How OXY (Occidental Petroleum) Makes Money in 2025: A Deep-Dive With Income Statement

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Understanding how a diversified energy and chemicals company like OXY Income Statement Overview makes money is essential for investors and anyone interested in the business of oil, gas, and chemicals. In this post, we break down OXY's quarterly income statement (Q2 2025) using a Sankey chart to visualize the financial flows — what comes in, where it goes, and what's left as profit.

Quick OXY Overview

OXY Income Statement Overview operates as a leading integrated energy company, focusing on the exploration and production of oil and gas, as well as manufacturing chemicals. Revenue comes primarily from the sale of crude oil, natural gas, and chemical products. The company’s business segments include Oil & Gas, Chemicals, and Other operations, with Oil & Gas being the dominant contributor.

Revenue Breakdown

• Total Revenue (Q2 2025): $6.32B (-7.3% YoY)
  • Oil & Gas Revenue: $5.01B (79.3% of total, -8.4% YoY)
  • Chemical Revenue: $1.23B (19.4% of total, -3.7% YoY)
  • Other: $81M (1.3% of total)
• Growth is powered by energy demand and commodity pricing, though revenue declined YoY due to lower realized prices and volumes.

Gross Profit and Margins

• Gross Profit: $1.91B (30.2% gross margin)
  • Cost of Revenue: $4.41B (+3.3% YoY)
  • OXY maintains moderate margins due to its scale in oil & gas production and integrated chemical operations.
• Most costs come from production expenses, raw materials, and energy inputs.

Operating Income and Expenses

• Operating Income: $857M (-46.3% YoY, 13.6% margin)
• Operating Expenses: $1.05B (+21.0% YoY)
  • R&D: Not separately disclosed for Q2 2025
  • SG&A: $284M (+9.7% YoY, 4.5% of revenue) — covers corporate overhead, sales, and administrative functions
  • OXY continues to control costs while expanding operations in chemicals and maintaining efficiency in oil & gas.

Net Income

• Pre-Tax Income: $738M (-54.9% YoY, 11.7% margin)
• Income Tax: $270M (36.6% effective tax rate)
• Net Income: $431M (-62.9% YoY, 6.8% net margin)
• OXY converts a moderate portion of sales into profit due to commodity price volatility and rising costs.

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What Drives OXY's Money Machine?

• Oil & Gas Production: 79%+ of revenue comes from upstream oil and gas sales, driven by global energy demand and market prices.
• Chemical Manufacturing: Contributes nearly 20% of revenue, with products used in industrial and consumer applications.
• Strategic Investments: OXY invests in expanding chemical capacity and optimizing oil & gas assets.
• Future Growth Areas: Carbon management and low-carbon initiatives, though not yet profitable, are positioned for long-term growth.

Visualizing OXY's Financial Flows

The Sankey chart below visualizes how each dollar flows from gross revenue, through costs and expenses, down to net income. This helps investors spot where value is created, what areas weigh on profits, and how efficiently the company operates.

• Most revenue flows into gross profit, with operating expenses (especially production costs and SG&A) taking the largest chunk.
• Even after significant costs, 6.8% of revenue drops to the bottom line.

Key Takeaways

• OXY's money comes overwhelmingly from oil & gas sales
• High gross and net margins illustrate the power of OXY's integrated energy business model
• Heavy investment in chemical manufacturing, balanced by efficiency in operating costs
• Ongoing growth is driven by energy demand, commodity prices, and strategic expansion in chemicals

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FAQ About OXY's Income Statement

1. What is the main source of OXY's revenue in 2025?

OXY generates over 79% of its revenue from oil & gas sales. Chemical manufacturing is the second largest source, contributing nearly 20% of total revenue.

2. How profitable is OXY in Q2 2025?

OXY reported net income of $431M in Q2 2025, with a net margin of approximately 6.8%, reflecting moderate profitability driven by scale and efficiency in its core segments.

3. What are the largest expense categories for OXY?

The biggest expenses on OXY's income statement are cost of revenue (production and raw materials) and operating expenses, particularly SG&A, which reached $284M in Q2 2025 as OXY manages corporate and sales functions.

4. Why does the Chemical segment operate at a loss?

The Chemical segment, despite generating $1.23B in revenue, faces high input and production costs. OXY aggressively invests in expanding chemical capacity and innovation, believing these will drive long-term growth—even if the division is less profitable today.

5. How does OXY's effective tax rate compare to previous years?

OXY's effective tax rate in Q2 2025 was 36.6%, higher than previous years. This elevated rate is primarily due to lower pre-tax income and reduced tax benefits from international structuring.