Occidental Petroleum (NYSE:OXY) Q4 2025 Earnings call February 19, 2026 01:00 PM ET Company ParticipantsJordan Tanner - Vice President of Investor RelationsKen Dillon - SVP and President of International Oil and Gas OperationsRichard Jackson - SVP and COOSunil Mathew - SVP and CFOVicki Hollub - President and CEOConference Call ParticipantsArun Jayaram - Equity Research AnalystBetty Jiang - Equity Research AnalystDoug Leggate - Equity Research AnalystNeil Mehta - Equity Research AnalystNitin Kumar - Equity R ...

Group 1: Helmerich & Payne (H&P) Overview - H&P views the Middle East as a primary growth driver, particularly for international shale development and increased rig demand [1] - The company is investing heavily in the Middle East to offset stagnation in the U.S. market, with plans to operate 24 rigs in Saudi Arabia by mid-2026 [1] - H&P reported mixed financial results for Q1 2026, with revenue of $1.02 billion exceeding expectations but a GAAP EPS of -$0.98 due to a $103 million non-cash impairment charge [2] Group 2: Industry Trends and Competitors - Major oilfield-service providers are increasingly focusing on the Middle East to hedge against volatility in the U.S. market, as the region can sustain production at lower oil prices [3] - The U.S. shale revolution has significantly increased production, but growth is now declining, with active oil-directed rigs dropping over 30% from late 2022 to October 2025 [4] - Companies like Patterson-UTI Energy and SLB are also targeting the Middle East for growth, leveraging their U.S. expertise and securing major contracts in the region [6][8] Group 3: Regional Opportunities - The Middle East is identified as a primary growth engine for several companies, including Weatherford and Halliburton, with strong opportunities in Saudi Arabia, UAE, Kuwait, and Oman [10][12] - Halliburton emphasizes the importance of mature field development and enhanced oil recovery (EOR) in the region, viewing it as a stable market for services [12] - SLB has secured a $1.5 billion contract with Kuwait Oil Company and is investing in local manufacturing and talent development in Oman [9]

Core Viewpoint - Hemisphere Energy Corporation has announced a quarterly dividend, provided guidance for 2026, and shared a corporate update, highlighting its financial health and strategic growth plans. Quarterly Dividend - The Board of Directors has approved a quarterly cash dividend of $0.025 per common share, payable on February 26, 2026, to shareholders of record as of February 12, 2026 [2]. 2026 Corporate Guidance - The approved capital program for 2026 is approximately $12 million, funded entirely by an estimated adjusted funds flow (AFF) of $40 million at a WTI price of US$60 per barrel [3][10]. - After capital expenditures, the expected free funds flow (FFF) for 2026 is $28 million, with about 35% allocated to quarterly base dividends [4]. Financial Highlights - Under different WTI price scenarios, the AFF and FFF projections are as follows: - At US$50 WTI: AFF of $28 million, FFF of $16 million - At US$60 WTI: AFF of $40 million, FFF of $28 million - At US$70 WTI: AFF of $51 million, FFF of $39 million [6]. - The base dividend per share remains consistent at $0.10 across all scenarios [6]. Production and Costs - Average annual production is projected at 3,900 barrels of oil equivalent per day (boe/d), with 99% being heavy oil [7]. - Operating and transportation costs are estimated at $15.00 per boe, with royalties at 16% for US$60 WTI [7]. Corporate Outlook - As of January 2026, corporate production is trending over 3,800 boe/d, supported by enhanced oil recovery (EOR) methods, leading to lower decline rates and higher free cash flows [9]. - The company entered 2026 debt-free with over $7 million in positive working capital, allowing flexibility in capital program adjustments based on market conditions [10]. Shareholder Returns - In 2025, Hemisphere paid a total of $21.8 million in shareholder returns, including base and special dividends, alongside expenditures on its normal course issuer bid (NCIB) program [4].

Core Insights - The company reported a record fourth quarter with $35 million in revenue and a cash inflow of approximately $60 million, driven by cost reductions and improved working capital management [2][5] - The focus has shifted towards offshore and subsea markets, with a target to grow subsea revenue to $470 million by 2030, compensating for weaker projections in other areas [3][6] Financial Performance - Cost reductions of about $20 million have positively impacted operating margins and narrowed losses in the EMEA region, leading to a small profit in December [1] - The company aims for an EBITDA margin of 15% and has guided for revenue between $145 million and $155 million for 2026 [7][5] Strategic Focus - The company emphasizes intellectual property and differentiated products in offshore markets, identifying titanium stress joints as a unique offering [3] - Recent acquisitions are central to growth, with FES's diverless connectors significantly reducing FPSO connection times and Organic Oil Recovery targeting $100 million in annual revenue by 2030 [4][15] Market Trends - The subsea revenue increased from over $40 million in 2019 to an expected $200 million by 2026, supported by a robust tender pipeline worth about $300 million [11] - Market indicators suggest a rebound in subsea investments, with a projected 82% increase in subsea tree awards from 2025 to 2026 [10] Technology and Innovation - The company has transitioned to a life-of-field technology partner, enhancing its portfolio across the subsea well lifecycle [8] - Organic Oil Recovery (OOR) is positioned as a lower-cost alternative to traditional recovery methods, with potential incremental recovery of 10% to 15% from offshore fields [16][17] Operational Insights - FES's diverless bend stiffener connectors have been deployed over 700 times globally, reducing FPSO connection time from approximately 12 hours to about 10 minutes [13] - The company has engaged in pilot projects for floating offshore wind, indicating diversification into renewable energy sectors [14]

Core Insights - The Global Oilfield Chemicals Market is projected to grow at a CAGR of 5.31% from 2024 to 2031, increasing from USD 25.18 Billion in 2024 to USD 38.09 Billion by 2031 [1][8] Market Size & Forecasts - The market is expected to experience significant growth driven by the rising demand for Enhanced Oil Recovery (EOR) methods, which rely on chemicals like surfactants and polymers [8] - The report provides detailed analysis of current market trends and projections for the next decade [7] Regional Insights - North America is the leading region in the Oilfield Chemicals Market, supported by extensive oil and gas exploration, particularly in the U.S. shale industry [14] - The region's advanced drilling technology and substantial investments in EOR contribute to the demand for specialized chemicals [14] Competitive Landscape - Key players in the market include Akzo Nobel N.V., Albemarle Corporation, Ashland Inc., Baker Hughes Incorporated, BASF SE, Canadian Energy Solutions, Clariant, Croda International Plc., and Drilling Specialties Company [15] Technological Innovations - Innovations in shale gas extraction, such as hydraulic fracturing and horizontal drilling, are driving the demand for specialized chemicals [10] - The focus on sustainable drilling solutions is leading to a shift towards environmentally friendly and biodegradable chemicals [9] Growth Opportunities - The market is poised for growth in sectors focused on sustainability-driven innovations, as companies seek to minimize environmental impacts [9] - The increasing emphasis on improved oil recovery methods presents substantial development prospects for producers catering to oil and gas operators [8]

Core Insights - Libya holds Africa's largest proved crude oil reserves at 48 billion barrels and aims to increase production to 2 million barrels per day (bpd) by 2028, with over 40 companies expressing interest in its first oil field licensing round since 2011 [2][3] Group 1: Oil Production and Reserves - Libya's crude oil production was approximately 1.65 million bpd before the civil war, which has since dropped to around 20,000 bpd during the conflict but has recovered to just under 1.4 million bpd [1][2] - The National Oil Corporation (NOC) plans to enhance oil recovery techniques to increase production capacity by about 775,000 bpd at existing fields [1][2] - The Sirte basin contains around 80% of Libya's recoverable reserves and most of its production capacity [1] Group 2: Political and Economic Context - The political stability of Libya remains uncertain, with previous agreements aimed at addressing oil revenue distribution and financial stabilization not fully implemented [3][4] - The blockade from January to September 2020 resulted in a loss of at least US$9.8 billion in hydrocarbons revenues, highlighting the economic impact of political instability [3] Group 3: International Interest and Investment - Major Western firms, including Shell, BP, and ExxonMobil, are re-entering Libya, indicating potential for increased investment and production [2][4] - The NOC's collaboration with international companies aims to leverage their presence to foster political stability and enhance oil production [4][5] - BP has signed a memorandum to evaluate redevelopment options for the Sarir and Messla fields, reflecting strong interest in Libya's energy sector [6]

Core Insights - TechnipFMC plc has secured a significant contract from Ithaca Energy for the Captain field development in the U.K. North Sea, valued between $75 million and $250 million, reinforcing its role in mature-field redevelopment and enhanced oil recovery projects [1] Project Scope - The project involves the delivery of flexible risers, flowlines, and associated hardware, with TechnipFMC adopting an integrated approach to design, manufacture, and install these components, ensuring seamless execution and minimizing delays [2] Production Enhancement - The Captain field, located approximately 90 miles northeast of Aberdeen, Scotland, has been operational since 1997 and is undergoing continuous technology upgrades, with TechnipFMC playing a key role in the second phase of its enhanced oil recovery initiative in 2024 [3] Partnership Value - The long-term collaboration between TechnipFMC and Ithaca Energy has consistently delivered value, focusing on optimizing field layout and deploying efficient flexible riser systems to support Ithaca's development goals [4] Leadership in Subsea Technology - This contract highlights TechnipFMC's strategy of providing flexible pipe technology for mature assets, utilizing proprietary technologies and integrated subsea solutions to enhance project economics and support clients' energy transition goals [5] Broader Vision for Energy Development - TechnipFMC is committed to enabling efficient, lower-carbon energy development, with ongoing contributions to the U.K. North Sea demonstrating its technical leadership and support for regional production resilience and growth [7]

Core Viewpoint - Pulse Oil Corp. has successfully amended loan agreements to increase total loans from $2,250,000 to $4,250,000, allowing continued funding for its Enhanced Oil Recovery (EOR) project [1][2] Loan Agreements - The amended loan agreements involve two lenders, with the new total principal amount being $4,250,000, and maturity dates revised to June 9, 2026, with a possible six-month extension [1][2] - The original loan amount of $2,250,000 was used for solvent injection into the Nisku D oil pool, while an additional $2,000,000 will be available for future drawdowns to support the Bigoray EOR project's solvent injection program [2] EOR Project Progress - Since June 9, 2025, the company has injected approximately 75 m³ of solvent daily into the Nisku D pool, totaling about 23,034 m³ since the project's inception [3] - Production at the Bigoray facility has increased by over 20% due to the EOR flood, with expectations for continued improvement as the solvent bank grows [3] - API Gravity measurements indicate positive results, with significant increases observed at various wells, suggesting effective solvent miscibility with remaining oil [3] Management Commentary - The CEO of Pulse Oil Corp. highlighted that the additional funding will facilitate ongoing solvent injection at favorable prices, with the EOR project showing promising results [4] - The Nisku D and E pools have produced nine million barrels of sweet light crude oil, and surrounding pools utilizing EOR solvent injection have experienced significant production increases [4] Company Overview - Pulse Oil Corp. is focused on a 100% working interest in the EOR Project located in West Central Alberta, which includes two established Nisku pinnacle reef reservoirs [9] - The company employs a proven recovery methodology (NGL solvent injection) to enhance oil recovery, with a current recovery factor of approximately 30% from the pools [10] - The company's total reclamation liabilities are reported at $3.1 million, which is considered low compared to industry peers in Western Canada [10]

Financial Data and Key Metrics Changes - The company reported a profit of $0.65 per diluted share for Q3 2025, generating approximately $1.5 billion in free cash flow before working capital adjustments [22][24] - Operating cash flow reached $3.2 billion, exceeding last year's Q3 performance despite lower WTI prices [8][22] - The principal debt balance was reduced to $20.8 billion after repaying $1.3 billion of debt in the quarter, with a total year-to-date repayment of $3.6 billion [22][28] Business Line Data and Key Metrics Changes - The oil and gas business produced approximately 1.47 million barrels of oil equivalent (BOE) per day, exceeding guidance, with the Permian Basin contributing 800,000 BOE per day, marking the highest quarterly production in Oxy's history [9][22] - The midstream and marketing segment generated positive adjusted earnings of $153 million, surpassing guidance due to strategic gas marketing and higher sulfur prices [23][24] Market Data and Key Metrics Changes - The company shifted its oil and gas production from 50% domestic to 83% domestic, reducing geopolitical risk [5] - The ongoing improvement in portfolio and operational performance was highlighted, with the lowest quarterly lease operating expense per barrel since 2021 at $8.11 per BOE [8][23] Company Strategy and Development Direction - The sale of OxyChem is a pivotal step in the company's transformation, aimed at strengthening the balance sheet and enhancing shareholder returns [4][7] - The company plans to focus capital on Permian unconventional assets and Gulf of Mexico water floods, with an emphasis on low-decline enhanced oil recovery projects [7][30] - The company is targeting a $55-$60 WTI plan for 2026, with flexibility to adapt to market conditions while improving cost efficiency [21][29] Management's Comments on Operating Environment and Future Outlook - Management expressed confidence in the company's ability to navigate changing market conditions and emphasized a disciplined approach to capital allocation [20][21] - The company aims to maintain a strong balance sheet with a cash reserve of $3 billion to $4 billion while being opportunistic in share repurchases [54][57] - Management highlighted the importance of operational efficiency and cost management to sustain free cash flow even in challenging oil price environments [20][62] Other Important Information - The company has a development runway of over 30 years, focusing on high-return, short-cycle, and lower decline assets [5][7] - The OxyChem transaction is expected to lower annual interest expenses by more than $350 million and improve credit metrics significantly [28] Q&A Session Summary Question: Capital spending outlook for next year - Management indicated that capital spending for next year could be between $6.3 billion and $6.7 billion, with a larger proportion allocated to U.S. onshore projects for flexibility [34][35] Question: Resource and drilling backlog - Management emphasized the importance of resource characterization over drilling inventory, highlighting advancements in unconventional shale improvements [37][38] Question: CO2 injection applicability on older wells - Management confirmed that CO2 injection techniques can be applied to both older and more recent wells, with significant potential for production uplift [41][42] Question: Return of capital strategy - Management stated that debt reduction will be prioritized before opportunistically repurchasing shares, maintaining a flexible approach to capital allocation [54][57] Question: Exploration focus in the coming years - Management indicated that exploration will remain a lower priority as the company focuses on optimizing existing resources and enhancing recovery techniques [59][60]

Financial Data and Key Metrics Changes - The company reported a profit of $0.65 per diluted share for the third quarter, generating approximately $1.5 billion in free cash flow before working capital adjustments [22][24] - Operating cash flow reached $3.2 billion, exceeding last year's third quarter despite lower WTI prices [8][22] - The principal debt balance was reduced to $20.8 billion after repaying $1.3 billion of debt in the quarter, with a total year-to-date repayment of $3.6 billion [22][28] Business Line Data and Key Metrics Changes - The oil and gas business produced approximately 1.47 million barrels of oil equivalent (BOE) per day, exceeding guidance, with the Permian Basin contributing 800,000 BOE per day, the highest quarterly production in Oxy's history [9][22] - The midstream and marketing segment generated positive adjusted earnings of $153 million, surpassing guidance due to strategic gas marketing and higher sulfur prices [23][24] Market Data and Key Metrics Changes - The company shifted its oil and gas production from 50% domestic to 83% domestic, reducing geopolitical risk [5] - The Gulf of America assets outperformed guidance, benefiting from favorable weather and achieving the highest uptime in operating history [9][23] Company Strategy and Development Direction - The sale of OxyChem is a pivotal step in the company's transformation, aimed at strengthening the balance sheet and enhancing shareholder returns [4][7] - The company plans to focus capital on Permian unconventional assets and enhance oil recovery projects, particularly CO2 EOR projects [7][18] - The company is targeting a $55-$60 WTI plan for 2026, with flexibility to adapt to market conditions [21][62] Management's Comments on Operating Environment and Future Outlook - Management expressed confidence in the company's ability to generate free cash flow even in challenging oil price environments, emphasizing operational and cost efficiency [20][21] - The company highlighted a strong portfolio of short-cycle, high-return, and mid-cycle low-decline assets that can deliver strong cash flow [21][67] Other Important Information - The company achieved $2 billion in annualized cost savings across U.S. onshore operations since 2023, driven by operational improvements [12] - The company plans to reallocate up to $400 million to short-cycle high-return projects, primarily in the Permian, while maintaining flexibility in capital allocation [30] Q&A Session Summary Question: Can you clarify the capital spending outlook for next year? - The company expects capital spending to be between $6.3 billion and $6.7 billion, with increased investment in U.S. onshore projects [34][35] Question: What is the status of the Permian resource and drilling inventory? - The company has added $2.5 billion in resources in the Permian, with a focus on unconventional shale improvements and a break-even for annual projects expected to remain below $40 [37][39] Question: Can you provide details on the CO2 injection pilot project? - The pilot project demonstrated a 45% uplift in production, with potential for further increases through continued CO2 injection cycles [42][44] Question: How will the company manage legacy liabilities post-OxyChem sale? - The company indicated that legacy liabilities are minimal and manageable, with annual costs around $20 million [55][56] Question: What are the plans for share repurchases following the OxyChem sale? - The company plans to prioritize debt reduction before considering opportunistic share repurchases, maintaining a cash balance of $3 billion to $4 billion [54][57]