OCCIDENTAL PETROLEUM CORP DE

Occidental’s operations, financial condition, cash flows and levels of expenditures are highly dependent on oil prices and, to a lesser extent, NGL and natural gas prices, the Midland-to-Gulf-Coast oil spreads, chemical product prices and inflationary pressures in the macro-economic environment. The average WTI price per barrel for the three months ended September 30, 2024 was $75.09, comparedto $80.56 for the three months ended June 30, 2024 and $82.26 for the three months ended September 30, 2023. Changes in prices could result in adjustments in capital investment levels and allocation, which impact production volumes. It is expected that the price of oil will be volatile for the foreseeable future given the current geopolitical risks, evolving macro-economic environment that impacts energy demand, future actions by OPEC and non-OPEC oil producing countries, the Russia-Ukraine war and the conflicts in the Middle East, and the U.S. Government's management of the U.S. Strategic Petroleum Reserve. Seasonality is not a primary driver of changes in Occidental's consolidated quarterly earnings.

Occidental works to manage inflation impacts by capitalizing on operational efficiencies, proactive contract management and working closely with vendors to secure the supply of critical materials. As of September 30, 2024, substantially all of Occidental's outstanding debt was fixed rate.

STRATEGIC PRIORITIES

Occidental’s capital and operational priorities are intended to maximize cash flow through focused investments in short and medium-cycle projects to enhance current year and future cash flows. Occidental's strategic priorities include:

■Maintain production base to preserve asset base integrity and longevity;

■Deliver a sustainable and growing dividend;

■Enhance its asset base with new investments in its cash-generative energy and chemical businesses as well as emerging low-carbon businesses;

■Advance technologies and business solutions to help drive a sustainable low-carbon future; and

■Prioritize the proceeds from asset divestitures and excess cash flow for deleveraging until principal debt is below $15 billion.

During the first nine months of 2024, Occidental generated cash flow from continuing operations of $8.2 billion and incurred capital expenditures of $5.2 billion.

DEBT

As of September 30, 2024, Occidental’s long-term debt was rated Baa3 by Moody’s Investors Service, BBB- by Fitch Ratings and BB+ by Standard and Poor’s. Any downgrade in credit ratings could impact Occidental's ability to access capital markets and increase its cost of capital. In addition, Occidental or its subsidiaries may be requested, elect to provide or in some cases be required to provide collateral in the form of cash, letters of credit, surety bonds or other acceptable support as financial assurance of their performance and payment obligations under certain contractual arrangements, such as pipeline transportation contracts, oil and gas purchase contracts and certain derivative instruments; certain permits, including with respect to carbon capture, utilization and storage activities; and environmental remediation matters.

In connection with the CrownRock Acquisition, Occidental issued $9.7 billion in new debt in July 2024 and assumed $1.2 billion of existing CrownRock debt in August 2024. Occidental's credit ratings were reaffirmed by credit agencies post bond offering launch. In the three months ended September 30, 2024, Occidental repaid$4.0 billion of debt. As of September 30, 2024, Occidental had approximately $1.0 billion of debt maturities due in the next 12 months, excluding the current portion of finance leases. For information on Occidental's debt activity, see Note 4 - Long-Term Debt in the notes to the Consolidated Condensed Financial Statements in Part I, Item 1 of this Form 10-Q for additional information.

SHAREHOLDER RETURNS

During the nine months ended September 30, 2024, Occidental declared dividends to common shareholders of $606 million or $0.66 per share.

CROWNROCK ACQUISITION

In December 2023, Occidental entered into an agreement to purchase CrownRock, L.P. for total consideration of $12.4 billion, consisting of $9.4 billion of cash consideration (inclusive of certain working capital and other customary purchase price adjustments), 29.6 million shares of common stock of Occidental, and the assumption of $1.2 billion of existing debt of CrownRock. The acquisition closed August 1, 2024, adding to Occidental's oil and gas portfolio in the Permian Basin. See Note 5 - Acquisitions and Divestitures in the notes to the Consolidated Condensed Financial Statements in Part I, Item 1 of this Form 10-Q for additional information.

DIVESTITURE PROGRAM

During the third quarter of 2024, Occidental sold non-core assets in the Powder River Basin with near to intermediate term lease expirations and certain Delaware Basin assets in Texas and New Mexico for combined net proceeds of $779 million. Occidental recognized a pre-tax loss of $479 million on the asset sales. In addition, Occidental sold 19.5 million of its limited partner units in WES for proceeds of $697 million resulting in a pre-tax gain of $489 million.