Occidental Petroleum Corp (OXY.N): GOA Drags Down 3q But Oil Cut Appears to Point to Disappointment Elsewhere – Model Update

OXY's 3q faced operational headwinds as pipeline downtime and damaged export equipment in the GOA pressured oil production, but we underline that these factors do not account for ~100bps of the oil cut decrease, implying additional disappointment elsewhere. OXY stated intentions to drop three Permian rigs while decreasing GOA spend and we thus decrease our 4q capex assumptions. OXY reiterated its $5.9bn capex target in FY'27 and while some suggest this is conservative, the company is unlikely to guide to a lower number until the budget is finalized. We expect to receive more color on the new debt paydown target, progress in the deep Barnett (efforts to extend the program have seen mixed results), and Stratos start-up (start-up around YE, but full EBITDA contribution not expected before 2028). Our 3q EBITDA estimate of ~$4bn is marginally below recent consensus and we expect some lingering GOA downtime impact into 4q. We update our model for recent commentary and commodity prices, and w