Occidental Petroleum Corporation (OXY) Cash Flow Statement

The extreme OCF/NI ratios, such as 25.8x in 2025Q4 and -26.9x in 2024Q4, suggest that net income is heavily influenced by non-cash items and one-off gains or losses, while operating cash flow remains more stable. In 2026Q1, net income of $3.3B exceeded operating cash flow of $1.3B, implying significant non-cash gains, which may not be sustainable. Investors should monitor the gap between net income and operating cash flow, as it may indicate earnings quality concerns.

The FCF trajectory is highly erratic, with positive quarters followed by near-zero or negative quarters, reflecting the cyclicality of oil and gas prices. The 2026Q2 FCF margin of 28.9% is strong, but the prior quarter's negative margin underscores the volatility. Compared to peers like COP with a 33.5% FCF margin, OXY's margins are less consistent, suggesting that its cost structure and hedging strategy may not fully smooth cash flows.

CapEx/Revenue ratios have ranged from 15.0% to 37.7%, with the highest in 2026Q2, suggesting that OXY is investing heavily in growth or maintenance projects. The elevated capital intensity, combined with volatile operating cash flow, means that free cash flow is often thin, especially in weaker price environments. This may limit the company's ability to return capital to shareholders without increasing leverage.

The large working capital swings, particularly the $1.9B outflow in 2026Q1, suggest that OXY's operating cash flow is not purely driven by earnings but also by short-term balance sheet movements. This volatility may reflect changes in commodity prices affecting inventory values and settlement terms. Investors should consider that working capital dynamics can distort quarterly cash flow comparisons and may not indicate a long-term trend.

Dividends have steadily increased from $332M in 2024Q1 to $839M in 2026Q2, while buybacks have been minimal and sporadic. This suggests that management is prioritizing a stable dividend over share repurchases, possibly to maintain investor confidence during volatile commodity cycles. However, the rising dividend payout, combined with high capex, may strain free cash flow in downturns, as seen in 2026Q1 when FCF was negative.

The cumulative OCF of $28.7B is more than double cumulative net income, indicating that earnings are understated relative to cash generation due to large non-cash charges such as depreciation and amortization. This suggests that OXY's cash-generating ability is stronger than net income suggests, but the volatility in quarterly OCF/NI ratios indicates that the relationship is not stable. The divergence may also reflect timing differences in working capital and one-off items, warranting a longer-term view.