The paragraph is an introduction to Occidental's First Quarter 2025 Earnings Conference Call. It begins with the operator welcoming participants and handing over to Jordan Tanner, Vice President of Investor Relations. Tanner introduces key executives present, including Vicki Hollub, CEO, and others in senior management roles. The call includes references to slides and non-GAAP financial measures, with relevant information available on the company's website. Vicki Hollub then highlights the company's strong first-quarter performance, noting $3 billion in operating cash flow and oil and gas production of over 1.39 million BOE per day, despite challenges from weather and seasonality. She also mentions developments in Oman and recent debt reduction efforts.

The paragraph highlights the company's success in reducing domestic oil and gas operating costs to $9.05 per BOE, surpassing initial expectations due to efficiency and cost management efforts. Notable achievements include a 15% improvement in drilling duration and more than a 10% reduction in well costs in the Permian, largely attributed to enhanced well designs and execution, particularly in the Delaware Basin. These efficiencies have allowed the company to reduce their rig count while still anticipating increased production and more wells online. The company foresees production growth primarily driven by activities in the Middle East and Gulf of America, with steady onshore development offsetting recent divestitures. Additionally, the company is in advanced negotiations with Oman to extend Block 53's contract to 2050, supporting mutual goals.

The paragraph discusses Oxy's plans to expand the Maisan field in Block 53, potentially unlocking over 800 million barrels of resources and boosting cash flow by 2025. The company's strong partnerships in Oman are highlighted, alongside a significant gas and condensate discovery in North Oman. OxyChem's performance surpassed expectations, overcoming winter operational challenges and continuing as a low-cost market leader. The midstream and marketing business outperformed expectations, benefiting from strong gas marketing in the Permian and a favorable sulfur market at Al Hosn.

The paragraph discusses the progress of STRATOS towards a start-up in West Texas and highlights a 25-year carbon offtake agreement 1PointFive signed with CF Industries for a low-carbon ammonia facility in Louisiana, supporting carbon dioxide storage at the Pelican hub. This agreement showcases Oxy's capabilities and the rising demand for carbon management solutions, aligning with their growth strategy without requiring immediate capital expenditures. Additionally, the paragraph outlines the company's financial strategy, focusing on debt reduction to strengthen their financial position and enhance shareholder returns. They have retired $2.3 billion in debt this year and $6.8 billion over the past ten months, significantly reducing interest expenses and eliminating 2025 debt maturities.

The paragraph outlines the company's strategy to address current market challenges, characterized by demand, policy, and supply uncertainties, which are impacting the oil sector and causing commodity price volatility. The company focuses on proactive measures to adapt to these conditions, such as reducing Permian rigs, optimizing project scopes, and cutting costs to improve financial resilience without significantly affecting production for the year. With a $200 million cut in capital expenditure and $150 million in expected operational savings by 2025, the company remains flexible and prepared to adjust activities further if commodity prices drop significantly. Emphasizing the strength of its diverse portfolio and development programs, the company aims to maintain long-term value by leveraging its high-quality inventory and operational efficiencies, akin to its strategic approach during market downturns in 2020.

The paragraph discusses Oxy's focus on maintaining steady operations to improve capital efficiency and sustain strong cash flow generation over the coming years, rather than merely maximizing free cash flow by 2025. It introduces Sunil Mathew, who reports that in the first quarter of 2025, Oxy achieved an adjusted profit of $0.87 per diluted share and a reported profit of $0.77 per diluted share, with the discrepancy mainly due to derivatives in their marketing business. The company generated approximately $1.2 billion in free cash flow before working capital, ending the quarter with $2.6 billion in unrestricted cash. A negative working capital change was noted due to typical first-quarter expenses and specific tax payments related to disaster relief. Despite these factors, all business segments performed well and exceeded initial expectations.

The company expects a positive trajectory for the remainder of the year, with an increase in production anticipated in the second quarter due to activities in the Permian, completion of maintenance at Dolphin, and resumed production in the Gulf of America. This growth will offset the impact of other planned reductions in production. Despite revised guidance for Gulf production due to capital optimization, Permian efficiencies will balance it. The company maintains its overall production guidance for the year but notes a slight reduction in the oil mix. Domestic operating expenses per BOE are expected to rise in the second quarter due to divestitures and maintenance activities. However, full-year operating cost guidance will be lowered, indicating a focus on operational efficiency. The chemical business overcame initial challenges and expects modest growth in domestic demand for caustic and PVC markets through the third quarter.

The company expects a rationalization of domestic capacity in the second half of the year to help balance supply growth in the domestic market. The midstream segment has shown strong performance, leading to an increased full-year guidance by $40 million, though earnings may decrease in the second quarter due to declining commodity prices. This will be offset by mark-to-market adjustments to preserve margins. Capital spending aligns with the 2025 business plan, with a focus in the first half of the year. The company plans to release two rigs, optimize infrastructure, and reduce capital guidance by $200 million, alongside $150 million in operating cost reductions, aiming for a $350 million positive cash impact by 2025. Debt reduction remains a priority, supported by diversified capital sources.

In the paragraph, the company discusses the positive outcomes of its March program to reduce the common warrant exercise price, which helped retire $900 million of debt and accelerated its deleveraging efforts. The company remains focused on strategic divestitures and has retired its 2025 debt maturities, leaving minimal obligations in the near term. Their U.S. onshore portfolio offers capital flexibility, and improved crude transportation contracts in the midstream segment are expected to enhance cash flow in the coming years. In the chemicals segment, modernization projects promise significant earnings growth. Overall, the company anticipates around $1 billion in additional pretax free cash flow from non-oil and gas sources by 2026, with further growth expected in 2027, supported by a solid operational and financial framework.

In this paragraph, the company discusses their strategic focus on delivering consistent results and increasing shareholder value through effective capital allocation and operational excellence. Vicki Hollub emphasizes the importance of strengthening the balance sheet, enhancing shareholder returns, and positioning the organization for strong performance across commodity cycles. The company acknowledges recent reductions in capital expenditures (CapEx) and operational expenditures (OpEx) as part of their strategy, influenced by efficiency improvements and adjusted timelines. Richard Jackson adds that the teams consistently evaluate program efficiencies to ensure both short-term free cash flow and sustained cost efficiencies for long-term cash flow are maintained. The session then opens for questions, with Devin McDermott inquiring about the impact of these financial adjustments.

The paragraph discusses a U.S. onshore decision framework focused on improving cost efficiency and performance. The company highlights year-on-year improvements in well costs, operating expenses, and supply chain opportunities. They specifically mention optimizing infrastructure investments, particularly in the Permian region, and finding synergies with existing assets. Operating expenses (OpEx) are managed by optimizing direct costs and downhole maintenance, with the latter achieving a 20% reduction in beam pump failures since 2023, which decreases the need for repair services by over 30% in the past two years.

In the conversation, Devin McDermott inquires about the breakdown of projected free cash flow improvements, particularly focusing on the contributions from operating cash flow and reductions in capital spending, specifically relating to non-oil and gas sectors like chemicals and low carbon initiatives. Vicki Hollub mentions that Kenneth Dillon has updates on Gulf of America projects, highlighting rescheduled activities and optimized water flood designs without diverting funds from drilling. Sunil Mathew addresses Devin's inquiry by pointing to a notable CapEx reduction in the Chemicals segment, specifically for the Battleground project, where spending will decrease from $600 million in 2025 to $300 million in 2026, with project startup expected mid-next year.

The paragraph discusses various financial improvements and strategies for a company. It projects an incremental operating cash flow of $160 million from a new project, contributing to a total of $460 million. The company expects $200 million in benefits from expiring oil transportation contracts this year and $400 million next year. With reduced spending from the STRATOS project, they anticipate a $450 million cash flow improvement in the midstream segment next year. Additionally, debt reduction is planned for maturing debt in 2026 and 2027, leading to a $135 million improvement in cash flow from interest expenses, ultimately aiming for a $1 billion improvement. For 2027, they foresee a $600 million CapEx reduction benefit and increased operating cash flow from a fully operational project. In the following Q&A, Doug Leggate inquires about the company's strategy for accelerating deleveraging, including possible asset disposals, noting the existing shallow debt maturity profile and questioning potential midstream asset sales.

The paragraph features a discussion between Vicki Hollub and Doug Leggate regarding Occidental Petroleum's financial strategy and project management. Hollub mentions plans to achieve debt reduction by paying off maturities due in 2026, ideally ahead of schedule, while maintaining a healthy cash balance. Leggate asks about the company's future capital spending, noting current projects like Battleground and DAC. Hollub indicates that capital spending is expected to be lower next year and won't replace all costs of completed projects. Arun Jayaram then asks about asset divestitures, seeking Hollub's perspective on selling short-cycle versus long-cycle assets, to which Hollub responds that they have several options.

The paragraph discusses a company's optimistic long-term outlook on the value of oil assets, particularly in the Permian, despite current low oil prices, due to expected future scarcity of resources. Arun Jayaram asks about new opportunities in Oman, specifically in Block 53 and a discovery in North Oman. Vicki Hollub defers to Sunil Mathew, who expresses excitement about these opportunities and mentions the potential for improved cash flow without providing specific metrics. The company anticipates a resilient cash flow even with lower oil prices and is enthusiastic about the Block 53 extension and the Oman North gas discovery.

The paragraph highlights the successful operations and promising developments Occidental Petroleum (Oxy) is experiencing in Oman, particularly in Block 53. Kenneth Dillon expresses excitement over the partnership with Oman's Ministry of Energy to maximize the country's resources. Oxy has produced over 640 million barrels and operates 3,500 wells in Block 53, with significant cost reductions and improved efficiency in drilling and artificial lift performance. Recent exploration successes, including discoveries brought online quickly, further boost operations. The CO2 EOR pilot in Block 9 shows positive results, underscoring the promising future in Oman. Overall, the company reports a successful quarter in the region.

The paragraph discusses Neil Mehta from Goldman Sachs asking about the low-carbon ventures business, specifically related to the STRATOS project, and how changing policies might affect returns. Vicki Hollub expresses optimism, highlighting the role of the voluntary compliance market in carbon credits, which can support their efforts in direct air capture (DAC) and enhanced oil recovery (EOR) to maintain energy independence. Richard Jackson elaborates on the progress in research and development, particularly in reducing costs and components for DAC, and emphasizes the importance of making returns competitive through continued R&D advances.

The paragraph discusses the future of oil production, focusing on the STRATOS operations and market support as key factors for future investment decisions. The partnership is considered crucial for developing and supporting low-carbon efforts within the company. Neil Mehta asks Vicki Hollub for her perspective on the oil market, particularly U.S. oil supply. Hollub notes that most shale basins have plateaued or are declining, with the Permian basin being an exception. However, if companies reduce activity levels, the Permian's growth might plateau sooner than expected. Previously, it was anticipated that U.S. production would peak between 2027 and 2030, but due to current economic uncertainties and pricing volatility, this peak might occur earlier.

The paragraph features a discussion during a conference call where Jean Ann Salisbury from Bank of America Merrill Lynch inquires about any additional midstream recontracting or chemical project benefits impacting the company's free cash flow. Sunil Mathew responds that there have been no changes, reiterating previously outlined expiring oil transportation contracts and benefits from the Battleground expansion project. Jean Ann Salisbury further asks about the impact of Enhanced Oil Recovery (EOR) on operating costs and the portfolio. Richard Jackson explains that the focus is on cost structure efficiencies, optimizing CO2 usage, and improving EOR's competitiveness. Paul Cheng from Scotiabank then queries about potential cost savings and opportunities through 2026 and 2027 based on the current momentum.

Vicki Hollub discusses Occidental Petroleum's (Oxy) strategic shift over the past decade to focus more on U.S. production, especially in shale resources. Previously, 50% of Oxy's output was international, but now 83% is domestic. The company increased its production from 650,000 BOE per day to 1.39 million barrels per day, with significant growth in shale reserves, which now constitute a majority of its proved reserves and total resources. Despite the emphasis on shale, Oxy still holds significant conventional resources, valued at $6 billion, with potential for further growth through artificial intelligence initiatives in the U.S.

The paragraph discusses the company's efforts in enhancing oil recovery through water flooding and production optimizations in the Gulf of America. It highlights significant potential growth in Algeria with the acquisition of the largest onshore 3D seismic survey, and in Oman with promising gas and oil discoveries. The company is making progress in Blocks 9 and 27, which could bring its conventional resource potential on par with its shale resources, extending its development prospects beyond 15 years. They are also developing direct air capture technology to extract CO2 for enhanced oil recovery in the U.S., Oman, Algeria, and potentially Abu Dhabi. The company has transformed its asset base and is close to reducing debt, which is expected to unlock significant shareholder value.

The paragraph discusses a strategic decision to drop a couple of rigs and reduce EOR capital expenditure in the Permian to maintain long-term production levels and enhance cash flow for future value creation. Vicki Hollub emphasizes that these changes aim to avoid sacrificing future production, particularly in 2026 and 2027. Richard Jackson adds that the action taken was an efficiency-driven acceleration in their drilling program, allowing them to operate more effectively with fewer resources. They achieved this by compressing drilling efficiencies, optimizing facilities and infrastructure over multiple years, and leveraging existing infrastructure from the CrownRock Midland development to avoid additional expenses, resulting in significant cost savings.

The paragraph discusses supply chain optimization and cost management strategies in a business context. Kenneth Dillon highlights the focus on achieving best-in-class performance and reducing the cost of goods and services for both capital expenditures and expenses, emphasizing collaboration with Tier 1 companies that dominate their domestic spending. They are also receiving offers for cost reductions from vendors, both domestically and internationally. The paragraph then transitions to a discussion on the Chemicals business outlook, with Leo Mariani questioning if the chemical sector's operating income will lean towards the lower end of the projected range due to economic uncertainty. Sunil Mathew addresses market dynamics, particularly noting an expected domestic PVC demand growth of 4% to 5%.

The paragraph discusses the economic conditions in China, highlighting challenges due to oversupply affecting export markets, particularly in PVC exports, which have significantly increased. This has pressured domestic prices. On the caustic side, domestic demand in China is expected to remain stable, with pricing influenced by recent Gulf Coast expansions. The market may rebalance if domestic capacity rationalization occurs sooner or if China's economy improves. In Q1, the company faced challenges from a winter storm, an unplanned outage, and increased raw material costs. Improvements in demand and pricing are expected later in the year due to supply rationalization and lower raw material prices. However, uncertainty remains, and the company plans to reassess its full-year income guidance after Q2.

The conference call concluded with Vicki Hollub thanking the participants for their questions and attendance, wishing them a good day, and saying goodbye. The operator then announced the end of the conference and instructed attendees to disconnect.

This summary was generated with AI and may contain some inaccuracies.