Key Points
Higher oil prices boosted Occidental's second-quarter profits.
The energy exploration company is prudently paying down debt.
Shares of Occidental Petroleum (NYSE: OXY) rose on Thursday after the oil and gas producer raised its cash payouts to investors.
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Rising production and surging prices are a lucrative combination
Occidental produced an average of 1,433 thousand barrels of oil equivalent per day (Mboed) in the second quarter, besting its own internal targets.
"We are unlocking more from our assets through our industry-leading advanced recovery capabilities and differentiated value-based development approach," CEO Richard Jackson said.
This strong operating performance, combined with a 38% surge in realized crude oil prices to $96.78 per barrel, drove Occidental's pre-tax income from oil and gas to $2.8 billion, up from $1 billion in the first quarter and $934 million in the second quarter of 2025.
The energy producer's midstream and marketing segment also swung to a pre-tax profit of $1.3 billion, compared to a loss of $87 million in Q1.
All told, Occidental's adjusted net income checked in at $2.4 billion, or $2.40 per share.
The company also generated $3 billion in free cash flow, enabling it to pay down its debt by $1.9 billion. At $11.8 billion, Occidental's total debt is now within range of management's $10 billion goal.
Boosting cash returns to shareowners
Occidental's strengthening financial position allows it to reward its investors with larger dividends. The oil and gas leader raised its quarterly cash payout by 8% to $0.28 per share. That equates to a 2% annualized yield at its current stock price near $56.
"Our second-quarter results demonstrate the strength of Oxy's resources and the competitive advantages that position us for continued value creation," Jackson said.
Joe Tenebruso has no position in any of the stocks mentioned. The Motley Fool recommends Occidental Petroleum. The Motley Fool has a disclosure policy.