OCCIDENTAL PETROLEUM CORP DE

CURRENT BUSINESS OUTLOOK AND STRATEGY

GENERAL

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, Midland-to-Gulf-Coast oil spreads, chemical product prices and inflationary pressures in the macro-economic environment. In 2024, compared to 2023, the average annual WTI price per barrel decreased to $75.72 from $77.64, and the average annual Brent price per barrel decreased to $79.79 from $82.25. It is expected that the price of oil will be volatile for the foreseeable future given the current geopolitical risks, impact of the evolving macro-economic environment on energy demand, future actions by OPEC and non-OPEC oil producing countries, geopolitical risks, 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, locking in pricing on longer term contracts and working closely with vendors to secure the supply of critical materials. As of December 31, 2024, approximately 89% of Occidental's outstanding debt was fixed rate.

STRATEGY

Occidental is focused on delivering a unique shareholder value proposition with its portfolio of oil and gas, chemicals and midstream and marketing assets as well as its ongoing development of carbon management and storage solutions and GHG emissions reduction efforts. Occidental conducts its operations with a priority on HSE, sustainability and social responsibility. In order to maximize shareholder returns, Occidental will:

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

■ Deliver a sustainable and growing dividend;

■ Enhance its asset base and reserves with investments in its cash-generative oil and gas and chemical businesses;

■ Advance technologies and decarbonization solutions to develop a sustainable low-carbon business; and

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

CAPITAL INVESTMENT

In 2024, Occidental invested $7.0 billion in high-return assets to generate long-term free cash flow throughout the commodity cycle. In addition, Occidental completed its $12.4 billion acquisition of CrownRock. In 2025, Occidental intends to complete the full integration of CrownRock assets, personnel and systems, as well as make progress towards the completion of asset divestitures announced in conjunction with the CrownRock Acquisition.

DEBT

As of December 31, 2024, principal debt outstanding was $24.4 billion, of which $1.0 billion is due in in 2025, $4.1 billion in 2026, $1.5 billion in 2027, $0.9 billion in 2028, and $16.9 billion due in 2029 and thereafter.

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 concurrent with issuance of new debt. In 2024, Occidental used proceeds from divestitures and cash on hand to repay $4.5 billion of debt, which included the satisfaction and discharge of the 5.000% senior notes due 2029 that were assumed with the CrownRock Acquisition. For information on Occidental's debt activity, see Note 6 - Long-Term Debt in the notes to the Consolidated Condensed Financial Statements in Part II, Item 8 of this Form 10-K for additional information.

SHAREHOLDER RETURN PRIORITIES

Capital is returned to shareholders through Occidental’s dividend and share repurchases. In 2024, Occidental declared dividends to common shareholders of $814 million, or $0.88 per share. As of December 31, 2024, $1.2 billion remained of Occidental’s $3.0 billion share repurchase program, which the Board authorized in February 2023. Following the CrownRock Acquisition, Occidental’s shareholder return priorities are to provide a sustainable and growing dividend and reduce the principal of outstanding debt below $15 billion, before resuming share repurchases.

SUSTAINABILITY STRATEGY

Occidental’s sustainability strategy is organized around four pillars: principles of governance, people, planet, and prosperity. Occidental integrates these sustainability pillars into our strategic planning and investment decision-making processes.

In 2020, Occidental was the first U.S. oil and gas company to announce goals to achieve net-zero GHG emissions for its total emissions inventory including use of sold products. These goals include achieving net-zero GHG emissions (i) from its operations and energy use before 2040, with an ambition to do so before 2035, and (ii) from its total carbon inventory, including the use of its sold products, with an ambition to do so before 2050. In 2020, Occidental also set various interim targets, including 2025 carbon and methane intensity targets, and Occidental was the first U.S. oil and gas company to endorse the World Bank’s initiative for zero routine flaring by 2030. In 2022, the Board of Directors adopted Occidental’s updated HSE and Sustainability Principles, based on engagement with shareholders, employees and other stakeholders. The Principles reinforce the alignment among Occidental’s core values, goals and strategies, underpin its Operating Management System, and help to guide the workforce across its businesses. In 2023, Oxy was an original signatory to the Oil and Gas Decarbonization Charter, committed funding to the World Bank’s Global Flaring and Methane Reduction Partnership, and established a new, medium-term 2030 methane intensity target.

Occidental seeks to meet its sustainability and environmental goals through its development and commercialization of technologies that lower both GHG emissions from industrial processes and existing atmospheric concentrations of CO 2. Occidental believes that carbon removal technologies, including DAC and CCUS, can, with incentives necessary for their development and deployment, provide essential CO 2 reductions to assist the world’s transition to a less carbon-intensive economy. Through fiscal year 2023, Occidental reduced estimated methane emissions by approximately 65% from 2019 and 16% from 2022, along with a 20% reduction in CO 2 equivalent emissions since 2019. The following actions helped Occidental advance its low-carbon business strategy in 2024:

■STRATOS construction is progressing on schedule, with commissioning and start-up of operations expected in mid-2025;

■Actively progressed its sequestration hub plans, including drilling stratigraphic data wells at multiple sequestration hub site locations, submitting 21 cumulative Class VI CO 2 injection well permit applications across its five proposed hub sites by year-end 2024, and signing award contracts in 2024 with the DOE for two of Occidental’s sequestration hubs that were awarded grants under the DOE’s Carbon Storage Assurance Facility Enterprise Initiative in 2023; and

■Achieved a global 80% reduction in routine flaring of gas in 2024 from its 2020 baseline through a rich gas injection project that recovers flared gas for injection for enhanced oil production and commissioning additional compression in Oman in 2024 while U.S. oil and gas operations sustained zero routine flaring.

The future costs associated with emissions reduction, carbon removal and CCUS to meet Occidental’s long-term net-zero GHG goals may be substantial and the execution of its plans and net-zero pathway depends on securing third-party capital investments. As reflected by the joint venture with BlackRock, Occidental is pursuing multiple avenues to fund these projects including project financing, long-term carbon removal or CCUS agreements, and identifying business opportunities with stakeholders in carbon-intensive industries.

KEY PERFORMANCE INDICATORS

Occidental seeks to meet its strategic goals by continually measuring its success against key performance indicators that drive total stockholder return. In addition to efficient capital allocation and deployment discussed below in the section titled “Oil and Gas Segment - Business Strategy”, Occidental believes its most significant performance indicators are:

OPERATIONAL

■Total spend per barrel - In 2025, Occidental will continue to focus on controlling total costs from a per-barrel perspective. Total spend per barrel is the sum of capital spending, general and administrative expenses, other operating and non-operating expenses and oil and gas lease operating costs divided by global oil, NGL and natural gas sales volumes.

■Daily production - Occidental seeks to maximize field operability and minimize production down-time.

FINANCIAL

■CROCE - CROCE is calculated as (i) the cash flows from operating activities, before changes in working capital, plus distributions from WES classified as investing cash flows, divided by (ii) the average of the opening and closing balances of total equity plus total debt.

■Credit rating - Improve financial leverage to a level well within investment grade credit metrics.

SUSTAINABILITY AND ENVIRONMENTAL

■Specific interim emissions reduction and emissions intensity targets to advance the goal of net-zero operational and energy use emissions before 2040, with an ambition to achieve before 2035.

■Milestones in specific carbon removal and CCUS projects that advance a net-zero total emissions inventory, including use of sold products, with an ambition to achieve before 2050.

■Facilitate deployment of carbon removal, CCUS and other solutions to advance total carbon impact past 2050.