Fitch Ratings upgraded Occidental Petroleum Corp.'s long-term issuer default rating and senior unsecured rating to 'BBB' from 'BBB-' and assigned a stable outlook, citing faster-than-planned debt reduction and clearer visibility on the company’s deleveraging trajectory.
The upgrade follows $5.4 billion in debt repayments year to date and what Fitch described as visibility on an additional $700 million in reductions tied to a recently announced tender. Those repayments were funded with proceeds from Occidental’s sale of OxyChem, which generated $8.0 billion after tax, according to the information cited by Fitch. Following those actions, principal debt stands at around $15 billion and total debt is expected to fall to about $14.3 billion when the tender closes.
Over the past 20 months Occidental has retired approximately $13.9 billion of debt, a pace that Fitch said has reduced pro forma interest expense by roughly $740 million. The company’s aggregate debt level is now about $3 billion lower than it was after the CrownRock acquisition.
Fitch’s assessment emphasizes several structural features of Occidental’s business. The agency noted the company’s large scale and a liquids-weighted production mix, competitive netbacks, a strong position in the Permian Basin and broader-than-average geographic diversification among exploration and production peers.
Occidental produces about 1.48 million barrels of oil equivalent per day. Production is divided between U.S. onshore and offshore assets - including the Permian, DJ/Rockies, Gulf offshore and the Powder River Basin - and international operations in Algeria, Oman, the UAE and Qatar. The CrownRock deal materially increased the Permian’s share of output to roughly 800,000 barrels of oil equivalent per day.
Operationally, Occidental has seen near-term benefits from lower new-well costs and improved well performance. Those factors contributed to an estimated $575 million reduction in oil and gas capital expenditures and operating expenses in 2025. The company is targeting an additional $500 million of structural cost savings in 2026.
Fitch also highlighted that, while interest costs and total indebtedness remain somewhat elevated relative to peers, those metrics are in decline. The rating agency incorporated preferred interest when assessing Occidental’s interest burden and leverage position.
Bottom line: Fitch’s upgrade reflects tangible progress on Occidental’s stated deleveraging plan, supported by sizable after-tax proceeds from the OxyChem sale and confirmed reductions in capex and operating expense, while acknowledging that leverage and interest costs remain higher than many peers even as they trend downward.