Occidental Petroleum’s Strategic Pivot Under Scrutiny Ahead of Earnings

Investors are keenly awaiting Occidental Petroleum's upcoming quarterly report, set for release after the U.S. market closes on February 18, 2026. The company's financial health is under the microscope as it navigates a dual challenge: lower oil prices and a significant strategic shift following a major asset sale.

The broader environment for energy producers has become more complex. Recently, industry giant BP unsettled markets by suspending its share buyback program to fortify its balance sheet. This move has intensified the focus on sector-wide commitments to cash flow and shareholder returns. Compounding this, oil prices retreated last week, with West Texas Intermediate crude declining approximately 5.5% to around $61.61 per barrel.

In this context, market experts at TD Cowen updated their stance on Occidental Petroleum just ahead of the earnings announcement. Yesterday, the investment bank upgraded the stock to a "Hold" rating, assigning a price target of $48.00. This suggests limited near-term upside from its recent trading level in the mid-$46 range. The broader market consensus remains neutral, with an average price target of $47.48.

Should investors sell immediately? Or is it worth buying Occidental Petroleum?

The Debt Reduction Imperative

A central theme of the forthcoming report will be the company's progress on debt reduction. This follows the completion of a landmark deal on January 2, which saw Occidental sell its OxyChem division to Berkshire Hathaway for $9.7 billion in cash. Management has indicated plans to allocate roughly $6.5 billion of these proceeds toward liability reduction.

The key question for shareholders is how swiftly this multi-billion dollar transaction will reshape the balance sheet. Occidental's leadership has set a clear target: to drive core debt below the $15 billion threshold. The figures released on February 18 will be scrutinized for their impact on the leverage ratio and the outlook for free cash flow throughout the remainder of 2026.

• Earnings Date: February 18, 2026 (after U.S. market close)
• Expected Earnings Per Share (EPS): $0.33
• Expected Revenue: Approximately $6.02 billion
• Debt Target: Reduction to under $15 billion

Looking Ahead: Capital Allocation Strategy

The earnings release will be followed by a management conference call on February 19. This event is expected to provide a detailed breakdown of the quarterly results and, more importantly, offer clarity on the future capital allocation strategy. Investors will be listening for guidance on how the company intends to balance further debt repayment, potential shareholder returns, and operational investments in a volatile commodity price environment. The coming days will reveal whether Occidental's strategic maneuvers are translating into a more stable financial foundation.