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Occidental Petroleum Finance

To maximize shareholder value through disciplined financial management while advancing our low-carbon strategy for long-term sustainable growth

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To maximize shareholder value through disciplined financial management while advancing our low-carbon strategy for long-term sustainable growth

Strengths

  • PORTFOLIO: Diversified energy assets with strong Permian Basin position
  • CARBON: Leading position in carbon capture through 1PointFive
  • BALANCE: Substantial debt reduction of over $10.5B since 2019
  • CASHFLOW: Consistent free cash flow generation exceeding $8B annually
  • EXPERTISE: Strong technical capabilities in enhanced oil recovery

Weaknesses

  • DEBT: Still carrying $18.5B in total debt despite reduction efforts
  • VOLATILITY: High exposure to oil price fluctuations affects planning
  • INTEGRATION: Anadarko acquisition still creating operational challenges
  • LEGACY: Older assets requiring significant maintenance capital
  • COMPLEXITY: Multiple business segments creating financial reporting hurdles

Opportunities

  • POLICY: Growing government incentives for carbon capture projects
  • EXPANSION: Direct Air Capture technology commercialization potential
  • ESG: Enhanced investor appeal through carbon management leadership
  • DIGITAL: Financial system modernization to improve cost controls
  • PARTNERSHIPS: Strategic JVs to share capital costs for major projects

Threats

  • REGULATION: Increasing environmental compliance costs and restrictions
  • COMPETITION: Intensifying clean energy transition pressures
  • CAPITAL: Rising cost of capital as investors scrutinize fossil fuels
  • TALENT: Difficulty attracting top financial talent to energy sector
  • TECHNOLOGY: Disruptive energy innovations reducing fossil fuel demand

Key Priorities

  • DEBT: Accelerate deleveraging to strengthen financial flexibility
  • CARBON: Scale carbon management business to diversify revenue
  • DIGITAL: Modernize financial systems for improved decision making
  • TALENT: Develop next-gen finance capabilities for energy transition

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To maximize shareholder value through disciplined financial management while advancing our low-carbon strategy for long-term sustainable growth

BALANCE STRENGTH

Fortify financial foundation for sustainable growth

  • DEBT: Reduce total debt by $3B through disciplined capital allocation and asset optimization
  • LIQUIDITY: Maintain minimum $4B liquidity position while extending debt maturity profile
  • EFFICIENCY: Implement zero-based budgeting to reduce G&A expenses by 12% versus 2023
  • RATING: Achieve credit rating upgrade to BBB by strengthening key financial metrics
CARBON LEADERSHIP

Scale carbon management for diversified growth

  • INVESTMENT: Finalize financial structure for $1.2B STRATOS DAC facility with <15% capital from OXY
  • FINANCING: Secure $750M in green bonds or sustainability-linked financing for carbon projects
  • REPORTING: Launch comprehensive carbon business segment financial reporting structure by Q3
  • PARTNERSHIPS: Close 3 new strategic partnership agreements with Fortune 500 carbon offtakers
DIGITAL REVOLUTION

Transform financial systems for enhanced decision-making

  • PLATFORM: Complete implementation of new enterprise financial management system by Q4
  • AUTOMATION: Achieve 40% reduction in manual finance processes through intelligent automation
  • ANALYTICS: Deploy 5 new AI-powered financial dashboards for executive decision support
  • EFFICIENCY: Reduce monthly close process from 10 days to 5 days through system optimization
TALENT ELEVATION

Build next-gen finance capabilities for energy transition

  • SKILLS: Train 85% of finance staff on energy transition economics and carbon market dynamics
  • ACQUISITION: Recruit 5 strategic hires with expertise in sustainable finance and ESG reporting
  • DEVELOPMENT: Implement finance rotation program with dedicated carbon business exposure
  • CULTURE: Achieve 80% engagement score in finance organization through targeted initiatives
METRICS
  • FREE CASH FLOW: $9.2B (2024)
  • NET DEBT TO EBITDA: <1.5x
  • CARBON BUSINESS REVENUE: $500M
VALUES
  • Integrity: We are honest, forthright and ethical in all our endeavors
  • Innovation: We pursue creative solutions to deliver exceptional results
  • Sustainability: We operate responsibly with respect for the environment
  • Excellence: We strive for outstanding performance in everything we do
  • Collaboration: We work together across functions to achieve common goals

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Align the learnings

Occidental Petroleum Finance Retrospective

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To maximize shareholder value through disciplined financial management while advancing our low-carbon strategy for long-term sustainable growth

What Went Well

  • CASHFLOW: Generated $8.5B free cash flow exceeding analyst expectations
  • DEBT: Reduced total debt by $3.2B, improving balance sheet flexibility
  • PERMIAN: Achieved production growth of 8% with lower capital intensity
  • CARBON: Secured major customer agreements for 1PointFive DAC facilities
  • MARGINS: Maintained industry-leading operating margins despite inflation

Not So Well

  • GUIDANCE: Q4 earnings missed consensus by 6% due to weather disruptions
  • CAPEX: Carbon management segment exceeded capital budget by 11% in Q4
  • INTERNATIONAL: Underperformance in Gulf of Mexico assets vs projections
  • COSTS: Higher than anticipated operating expenses in midstream business
  • HEDGING: Sub-optimal hedge position limited upside during price rallies

Learnings

  • INTEGRATION: Cross-functional planning critical for carbon business success
  • VISIBILITY: More granular financial disclosures needed for segment analysis
  • TIMELINE: Carbon capture projects require longer development runways
  • ALLOCATION: Balanced capital deployment between growth and debt reduction
  • COMMUNICATION: Earlier signaling of potential misses improves market trust

Action Items

  • FORECASTING: Implement enhanced financial modeling with sensitivity analysis
  • REPORTING: Develop improved segment reporting for carbon management business
  • EFFICIENCY: Launch zero-based budgeting initiative across all departments
  • ALIGNMENT: Redesign incentive structures to prioritize free cash flow growth
  • TRANSPARENCY: Enhance investor communications on capital allocation strategy

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To maximize shareholder value through disciplined financial management while advancing our low-carbon strategy for long-term sustainable growth

Strengths

  • DATA: Robust operational data collection across global operations
  • INVESTMENT: Early adopter of AI for subsurface data analysis
  • LEADERSHIP: Executive team commitment to digital transformation
  • FOUNDATION: Established data governance frameworks for AI readiness
  • EXPERIENCE: Successful pilot projects in predictive maintenance

Weaknesses

  • INFRASTRUCTURE: Legacy financial systems limiting AI integration
  • TALENT: Limited specialized AI expertise within finance function
  • SILOS: Departmental data isolation hampering holistic analysis
  • ADOPTION: Inconsistent embrace of AI tools across finance teams
  • GOVERNANCE: Underdeveloped AI risk management framework

Opportunities

  • FORECASTING: Enhanced financial modeling with machine learning
  • AUTOMATION: Treasury and accounting process optimization with AI
  • INSIGHTS: Advanced analytics for capital allocation decisions
  • RISK: Improved risk assessment through predictive algorithms
  • REPORTING: Automated financial reporting and disclosure preparation

Threats

  • SECURITY: Increased cybersecurity risks with AI implementation
  • COMPLIANCE: Evolving regulatory landscape for AI in finance
  • DISRUPTION: Potential workforce resistance to AI-driven changes
  • COMPETITION: Industry peers advancing AI capabilities more rapidly
  • INVESTMENT: Difficulty quantifying ROI for AI finance initiatives

Key Priorities

  • MODERNIZATION: Upgrade core financial systems to enable AI adoption
  • CAPABILITIES: Build specialized AI talent within finance organization
  • AUTOMATION: Implement AI for high-value financial processes
  • GOVERNANCE: Develop robust framework for responsible AI deployment

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AI Disclosure

This report was created using the Alignment Method—our proprietary process for guiding AI to reveal how it interprets your business and industry. These insights are for informational purposes only and do not constitute financial, legal, tax, or investment advice.

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