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Occidental reports approximately 19 gross operated Permian rigs and plans to place 485 to 515 gross company-operated wells online while advancing STRATOS commissioning and the Horn Mountain waterflood.
Published by Allstream Insiders.
Allstream Insiders Summary
Occidental is guiding to between $5.5 billion and $5.9 billion of capital expenditures, net of noncontrolling-interest contributions, in 2026, including approximately $3.1 billion for its Permian Basin program and approximately $800 million for the Rockies. Occidental describes the approximately $5.7 billion midpoint as about 8% below its comparable 2025 capital program, excluding its former chemical business.
The Permian activity plan includes approximately 19 gross operated rigs, 14 net rigs and between 485 and 515 gross company-operated wells placed online during 2026. Occidental’s Rockies program includes approximately three gross operated rigs, three net rigs and between 150 and 170 operated wells placed online.
Occidental also reported new milestones for two named projects. Its 1PointFive subsidiary has completed construction of all four capture trains at the STRATOS direct air capture facility in Ector County, Texas, and is progressing commissioning work. In the Gulf of America, the Horn Mountain waterflood is designed around two injection wells, with initial water injection expected during the second half of 2027.
Occidental 2026 Capital and Project Tracker
| Program or project | Company-reported scope | Stage | 2026 capital, activity or schedule |
|---|---|---|---|
| Companywide capital program | Oil and gas, exploration, midstream, corporate and Low Carbon Ventures | Active guidance | $5.5 billion-$5.9 billion of net capital expenditures |
| Permian Basin program | Delaware Basin, Midland Basin, EOR, facilities, maintenance and non-operated activity | Active | ~$3.1 billion, ~19 gross rigs, ~14 net rigs and 485-515 operated wells online |
| Rockies program | DJ Basin, Powder River Basin, facilities, maintenance and non-operated activity | Active | ~$800 million, ~3 gross rigs, ~3 net rigs and 150-170 operated wells online |
| STRATOS | Four-train direct air capture and central processing facility in Ector County, Texas | Component-level commissioning; full-plant commissioning pending | Full-plant commissioning expected to begin around year-end 2026; carbon dioxide injection is expected after the necessary commissioning milestones are completed |
| Horn Mountain waterflood | Two offshore water-injection wells with pumps, filtration and an injection line | Development | Initial injection expected during H2 2027; company-estimated peak uplift of ~20,000 boe/d |
Occidental’s capital guidance is net of contributions from noncontrolling interests. Rig totals, net-rig equivalents and wells-online figures are different activity measures and should not be added together.
Occidental Maintains a $5.5-$5.9 Billion 2026 Capital Range
Occidental’s current 2026 guidance calls for $5.5 billion to $5.9 billion of net capital expenditures, with a midpoint of approximately $5.7 billion. The company compares that midpoint with approximately $6.23 billion in 2025 net capital expenditures, excluding OxyChem.
Occidental attributes the approximately $550 million reduction to changes across four program areas:
| Capital-allocation change from 2025 | Company-reported change |
|---|---|
| U.S. unconventional | Approximately $400 million lower |
| Exploration | Approximately $200 million higher |
| Gulf of America, international and EOR | Approximately $100 million lower |
| Low Carbon Ventures | Approximately $250 million lower |
| Net capital reduction | Approximately $550 million |
These amounts describe changes from the 2025 allocation; they are not standalone 2026 budgets for each business. Occidental says about 70% of the U.S. unconventional reduction comes from cost savings, with the remainder tied to well performance and operating efficiencies that enabled lower activity.
Based on Occidental’s quarterly disclosures, Allstream calculates approximately $3.1 billion of capital expenditures, net of noncontrolling-interest contributions, during the first half of 2026, the majority of which related to oil and gas operations. The underlying company-reported total is approximately $3.093 billion. That first-half amount is historical spending and is not the same as the full-year guidance range.
Permian Basin Program Carries Approximately $3.1 Billion
Occidental assigns approximately $3.1 billion of its 2026 plan to Permian Basin activity. The program spans the Delaware and Midland basins, enhanced oil recovery, drilling, completions, equipment, production facilities, base maintenance and participation in wells operated by other companies.
The current activity plan includes:
- approximately 19 gross operated rigs;
- approximately 14 net rigs, calculated according to working interest and including the effect of joint-venture carries;
- between 485 and 515 gross company-operated wells online during 2026; and
- approximately $1.6 billion of first-half Permian capital, with 256 operated wells placed online during that period.
Occidental’s slide presentation shows the Delaware Basin carrying the largest share of its gross operated and net rig programs, followed by the Midland Basin and EOR activity. The net-capital program is primarily directed to drilling, completing and equipping wells, with smaller allocations for facilities, base maintenance and non-operated work.
Rockies Program Directs Approximately $800 Million to the DJ and Powder River Basins
Occidental plans approximately $800 million of 2026 capital across its Rockies position. The program includes activity in the DJ Basin and Powder River Basin, along with facilities, base maintenance and wells operated by other companies.
The company expects to operate approximately three gross rigs and three net rigs and place between 150 and 170 gross operated wells online during the year. During the first half, Occidental reported about $400 million of Rockies capital, three gross operated rigs, two net rigs and 84 operated wells online.
The DJ Basin represents the majority of the disclosed Rockies rig and wells-online program. Powder River Basin activity represents the smaller portion, but remains part of Occidental’s 2026 operated development plan.
Occidental Expands Longer Laterals and Simultaneous Completions
Occidental expects its U.S. unconventional well costs to improve by approximately 7% in 2026 compared with 2025. The company attributes the change to larger pads, longer laterals, simultaneous completions and other operating efficiencies.
Occidental reports the following 2026 drilling, completion and equipment cost indicators:
| Operating area | Expected well cost per lateral foot |
|---|---|
| Midland Basin | ~$515 per foot |
| Delaware Basin | ~$715-$865 per foot |
| Barnett | Less than $750 per foot |
The Delaware range reflects two lateral-length groups: wells longer than approximately 12,500 feet and wells around 10,000 feet. Occidental reports drilling-and-completion-only costs of approximately $620 per foot and $730 per foot, respectively, for those groups.
Across its Permian program, Occidental expects the average number of wells per pad to increase by approximately 25%. It also expects an approximately 10% increase in average U.S. unconventional lateral length and says more than 45% of U.S. unconventional completions are using simultaneous completion methods, compared with 10% previously.
For the industrial supply chain, these operating changes could affect pad construction, directional drilling, casing and cementing programs, pressure-pumping logistics, simultaneous-fracturing fleets, water systems, electrical infrastructure and production-facility standardization. Allstream identifies these as potential supply-chain work categories associated with the disclosed development approach. Occidental has not announced corresponding contracts, bid packages or procurement dates.
STRATOS Advances Through Four-Train Commissioning
Occidental reports that construction is complete on all four STRATOS capture trains and the central processing facilities, while commissioning, repairs and remaining completion work continue. Component-level commissioning is underway, including commissioning of Trains 3 and 4. The direct air capture facility is located in Ector County, Texas, near Odessa, and is designed to remove up to 500,000 metric tons of atmospheric carbon dioxide annually when fully operational.
During the latest commissioning program, Occidental reports that the project has:
- completed wet commissioning with water circulation;
- received Class VI permits for carbon dioxide sequestration;
- operated the carbon dioxide compression system at design pressure;
- added potassium hydroxide to begin the atmospheric capture process;
- built pellet inventory and operated the calciner; and
- started commissioning Trains 3 and 4.
Occidental says repairs to non-process components remain in progress and are unrelated to the capture technology. Full-plant commissioning is expected to begin around year-end 2026, with carbon dioxide injection expected after the necessary commissioning milestones are completed.
The second-quarter Form 10-Q reports approximately $1.3 billion of construction in progress within the STRATOS joint venture as of June 30. That figure is the reported carrying value of project assets under construction, not a newly announced total project budget. The filing also states that BlackRock had invested its full $550 million commitment to the joint venture by quarter-end.
STRATOS’s current stage could continue to require commissioning, controls integration, mechanical repair, compression, process-chemical handling, injection-well support, measurement and verification, and operations-readiness services. Allstream identifies these as potential supply-chain work categories associated with the disclosed project scope. Occidental has not announced corresponding contracts, bid packages or procurement dates.
Horn Mountain Waterflood Targets Initial Injection in 2027
Occidental expects initial water injection for the Horn Mountain waterflood during the second half of 2027. The Gulf of America project is designed to increase reservoir pressure using two injection wells.
The company describes the surface and subsea scope as requiring relatively limited additional equipment:
- water-injection pumps;
- filtration equipment;
- an injection line;
- a water-injection manifold; and
- two injection wells connected to the existing Horn Mountain infrastructure.
Occidental estimates that the project could deliver approximately 20,000 barrels of oil equivalent per day of peak production uplift, potentially double the field’s recovery factor and extend its producing life by more than two decades. The company also expects the project to reduce Horn Mountain’s production-decline rate to less than 10% by 2030.
Occidental presents an expected 40% to 50% after-tax internal rate of return for the Horn Mountain waterflood using a flat $60-per-barrel WTI assumption. The return estimate is company guidance based on that price case, not a guaranteed project outcome.
The company also identifies two additional Gulf of America waterflood opportunities in study for 2030 or later. Those projects remain at a study stage and should not be treated as sanctioned developments.
Allstream Perspective
Occidental’s current capital plan is concentrated in domestic upstream development, with the Permian and Rockies programs accounting for approximately $3.9 billion of company-reported 2026 activity. That combined amount is an Allstream arithmetic sum of two disclosed regional figures, not a separate Occidental budget category.
The near-term industrial activity is clearest in the Permian Basin, where approximately 19 gross rigs and up to 515 operated wells online support continuing demand across drilling, completions, facilities and field infrastructure. Occidental’s increased use of longer laterals and simultaneous completions could change the timing and concentration of equipment, crews, water and logistics required at multiwell pads.
STRATOS and Horn Mountain are at different project stages. STRATOS is progressing through start-up and commissioning, while Horn Mountain is preparing for initial water injection during the second half of 2027. Both projects could create specialized work, but neither disclosure should be interpreted as announcing contractor awards or procurement dates.
