How OXY (Occidental Petroleum) Makes Money in 2026: A Deep-Dive With Income Statement

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Understanding how a global energy company like Occidental Petroleum (OXY) makes money is essential for investors and anyone interested in the business of oil and gas. In this post, we break down Occidental Petroleum's quarterly income statement (Q3 2025) using a Sankey chart to visualize the financial flows — what comes in, where it goes, and what's left as profit.

Quick Occidental Petroleum Overview

Occidental Petroleum operates as an integrated energy company focused on exploration, production, midstream, marketing, and chemicals. Revenue comes primarily from oil and gas production, supplemented by chemical products and midstream services. The company manages upstream operations in key basins like the Permian, alongside downstream chemical manufacturing and midstream transportation.

Revenue Breakdown

• Total Revenue (Q3 2025): $6.62B (-7.7% YoY)
  • Oil & Gas Revenue: $5.40B (81.6% of total, -5.1% YoY)
  • Chemical Revenue: $1.17B (17.6% of total, -6.4% YoY)
  • Midstream & Marketing Revenue: $0.31B (4.6% of total, -30.5% YoY)
  • Corporate & Other Revenue: -$0.25B (-3.8% of total, +20.0% YoY)
  • Growth is powered by core oil and gas production, though headwinds from lower commodity prices contributed to overall decline.

Gross Profit and Margins

• Gross Profit: Not directly reported (inferred from operating income and expenses).
  • Cost of Revenue: Not specified.
  • Occidental Petroleum maintains moderate margins due to high fixed costs in energy production and exposure to volatile commodity prices.
• Most costs come from production-related expenses (inferred as primary driver before operating expenses) and operating expenses.

Operating Income and Expenses

• Operating Income: $0.84B (-26.1% YoY, 12.7% margin)
• Operating Expenses: $1.17B (-57.2% YoY)
  • R&D: Not reported.
  • SG&A: $0.28B (+3.4% YoY, 4.2% of revenue) — covers general administrative, selling, and overhead costs typical for energy operations.
  • Occidental Petroleum continues to control costs while maintaining efficiency amid fluctuating energy markets.

Net Income

• Pre-Tax Income: $1.00B (-30.3% YoY, 15.0% margin)
• Income Tax: $0.32B (32.5% effective tax rate)
• Net Income: $0.66B (-41.7% YoY, 10.0% net margin)
• Occidental Petroleum converts a moderate portion of sales into profit due to operational scale in oil production and other income offsets.

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What Drives Occidental Petroleum's Money Machine?

• Oil & Gas Revenue: 81.6%+ of revenue — core driver from upstream production in major basins, sensitive to oil prices.
• Chemical Segment Performance: Generates 17.6% of revenue; provides diversification but also declined 6.4% YoY.
• Midstream Investments: Supports transportation and marketing (4.6% of revenue); heavy exposure to volume fluctuations (-30.5% YoY).
• Future growth areas: Permian Basin expansion and carbon capture initiatives, though not yet fully reflected in quarterly profits.

Visualizing Occidental Petroleum'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 operating income, with operating expenses (especially overall op-ex at $1.17B) taking the largest chunk.
• Even after significant taxes and interest expenses, 10.0% of revenue drops to the bottom line.

Key Takeaways

• Occidental Petroleum's money comes overwhelmingly from oil and gas production
• High gross and net margins illustrate the power of Occidental Petroleum's integrated energy model
• Heavy investment in midstream and chemicals, balanced by efficiency in operating costs
• Ongoing growth is driven by upstream production resilience despite YoY declines

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FAQ About Occidental Petroleum's Income Statement

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

Occidental Petroleum generates over 81.6% of its revenue from oil and gas. Chemical revenue adds 17.6%, with midstream at 4.6%.

2. How profitable is Occidental Petroleum in Q3 2025?

Occidental Petroleum reported net income of $0.66B in Q3 2025, with a net margin of approximately 10.0%, reflecting moderate profitability driven by core energy production amid market volatility.

3. What are the largest expense categories for Occidental Petroleum?

The biggest expenses on Occidental Petroleum's income statement are operating expenses, particularly Research & Development (R&D) and Sales, General & Administrative (SG&A) costs. R&D investment reached not reported in Q3 2025, as Occidental Petroleum prioritizes exploration and production efficiency.

4. Why does Corporate & Other operate at a loss?

Corporate & Other, despite generating -$0.25B in revenue, posted an operating loss contribution in Q3 2025. This is because Occidental Petroleum aggressively invests in corporate overhead and eliminations, believing these will drive long-term growth—even if the division is unprofitable today.

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

Occidental Petroleum's effective tax rate in Q3 2025 was 32.5%, consistent with previous years. This moderate rate is primarily due to standard corporate taxation on energy profits.