assumptions instead of relying on hardcoded results.
All assumptions in one tab
Inputs are clearly marked in the Assumptions tab and separated from calculations, making it clear what to change and what to leave intact.
Statements always balancing
For integrated-statement models, the balance sheet, cash flow, and supporting schedules tie through properly.
Distinct schedules for clarity
Debt, working capital, taxes, and cash flow can get messy quickly. We group calculations in clear schedules, not across disconnected tabs.
No hidden macros or external links
There are no unexplained external workbook links or macros to undermine auditability or portability.
Changes flow through the model
Update a key driver and see the impact carry through the forecast, financing, and return outputs. We never use hardcoded numbers in formulas.
Historicals & AssumptionsOccidental Petroleum financial modelCompany, Historicals & Assumptions used
Source: SEC EDGAR · values in USD
| Line item | FY2021 | FY2022 | FY2023 | FY2024 | FY2025 |
|---|---|---|---|---|---|
| Revenue | $25.96B | $36.23B | $23.23B | $22.71B | $21.57B |
| Income before income taxes and other items | $2.95B | $13.01B | $5.89B | $3.21B | $3.05B |
| Acquisition-related costs | $153.0M | $89.0M | $26.0M | $84.0M | $13.0M |
| Net income | $2.32B | $13.30B | $4.70B | $3.08B | $2.37B |
Forecast assumptions
Defaults used in the downloadable model. Forecast horizon: FY2026–FY2030.
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How to build a detailed financial model for Occidental Petroleum
A complete walkthrough of every driver, margin, working-capital input, and capital-allocation assumption used in the downloadable model.
Revenue Deep Dive
Oil and Gas
- Segment name: Oil and Gas
- Revenue driver formula: (Daily Production Volume in Mboe/d x 365) x Realized Price per BOE
- Historical growth rate: Highly volatile due to commodity prices; production volumes grew significantly in 2024/2025 due to the CrownRock acquisition, reaching 1.48 million BOE/d in Q4 2025.
- Key growth levers and headwinds: Permian Basin drilling efficiency, enhanced oil recovery (EOR) performance, and international contract extensions (e.g., Mukhaizna field in Oman). Headwinds include natural well decline rates, regulatory risks on federal lands, and macroeconomic impacts on WTI/Brent crude prices.
- Pricing dynamics: Spot pricing based on WTI and Brent benchmarks, adjusted for regional gathering and transportation differentials.
- Revenue recognition notes: Recognised at the point of sale when control transfers to the customer (typically at the lease meter or delivery point).
- Seasonality: Minimal seasonality in production, though Gulf of Mexico operations can be disrupted by hurricane season in the third quarter.
Midstream and Marketing
- Segment name: Midstream and Marketing
- Revenue driver formula: Volumes Transported/Marketed x Margin or Fee per Unit + Equity Investment Income (e.g., WES)
- Historical growth rate: Flat to low single-digit growth, heavily dependent on regional basis differentials and pipeline capacity optimization.
- Key growth levers and headwinds: Gas transportation capacity optimization, long-haul crude transportation costs, and sulfur pricing at Al Hosn.
- Pricing dynamics: Contractual fee-based revenues mixed with spot margin optimization (capturing geographic pricing differentials).
- Revenue recognition notes: Recognised over time as services are rendered or at a point in time for marketing sales.
- Seasonality: Winter months can drive higher natural gas marketing margins due to heating demand spikes.
Chemical (Discontinued Operations)
- Segment name: Chemical (OxyChem)
- Revenue driver formula: Sales Volume x Realized Price per Tonne (PVC, Caustic Soda)
- Historical growth rate: Cyclical, historically generating $1 billion to $1.5 billion in pre-tax income.
- Key growth levers and headwinds: Sold on 2 January 2026. This segment must be modelled as Discontinued Operations for all periods after Q4 2025.
Cost Structure
Variable Costs / COGS
- Line-by-line breakdown: Lease Operating Expenses (LOE), Transportation and Gathering, Production and Severance Taxes.
- Gross margin range: Not typically evaluated on a gross margin basis; E&P focuses on cash operating margin per BOE. LOE typically ranges from $8.00 to $10.00 per BOE.
- Key input costs and commodity exposures: Power costs, water handling, oilfield services day-rates, and steel (tubulars).
- How COGS scales with revenue: LOE scales directly with production volumes (linear), while production taxes scale directly with revenue (percentage of realized price).
Operating Expenses
- Exploration Expense: Includes dry hole costs, seismic data, and unproved leasehold impairments. Highly variable.
- SG&A: Corporate overhead, IT, and administrative headcount. Typically $900 million to $1.1 billion annually.
- Depreciation, Depletion & Amortisation (DD&A): Calculated using the unit-of-production method based on proved reserves. Typically ranges from $12.00 to $15.00 per BOE.
- Stock-Based Compensation: Modest relative to revenue, typically embedded within SG&A.
- Restructuring / one-time charges: Frequent in recent years due to CrownRock integration and environmental liability adjustments (e.g., $1.1 billion charge in Q4 2024).
Margin Profile
- EBITDA margin: 45% to 60%, highly sensitive to crude oil prices.
- Margin trend: Expanding on a unit-cost basis due to CrownRock synergies and a $500 million cost reduction programme targeted for 2026, though absolute margins fluctuate with commodity cycles.
- Segment-level margins: Oil and Gas drives over 90% of consolidated operating cash flow post-OxyChem sale.
Balance Sheet Structure
- Total assets: Approximately $75 billion to $85 billion.
- Key asset categories: Property, Plant and Equipment (PP&E) represents the vast majority, specifically proved and unproved oil and gas properties accounted for under the successful efforts method.
- Goodwill & intangibles: Material goodwill generated from the 2019 Anadarko acquisition and 2024 CrownRock acquisition.
- Working capital profile:
- Days Sales Outstanding (DSO): 30 to 45 days.
- Days Inventory Outstanding (DIO): Minimal (10 to 15 days) as oil is sold continuously.
- Days Payable Outstanding (DPO): 45 to 60 days.
- Net working capital as % of revenue: Typically negative or near zero. The company does not rely on working capital to fund growth.
- PP&E: Depleted via the unit-of-production method. Capital expenditure is split between drilling and completions (D&C) and low-carbon investments.
- Right-of-use assets / operating leases: Material due to drilling rig contracts and pipeline commitments, typically $1.5 billion to $2.5 billion.
Capital Expenditure & Investment
- Capex as % of revenue: Typically 20% to 30%, though E&P capex is managed to absolute dollar budgets rather than revenue percentages.
- Maintenance capex vs. growth capex: Approximately 70% to 80% is sustaining capex required to hold production flat against natural decline rates.
- Major capex programmes underway or planned: 2026 capital budget is guided at $5.5 billion to $5.9 billion. A major ongoing project is the STRATOS Direct Air Capture facility in West Texas.
- Capitalised software / development costs: Immaterial compared to drilling capital.
- M&A pattern: Transformational acquirer (Anadarko in 2019, CrownRock in 2024) followed by aggressive divestiture programmes to deleverage.
- Typical acquisition multiple paid: Evaluated on a $/flowing barrel or $/acre basis rather than traditional EBITDA multiples.
Debt & Capital Structure
- Total debt: Principal debt reduced to approximately $14.3 billion to $15.0 billion by early 2026, down from a post-CrownRock peak, following $13.9 billion of debt retirement over 20 months.
- Debt/EBITDA ratio: Target is typically below 1.5x at mid-cycle prices.
- Credit rating: Investment grade (BBB- / Baa3 equivalent), recently upgraded following aggressive debt paydown.
- Key debt instruments: Senior unsecured notes, term loans, and a revolving credit facility.
- Maturity profile: Management actively uses asset sale proceeds to retire near-term maturities (e.g., 2025 and 2026 notes).
- Interest rate profile: Predominantly fixed-rate senior notes. The recent debt reduction is expected to save $365 million in interest expense in 2026.
- Preferred Equity: Berkshire Hathaway holds a significant preferred equity position yielding 8%, which Occidental actively redeems as common equity distributions exceed certain thresholds.
- Share repurchase programme: Active. Management shifts free cash flow to share repurchases once principal debt targets are met.
- Dividend policy: Quarterly dividend increased by 8% in early 2026, reflecting management confidence in the lower cost structure.
Cash Flow Characteristics
- Operating cash flow conversion: Very strong; OCF typically exceeds Net Income due to heavy non-cash DD&A charges.
- Free cash flow margin: 15% to 25% depending on commodity prices. The company generated $4.3 billion in FCF before working capital in 2025.
- Major non-cash items: DD&A, deferred income taxes, and environmental remediation accruals.
- Working capital cash flow impact: Generally a minor source or use of cash; the primary bridge from OCF to FCF is capital expenditure.
- Capex intensity: High. E&P requires continuous reinvestment to offset base decline.
- Cash tax rate vs. GAAP effective tax rate: Cash taxes are often lower than GAAP taxes due to the immediate deductibility of Intangible Drilling Costs (IDCs) in the US.
Sheet Structure
- Assumptions: Macro drivers (WTI, Brent, Henry Hub prices), production volume guidance, LOE per BOE, and tax rates.
- Production & Pricing: Detailed build of daily production (Mboe/d) split by US Onshore, Gulf of Mexico, and International, multiplied by days in the period and realized pricing differentials.
- Income Statement: Segmented revenue (Oil and Gas, Midstream and Marketing). OxyChem must be isolated below the line as Discontinued Operations for 2026 onwards.
- Capital & Reserves: Roll-forward of proved reserves (additions, production, revisions) and calculation of the DD&A rate per BOE.
- Balance Sheet: Standard format, highlighting the massive PP&E balance and the Berkshire Hathaway preferred equity line.
- Cash Flow Statement: Indirect method, bridging Net Income to OCF via the heavy DD&A add-back, and tracking FCF available for debt paydown.
- Debt & Preferred Schedule: Tranches of senior notes, mandatory preferred dividend payments, and a cash sweep mechanism directing FCF to debt retirement.
- Valuation (NAV & DCF): Net Asset Value based on discounted cash flows of proved reserves, plus the value of midstream assets, less net debt and preferred equity.
Key Financial Relationships
- "Oil and Gas Revenue = Total Production (Mboe/d) * 365 * Blended Realized Price ($/BOE)"
- "Blended Realized Price = (Oil % * Realized Oil Price) + (NGL % * Realized NGL Price) + (Gas % * Realized Gas Price)"
- "Lease Operating Expense (LOE) = Total Production (Mboe/d) * 365 * LOE Rate ($/BOE)"
- "Production and Severance Taxes = Oil and Gas Revenue * Average Severance Tax Rate (%)"
- "DD&A Expense = Total Production (Mboe/d) * 365 * DD&A Rate ($/BOE)"
- "Ending Proved Reserves = Beginning Proved Reserves + Extensions/Discoveries + Revisions - Annual Production"
- "New DD&A Rate = Net Book Value of Proved Properties / Ending Proved Reserves"
- "Midstream Margin = Midstream Revenue - Midstream Purchased Commodities and Transportation Costs"
- "Preferred Dividend = Berkshire Preferred Equity Balance * 8%"
- "Free Cash Flow = Operating Cash Flow - Capital Expenditures"
- "Cash Available for Debt Paydown = Free Cash Flow - Common Dividends - Preferred Dividends"
- "Ending Principal Debt = Beginning Principal Debt - Mandatory Repayments - Discretionary Paydown from FCF"
Cross-Sheet Dependencies
The Assumptions sheet dictates commodity prices and production volumes, which feed the Production & Pricing sheet. This output drives the top line of the Income Statement and the volume metrics required to calculate LOE and DD&A. Net Income flows to the Cash Flow Statement, where DD&A is added back to generate Operating Cash Flow. Capital expenditures are deducted to calculate Free Cash Flow, which feeds the Debt & Preferred Schedule. The ending debt balance and preferred equity balance flow to the Balance Sheet, while the calculated interest expense and preferred dividends flow back to the Income Statement and Cash Flow Statement. A circularity exists between the debt balance, interest expense, and net income; this must be managed with a circuit breaker or iterative calculation toggle.
Sign Convention
- Income Statement: Revenues are positive. Expenses (LOE, SG&A, DD&A, Interest, Taxes) are negative.
- Balance Sheet: Assets are positive. Liabilities and Equity are positive.
- Cash Flow Statement: Net Income is positive. Non-cash add-backs (DD&A) are positive. Capital expenditures are negative. Debt issuance is positive; debt repayment is negative. Dividends paid are negative.
Things Most Likely to Go Wrong
- OxyChem Discontinued Operations: The builder will likely project OxyChem revenue forward based on historical trends. The model must hardcode OxyChem revenue to zero for 2026 onwards, as the sale closed on 2 January 2026.
- Daily vs. Annual Volumes: A classic E&P modelling error is multiplying daily production (Mboe/d) by price without multiplying by 365 days.
- Berkshire Preferreds: Ignoring the 8% preferred dividend will artificially inflate cash available to common shareholders. The model must explicitly deduct this before calculating common equity FCF.
- DD&A Calculation: Projecting DD&A as a percentage of revenue is fundamentally incorrect for an E&P. It must be calculated on a per-BOE basis tied to production volumes.
- CrownRock Stub Period: Historical 2024 data only includes CrownRock from August 2024 onwards. Annualising 2024 figures will understate 2025/2026 baseline production.
- Divestiture Impact: The company sold over $4 billion in assets in 2024/2025. The model must reduce base production assumptions to account for these divested flowing barrels.
- Price Differentials: Assuming realized prices equal WTI/Brent benchmarks will overstate revenue. The model must apply historical discount differentials for NGLs and regional gas.
- Environmental Liabilities: OXY frequently books large non-cash environmental remediation charges (e.g., Q4 2024). These must be excluded from adjusted EBITDA and operating cash flow proxies.
Validation Checks
- "2026 Total Production should equal approximately 1.45 million BOE/d based on management guidance."
- "2026 Capital Expenditure should fall within the $5.5 billion to $5.9 billion guidance range."
- "OxyChem segment revenue and operating income must be exactly $0 in 2026."
- "Principal debt balance should step down to approximately $14.3 billion to $15.0 billion in early 2026."
- "LOE per BOE should remain in the $8.50 to $9.50 range; flag if it exceeds $10.00."
- "DD&A per BOE should remain in the $12.00 to $15.00 range."
- "Balance sheet must balance: Total Assets = Total Liabilities + Equity in every period."
- "Interest expense should decrease by approximately $365 million YoY in 2026 due to aggressive 2025 debt paydown."
Key Assumptions (Default Values)
| Assumption | Default Value | Unit | Rationale |
|---|---|---|---|
| WTI Crude Oil Price | 65.00 | $/bbl | Base case mid-cycle assumption (Q4 2025 realized was ~$59) |
| Total Production | 1,450 | Mboe/d | Management 2026 guidance |
| Oil as % of Production | 52.0 | % | Historical average post-CrownRock |
| Realized Oil Price Differential | (1.50) | $/bbl | Historical discount to WTI |
| Realized NGL Price | 18.00 | $/bbl | Based on Q4 2025 actuals (~$16.68) adjusted for mid-cycle |
| Realized Natural Gas Price | 1.50 | $/Mcf | Based on Q4 2025 actuals (~$1.12) adjusted for mid-cycle |
| Lease Operating Expense (LOE) | 9.00 | $/BOE | Historical average and management cost reduction targets |
| Production & Severance Taxes | 6.5 | % of O&G Rev | Historical statutory average across operating basins |
| DD&A Rate | 13.50 | $/BOE | Calculated from recent proved reserve base |
| SG&A Expense | 1,000 | $ Millions | Run-rate corporate overhead |
| Capital Expenditures | 5,700 | $ Millions | Midpoint of 2026 guidance ($5.5B - $5.9B) |
| Effective Tax Rate | 22.0 | % | Standard US corporate rate plus state taxes |
| Berkshire Preferred Dividend Rate | 8.0 | % | Contractual rate on preferred equity |
| Target Debt Balance | 14,300 | $ Millions | Post-tender offer principal debt target for early 2026 |
| WACC | 9.5 | % | Standard E&P discount rate |
Data Sources & Benchmarks
- Filings: SEC EDGAR (Occidental Petroleum Corp, CIK: 0000079746) for 10-K, 10-Q, and 8-K filings.
- Investor Relations: OXY Investor Relations page for quarterly earnings presentations and the 2026 guidance deck.
- Key Peers: EOG Resources (EOG), Pioneer Natural Resources / ExxonMobil (XOM), ConocoPhillips (COP), Devon Energy (DVN).
- Industry Data: Energy Information Administration (EIA) for WTI/Henry Hub historical pricing and Permian basin rig counts.
- Consensus Estimates: Bloomberg or FactSet for forward commodity curves and consensus production estimates.
Sources
- Occidental Petroleum Q4 2025 Earnings Release and Financial Schedules (https://www.oxy.com)
- Occidental Petroleum Q4 2024 Earnings Release and Financial Schedules (https://www.oxy.com)
- SEC EDGAR Database: OXY Form 10-K for the year ended December 31, 2025 (https://www.sec.gov)
- Zacks Equity Research: Occidental Q4 2025 Earnings Report (https://www.zacks.com)
- Investing.com: Occidental Q2 2025 Presentation and Debt Reduction Updates (https://www.investing.com)
- AlphaSpread: OXY Investor Relations and Free Cash Flow Analysis (https://www.alphaspread.com)
Do more with the Occidental Petroleum model
Frequently asked
What is Occidental Petroleum's primary business focus after recent divestitures?+
Following the January 2026 sale of its chemical subsidiary, OxyChem, Occidental Petroleum primarily operates through its Oil and Gas and Midstream and Marketing segments. The company's core upstream assets are concentrated in major basins like the Permian and DJ Basins, as well as the Gulf of Mexico and the Middle East.
How does Occidental Petroleum generate its revenue?+
Occidental Petroleum generates revenue primarily from its Oil and Gas exploration and production (E&P) activities, making its financial performance highly sensitive to global commodity prices. The Oil and Gas segment now accounts for over 90% of its continuing operations revenue after recent portfolio transformations.
What is Occidental Petroleum's capital expenditure strategy?+
Occidental Petroleum's capital expenditure (Capex) is typically 20% to 30% of revenue, though E&P capex is managed to absolute dollar budgets rather than revenue percentages. Approximately 70% to 80% of this capex is sustaining capital required to maintain production levels against natural decline rates, with major projects including the STRATOS Direct Air Capture facility.
What are the key assumptions for Occidental Petroleum's revenue growth and cost of goods sold in financial models?+
In the financial model, Occidental Petroleum's revenue growth is assumed to be approximately 4.89%. The cost of goods sold is modeled as about 12.08% of revenue, reflecting the company's operational cost structure.
What is the main purpose of the Occidental Petroleum financial model?+
The Occidental Petroleum financial model provides a comprehensive equity valuation and cash flow forecast. Its purpose is to assess the company's deleveraging trajectory, shareholder return capacity, and free cash flow generation, especially following the CrownRock acquisition and the strategic divestiture of OxyChem.
Can I download a financial model for Occidental Petroleum (OXY)?+
Yes, a downloadable Excel financial model is available for Occidental Petroleum (OXY). This model offers a forecast horizon from FY2026 through FY2030, allowing for detailed analysis of the company's future performance.
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