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Qatar intensifies U.S.-Iran peace efforts as Gulf security fears persist



Qatar continued its diplomatic push to broker an end to the U.S.-Iran war this week, but prospects of a breakthrough remain uncertain. 

On Tuesday, a Qatari government spokesperson said that Monday’s closed-door talks between the U.S. and Iran were “focused on making progress”, but that the timeline for a potential agreement remained unclear.

“We cannot say how close or how far away an agreement is,” Ibrahim bin Sultan Al Hashmi, director of the foreign ministry’s media and communication department, told a weekly briefing in Doha. 

His remarks followed those of Qatari Prime Minister Sheikh Mohammed bin Abdulrahman Al Thani who described his White House meeting on Monday with U.S. President Donald Trump and Vice President JD Vance as “positive”. 

Emerging from the latest round of shuttle diplomacy, Al Thani said he was “Grateful for the positive discussions on reaching a deal and bringing peace to the region.” Before Al Thani’s visit to Washington, Qatari officials had held talks in Tehran as well as consultations with other regional governments. 

On Tuesday, Al Thani made an unscheduled stop at the G7 foreign ministers meeting in Paris where top European diplomats have reportedly been pressing U.S. Secretary of State Marco Rubio to avoid any new escalation against Iran.  

Trump, meanwhile, took to Truth Social to argue that Qatar, Saudi Arabia, Kuwait and the UAE “would prefer the status quo”, referencing both the US naval blockade and restrictions on Iran’s overland trade under Operation Iron Gate. Echoing Qatar’s comments, he said: “We are seeing positive momentum toward an end to this conflict” but warned that the U.S. is “locked and loaded” should there be any changes in regional developments, adding “that seems to be quite unlikely”. 

Speaking at a geopolitical forum in Abu Dhabi on Monday Anwar Gargash, diplomatic advisor to UAE President Mohamed bin Zayed, said: “We should prepare for a long period of uncertainty in which neither a decisive resolution nor stable regional ​order can be taken for granted.” This would require the UAE to invest in its defensive capabilities and stronger international security partners, he said. 

The number of attacks on commercial shipping in and around the Strait peaked in October, reaching its highest monthly level since the U.S.-Iran war began, with more than 30 incidents recorded, according to the U.K. Maritime Trade Operations. 

On Tuesday, GCC defence ministers approved plans to establish a joint command center in Kuwait, with member states contributing forces to strengthen military integration across the six-nation bloc. 

The advanced command will form part of the existing Unified Military Command which is headquartered in Riyadh. However, the announcement offered no details on the number or composition of forces to be assigned, the command’s specific mandate or when it would become operational.    

The continuing uncertainty did not deter Barclays from opening its new office in Riyadh’s financial district on Monday. It marks the U.K. lender’s return to the market after more than a decade as it seeks to expand its Gulf business. Barclays’ Asia-Pacific CEO Jaideep Khanna told Bloomberg last month that the bank was a “big believer” in the Middle East.  

Riyadh’s business district has been under remote work orders for about a month, while ongoing travel restrictions continue to create additional challenges for commuting from nearby Gulf hubs, as well as for global executives flying directly into the kingdom. 

Melissa Hancock

As ever, thanks for reading, and do keep in touch with your thoughts and ideas.
melissa.hancock@fortune.com 

EMIRATES’ PROFITS HIT TURBULENCE

Iran-U.S. war clouds Emirates’ financial performance 

Emirates Group’s profits fell 66% for the April to September period as the U.S.-Iran war reduced passenger demand and drove up global jet fuel costs.  

The Dubai-headquartered airline made a profit before tax of AED 4.1bn ($1.1bn) in the first half of its 2026-27 financial year, compared with the AED12.2bn ($3.32 billion) it made in the same period last year. 

The airline carried 21.8 million passengers, 22% fewer than a year earlier while available seat kilometers—the industry’s ​standard measure of passenger-carrying capacity—fell 17%. 

Cargo operations helped to cushion the decline, with Emirates SkyCargo transporting 1.2 million tons over the six-month period. While this represented a 1% decline year-on-year, it still translated to a 52% increase in revenue, as the war prompted more shipping companies to turn to air transport.  

Emirates fuel price risk management strategy significantly offset the impact of a 60% jump in fuel prices. Gains of AED 7.1bn ($1.9bn) from fuel hedging cut the net increase in costs to 13% but fuel remains the largest component of the airline’s operating cost at 34%. 

Emirates had restored operations across 91% of its network by the end of September, serving 150 airports in 78 countries and territories. At the end of March, it was flying at 58% of its passenger capacity to 122 destinations in 65 countries. 

While other airlines’ operations have been affected by regional airspace restrictions and travel advisories, Emirates has stepped in to meet passenger demand.  

In total, 11 airlines, including some of Emirates’ key rivals, currently maintain suspensions on flights to Dubai. Last week, British Airways resumed direct flights to Dubai after an eight-month suspension.  

MIND THE DIGITAL GAP

Mobile World Congress Doha puts MENA’s digital divide center stage 

The great and the good of the telecommunications industry gathered in Doha this week to attend the second Gulf annual Mobile World Congress.  

The event opened with a call to action from H.E. Mohammed bin Ali al-Mannai, Qatar’s minister of communications and information technology, to align global industry standards and bridge the Middle East and Africa’s connectivity gap. 

Almost half (48%) of MENA’s population used mobile internet in 2025, according to a GSMA report released at MWC Doha. However, 49% remained offline despite living within coverage.  

Mobile connectivity is quickly becoming a core pillar of the region’s economic diversification, with the Gulf being home to some of the world’s most advanced 5G markets.  

Mobile technologies and services, which generated $380 billion of economic value across MENA in 2025, equivalent to 5.8% of regional GDP, are forecast to reach $470 billion by 2030.  

Meanwhile, 5G is expected to account for 40% of regional connections by 2030, up from 9% in 2025, as mobile operators invest a forecast $88.9 billion over the five-year period. 

DUBAI’S DIGITAL LEAP

Banking on innovation: Dubai doubles down on its ambition to become a global fintech hub 

In just under a decade, the Dubai International Financial Centre (DIFC) has become a hub for innovation and is now home to more than 2,000 AI, fintech, and technology companies—a sizeable leap from just 11 startups that joined its accelerator in 2017. 

FinTech Hive is both the region’s first and largest financial technology accelerator and has played a key role in modernizing the emirate’s financial sector.  

HSBC, BNP Paribas, Bank of America, Morgan Stanley, Standard Chartered, Visa, Ripple and Network International, were among the major names who attended Dubai Future Finance Week last week, a five-day event that incorporated the two-day Dubai FinTech Summit. 

DIFC announced a strategic partnership with Japan’s Mizuho Financial Group to support the international expansion of Japanese startups and deepen economic ties between the UAE and Japan. The partnership will give up to 6,000 Mizuho startup clients access to DIFC’s Innovation Hub.  

DIFC also announced plans for a Dubai Fintech Stack to support founders with payments, onboarding, risk, financial security and AI integration. 

Speaking as part of a headline session at Dubai FinTech Summit, Noel Quinn, chair of the wealth manager Julius Baer and former group CEO of HSBC, predicted that AI is set to become an integral part of every bank’s technology stack, particularly in monitoring payments for potential money laundering and sanctions violations. 

You can read my article here which takes a closer look at how UAE banks are embedding AI into their operations 

The Big Number

$67 billion  

ADIPEC 2026, Abu Dhabi’s flagship annual energy conference, concluded last week, with more than 50,000 deals worth an estimated $67 billion signed over four days. ADIPEC 2025 saw $46 billion in deals signed over the course of the event. 

The 3 things we enjoyed reading this week

  • Before the Iran war, the Gulf’s biggest challenge was reducing its dependence on oil. As Bloomberg Economics’ Ziad Daoud argues, the region must now pursue diversification on three fronts: developing economies beyond hydrocarbons, broadening its security partnerships beyond Washington, and establishing alternative trade and energy routes to the Strait of Hormuz. Gulf states are already exploring new industries, regional alliances, and infrastructure, but failure to address these vulnerabilities could have consequences far beyond the region. 

 

  • U.S. technology company Gecko Robotics is deploying advanced wall-climbing robots across ADNOC energy facilities to help identify structural damage and weaknesses in energy infrastructure, particularly following attacks on Gulf assets. Its new Raptor robot uses sensors and sound waves to inspect facilities, collecting millions of data points up to three to five times faster than its predecessor, while allowing operations to continue uninterrupted, reports The National. The technology could significantly accelerate damage assessments and repairs, with the company claiming it can reduce data collection costs by up to 50 times. Gecko is also considering manufacturing the robots in the UAE, reflecting the Gulf’s growing focus on robotics, AI, and locally developed technology to strengthen energy security and infrastructure resilience. 

 

  • Yemen’s Iran-backed Houthis have effectively imposed their own shipping controls in the Red Sea through an often-overlooked application system for captains seeking transit clearances. The process is surprisingly simple: email the rebels. This Wall Street Journal investigative piece does a deep dive into how, in early 2024, the Houthis set up the Humanitarian Operations Coordination Center, an administrative body responsible for processing shipping applications and communicating the group’s sanctions. The Houthi militants, if they choose to reply, will typically do so within 24 hours, according to crew members and emails seen by the Journal. It provides an example from September when the Houthis approved passage for the Zhong Cheng Chang Ling, a Chinese containership, which sailed through the Red Sea without incident. 

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AI Herding, Retail Investors, and New Sources of Alpha


Every analytical method works within limits. The expert’s edge is knowing where those limits are. AI hands the novice the method without the limits.

This is no longer a thought experiment. In a March 2026 Investing.com survey of 938 US investors, 51% said they use AI tools regularly or occasionally, and generating trading ideas was among the uses they cited (34%).

The gap between method and limits appears at every horizon:

  • Discounted cash flow (DCF), months to years. The arithmetic is easy. The judgment sits in the growth, margin, capital spending and discount-rate assumptions, and in knowing which of them do not fit this business.
  • Multiples, weeks to months. A chatbot will readily compare four companies on price-to-earnings. The expert knows why they deserve different multiples: different cycles, balance sheets, accounting or growth quality.
  • News and central bank statements, minutes. A model reads the words of a press release or a Fed statement. The expert reads what changed, what was left out and what the market already expected.

In each case the novice’s error is not bad arithmetic. It is a valid method applied where it does not belong.

These examples come from practice, not from a study. The research so far shows that AI-guided decisions move together, not yet why they go wrong.

Those choices also look alike, because the tools look alike. In a 2026 SSRN paper, Steven Edwards had GPT-4o play 100 investor personas, from value to momentum, and asked each one separately to pick 50 US stocks. He then took the 50 stocks the personas named most often and called them the consensus portfolio. Just 25 personas, drawn at random, recovered about 88% of it. The consensus portfolio also had 92% of its stocks in common with the picks from a single neutral prompt, with no persona at all. Edwards concludes that models trained on the same data make correlated picks, whatever the persona.

Similar is not the same as wrong. That consensus portfolio returned 29.5% a year against 15.3% for an S&P 500 fund over the test period, which the author attributes to its tilt toward large technology stocks. The opportunity comes by two routes. When the shared view is wrong, everyone makes the same error at once. When it is right, everyone acts on it at once, and the crowd may carry the price past fair value.

Independent mistakes point in different directions and partly cancel out. Shared mistakes add up and move prices.

Researchers have started to document this risk. A 2026 working paper by Xiaoxue He of Lancaster University, not yet peer reviewed, uses 14 unexpected ChatGPT outages during US trading hours as a natural experiment. When ChatGPT was available, retail trading was more correlated, within stocks and across industry peers, and trades moved prices more: price impact was about 12.5% higher.

The two sides of the trade differed. Retail selling pushed prices too far, then reversed over the next one to five trading days. During outages, that reversal largely disappeared. The author’s reading: A shared low-cost signal may crowd out investors’ own information. Retail buying, by contrast, became more informative with ChatGPT.

The evidence so far covers short horizons. For longer horizons, where the errors would come from valuations and multiples, there is no direct study yet: that part is an expectation, not a finding.

Bilt Partners With Lowe’s – Doctor Of Credit


Lowe’s announced today a partnership with Bilt.

Press Release

Customers can link their MyLowe’s Rewards account in Bilt and earn 1 Bilt point per dollar spent at Lowe’s and lowes.com. This would stack on top of whatever regular rewards you earn from the credit card or shopping portal or card-linked offer. And you don’t have to pay for the purchase with your Bilt card.

You can also use Bilt Cash to buy the $99/year Lowe’s HomeCare+ subscription. 

Nice little addition there for Lowe’s shoppers. For purchases to qualify, make sure you’re logged into your linked MyLowe’s Rewards account online or provide your linked phone number in-store.

There are a slew of other Bilt announcements today found at this Bilt link, let us know if you see anything interesting. 

Borrower problems are surfacing later, at closing, JD Power finds


“I think it speaks well for the industry, given the market, the challenges out there, the financial challenges, the challenges in the housing market,” Gehrke said. “They’re delivering.”

Several measures of the personal side of the experience moved lower, he said, including trust and communication. Fewer borrowers also say they have a main point of contact, 88% against 91% a year ago, according to the study.

“Not a big drop, but they’re falling back slightly. Not something that says, ‘Hey, this is a real problem.’ But it’s a hint at it, and it’s consistent across these,” Gehrke said.

Among borrowers who had problems, a greater share cite them after approval or on closing day, according to the study. The study also asks whether lenders honored their promises, especially on rates, points and pricing, Gehrke said.

Rate volatility did not stand out as the cause, he said, and problems tied to rates were at the same level as the past two or three years.

Millions of People’s Wealth Isn’t in a Bank Account — It’s in Jewelry


Opinions expressed by Entrepreneur contributors are their own.

Key Takeaways

  • When people inherit jewelry, emotional value and real financial worth collide. What they rarely understand is the asset itself.
  • This generational hand-off is occurring alongside a seismic shift in consumer behavior: the mainstream adoption of secondhand commerce.
  • The companies that win this transition won’t simply be those offering to buy these assets. They will be the trusted institutions that help heirs understand what they have and empower them to decide what happens next.

When economists and financial advisors talk about the Great Wealth Transfer, the conversation almost always centers on traditional financial assets: brokerage accounts, primary residences, retirement accounts and family businesses.

These numbers are massive, to be sure. Cerulli Associates estimates that $124 trillion will transfer through 2048, with $105 trillion passing directly to heirs. Nearly $100 trillion of that sum will originate with baby boomers and older generations.  

Yet wealth does not sit exclusively on a balance sheet. It lives inside our homes, stored in safes, tucked into back drawers and resting quietly in velvet jewelry boxes.

It’s estimated that half of the gold ever mined in human history exists today as jewelry. Millions of families are about to inherit gold jewelry, luxury watches, diamonds, heirloom rings, coins and precious metals alongside standard investment portfolios.

We are not just approaching a Great Wealth Transfer. We are on the precipice of the Great Jewelry Transfer. Unlike a stock portfolio or checking account, heirloom pieces rarely arrive with a neat financial statement telling heirs what they own, leaving many unprepared when it’s time to evaluate, keep or sell inherited jewelry.

Why jewelry creates a fundamentally different inheritance problem

When people inherit jewelry, emotional value and real financial worth collide.

Most heirs can tell you the backstory without missing a beat:

  • “This was my grandmother’s engagement ring.”
  • “My father gave this bracelet to my mother for their 25th anniversary.”
  • “I remember her wearing this necklace to every holiday dinner.”

What they rarely understand is the asset itself.

They’re left asking basic financial questions: Is this real? Is it worth $200 or $20,000? Does the value come from the gold, the quality of the stones, the brand or the item’s vintage status? And ultimately, what’s the right move: keep it, insure it, divide it among siblings or sell it?

Without clear answers on metal purity or stone quality, deciding whether to keep, divide or sell inherited jewelry becomes an educated guess made during an already stressful time. 

Furthermore, younger generations often don’t want to inherit physical clutter. Modern estate research indicates that millennials and Gen Z heirs prefer a small, curated selection of meaningful possessions over taking custody of an entire household’s worth of heirlooms.

Inheriting an asset and understanding an asset are two completely different things.

A collision course with the resale revolution

This generational hand-off is occurring alongside a seismic shift in consumer behavior: the mainstream adoption of secondhand commerce.

Buying secondhand used to carry a subtle stigma; today it’s a mainstream consumer movement driven by younger consumers who actively prioritize circularity, sustainability and the unique appeal of vintage items. According to data from Deloitte, the broader U.S. resale market is projected to reach $73 billion by 2028, while the number of U.S. fashion brands hosting resale platforms on their own sites increased 325% between 2021 and 2025.

For the jewelry market, this shift changes everything.

A piece one generation no longer wants to wear doesn’t suddenly lose its intrinsic value. Its lifecycle can seamlessly evolve: Kept → Valued → Sold → Recycled → Worn by someone new.

This expands the concept of a circular economy beyond traditional “cash for gold” operations. The next generation doesn’t have to choose between keeping Grandma’s jewelry in a drawer forever or shipping it off to a refinery to be melted down.

What we learned building Alloy

When I founded Alloy, our initial premise was straightforward: The traditional process to sell gold jewelry, or any other high-value estate piece, was unnecessarily opaque and fundamentally built to favor the buyer over the consumer.

After working with thousands of consumers, one thing became clear quickly: Many customers acquired their pieces through inheritance, estate management or a major life transition. We quickly realized our main job wasn’t just facilitating a sale; it was helping people understand what they actually owned.  

Solving that problem requires three foundational pillars:

  1. Transparency: What is the piece made of? What does it weigh? Where does its true financial value come from?
  2. Trust: Is the party evaluating this item financially incentivized to be dishonest about its value?
  3. Optionality: Does this piece actually belong in a refinery, or could someone else want to wear it?

That third pillar, optionality, is where the market’s future lies.

Alloy’s role: Building infrastructure for jewelry’s next life

Historically, the secondary jewelry market has been deeply fragmented. A consumer sells a piece to a local business. That business flips it to another intermediary. Some pieces get resold; others are melted. Throughout the entire process, the original owner has zero insight into the asset’s true destination or value.

At The Alloy Market, we are building the infrastructure to connect these fragmented lifecycles.

By providing upfront valuation tools, real-time calculators and educational resources, we empower consumers to understand the exact value of their items before deciding. When an item is sold, our ecosystem evaluates whether to reintroduce it to the consumer market as a wearable piece, returning a portion of that resale upside to the original seller or whether to return its metals responsibly to the industrial supply chain.

We’re not merely building a better way to sell inherited jewelry; we’re building the underlying digital infrastructure that lets high-value physical assets transition smoothly from one generation to the next.  

The ‘Great Jewelry Transfer’

Leaving things behind isn’t new. But we’ve never seen a handoff like this, where trillions of dollars in physical items land with a generation that thinks very differently about what’s worth keeping, selling or passing along.

Some inherited jewelry will remain in families for another century. Some will be sold for financial liquidity. Some will be melted for reuse. And a growing percentage will find a second life with a new owner who appreciates its history.

The companies that win this transition won’t simply be those offering to buy these assets. They will be the trusted institutions that help heirs understand what they have and empower them to decide what happens next.

While standard wealth management focuses on paper assets and balance sheets, the Great Jewelry Transfer is about what happens to the physical history families leave behind. Trillions are at stake, but the real value is in the objects themselves.

Key Takeaways

  • When people inherit jewelry, emotional value and real financial worth collide. What they rarely understand is the asset itself.
  • This generational hand-off is occurring alongside a seismic shift in consumer behavior: the mainstream adoption of secondhand commerce.
  • The companies that win this transition won’t simply be those offering to buy these assets. They will be the trusted institutions that help heirs understand what they have and empower them to decide what happens next.

When economists and financial advisors talk about the Great Wealth Transfer, the conversation almost always centers on traditional financial assets: brokerage accounts, primary residences, retirement accounts and family businesses.

These numbers are massive, to be sure. Cerulli Associates estimates that $124 trillion will transfer through 2048, with $105 trillion passing directly to heirs. Nearly $100 trillion of that sum will originate with baby boomers and older generations.  

Yet wealth does not sit exclusively on a balance sheet. It lives inside our homes, stored in safes, tucked into back drawers and resting quietly in velvet jewelry boxes.

IHG Timeshare Offer with 40K Bonus Points


IHG Timeshare Offer with 40K Bonus Points

IHG has launched a new timeshare offer, with 2-night stays starting from just $99. You will also receive 40K IHG One Rewards points just for attending a timeshare tour. You can choose one of nine eligible destinations such as Las Vegas, Orlando, Galveston, Myrtle Beach and more. Let’s check out the details and see how this IHG timeshare offer works.

Offer Details

Enjoy up to 70% off the regular rate when you book one of these timeshare getaways today. Purchase now and have up to 12 months to travel. Travel when you’re ready, and as a bonus, you’ll receive 40K IHG One Rewards points after attending a timeshare presentation. Choose from two exclusive offers.

  • Get 3 days, 2 nights for:
    • $149+tax at Holiday Inn Club Vacations resorts
    • $99+tax at a centrally-located partner hotel.
  • Get 40,000 IHG points
  • Must attend a two-hour timeshare sales presentation.
  • Book by 11/22/26. You can purchase online now or call (888) 901-5685.
  • OFFER PAGE

Eligible destinations include:

  • Branson, MO
  • Cocoa Beach, FL
  • Galveston, TX
  • Gatlinburg, TN
  • Las Vegas, NV
  • Myrtle Beach, SC
  • Orlando, FL
  • Scottsdale, AZ
  • Williamsburg, VA

Tips for Timeshare Offer

  • Read about my experience with a similar offer from Marriott so you can see what to expect and to possibly prepare yourself with some talking points.
  • Check out the  map of the Holiday Inn Club Vacations properties.  You can call and ask if they can extend the same offer for a stay at a different location not included in the promotion list.
  • Before booking one of these timeshare offers, you should always ask for a better deal. You can often get more points, a cheaper price, or maybe a better room.

Important Terms

  • You are required to attend a two-hour timeshare sales presentation for the offering of a timeshare interest in Holiday Inn Club Vacations at several locations.
  • This offering will be made at a Holiday Inn Club Vacations Resort.
  • The retail value of this offer is between $732 and $1,651, depending upon travel dates selected.
  • Offer is void where prohibited by law and in Alaska and Hawaii.
  • Must be at least 23-years-old (Spouse must be 21 or older)
  • Couples, married or unmarried, must attend the tour together
  • Must have an annual household income of at least $50,000 USD
  • Not have an active package or toured within the past 60 days.
  • See full terms here.

Guru’s Wrap-up

If one of these destinations is on your travel list, or you just want a cheap getaway, then definitely take a look and see if it makes sense for you. Just keep in mind that it comes with a mandatory sales pitch for Holiday Inn Club Vacations. You have to sit through that for two hours. 

You need to attend this presentation in order to pay the discounted price for your stay, and to earn the 40,000 IHG bonus points. Just those points alone are worth more than the price of your stay.

You should know that they can’t force you to buy anything, but again not everyone can say “no” over and over. They make those deals sound pretty good, but they offer mention the perks of the most expensive packages, while showing you the starting prices. If that’s something you’re not comfortable with, might be best to skip this IHG timeshare offer. But if you’ve done this before, or are confident that you will resist the temptation, then could be a good opportunity.

Have you participated in similar timeshare offers in the past. How did they go and what tips do you have for other readers? Leave a comments below!

HT: DoC

Occidental Petroleum (OXY) Q3 2026 Earnings Call Transcript


Image source: The Motley Fool.

DATE

Nov. 10, 2026

CALL PARTICIPANTS

  • Vice President of Investor Relations – Babatunde Cole
  • President and Chief Executive Officer – Richard Jackson
  • Senior Vice President and Chief Financial Officer – Sunil Mathew
  • Senior Vice President and President, International Oil and Gas Operations – Ken Dillon

TAKEAWAYS

  • Adjusted EPS — $1.91 per diluted share, excluding $1.61 per diluted share in reported earnings primarily due to mark-to-market losses in marketing and crude hedges.
  • Free Cash Flow — $2.8 billion, driven by operational execution and cost discipline combined with higher commodity prices.
  • Total Production — 1.43 million barrels of oil equivalent per day, exceeding the midpoint of guidance by 7,000 barrels of oil equivalent per day.
  • Principal Debt Repayment — $1.8 billion repaid in the third quarter, bringing total year-to-date prepayments to $10.4 billion.
  • Debt Milestone — The company reached its $10 billion principal debt milestone and established a new target of $6 billion.
  • New Mexico Production — 284,000 barrels of oil equivalent per day, representing a 23% increase since January 2026 and a new record for the asset.
  • Powder River Basin Growth — 70% production growth compared to the first quarter of 2026, supported by bringing a record 27 wells online.
  • AI Operational Uplift — 9,000 wells, or 68% of artificial lift wells, are under AI surveillance, which management reported contributes to a 7% annual production uplift.
  • New Well Costs — A 7% improvement year to date, reflecting continued advancement in drilling and completion efficiencies.
  • Domestic Lease Operating Expense — $8.54 per barrel of oil equivalent, outperforming quarterly guidance despite higher commodity-linked costs for CO2 and diesel.
  • Capital Expenditures — $1.3 billion for the third quarter, with full-year 2026 spending remaining within original guidance ranges.
  • 2027 Capital Outlook — $5.9 billion in planned spending, which management expects will maintain relatively flat production compared to 2026 levels.
  • Sustainable Cash Flow Target — $4 billion in annual sustainable cash flow addition by 2030, representing an approximate 95% increase compared to 2025.
  • Interest Expense Run Rate — A projected $400 million per year upon reaching the $6 billion debt milestone, which is $1 billion lower than 2025 interest expense.
  • Gulf of America Production — 110,000 barrels of oil equivalent per day, impacted by third-party gas pipeline constraints and maintenance activities.
  • EOR Sidetrack Program — 80 sidetrack wells drilled year to date, adding 10,000 barrels of oil equivalent per day of production capacity.
  • STRATOS Progress — 2,000 metric tons of atmospheric CO2 captured to date during commissioning, with full plant start-up scheduled for the end of 2026.
  • Unconventional Well Productivity — 2025 and 2026 wells performed at least 10% above the industry average on a six-month cumulative oil per lateral foot basis.
  • CO2 Offtake Agreements — Agreements signed for 2 million metric tons per year of anthropogenic CO2, representing 15% of the company’s 2026 purchased CO2.
  • Waterflood Resources — 450 million barrels of oil equivalent identified at a breakeven price of less than $40 per barrel.
  • Barnett Formation Performance — Drilling costs of less than $750 per foot with six-month oil productivity averaging 12.5 barrels of oil per foot.
  • Midstream and Marketing Income — $309 million in adjusted pretax income, driven by stronger sulfur pricing and sales volumes at Al Hosn.
  • Realized Gas Prices — $1.61 per thousand cubic feet for domestic gas, a 209% improvement from the negative $1.48 per thousand cubic feet realized in the second quarter.

Need a quote from a Motley Fool analyst? Email [email protected]

RISKS

  • Mathew stated, “Our guidance reflects Gulf of America production curtailments related to the third-party gas pipeline constraint, which extended into the fourth quarter as well as the impact of the hurricane in early October,” noting the sustained impact on regional volumes.
  • Mathew warned that the company expects “lower gas marketing income as additional Permian gas takeaway capacity comes online in the fourth quarter,” which will likely narrow regional pricing spreads.
  • Management noted that interest in certain EOR projects is subject to final investment decisions expected in early 2027, introducing uncertainty to the timeline for low-cost CO2 expansion.

SUMMARY

Occidental Petroleum Corporation (OXY +2.04%) reported adjusted earnings of $1.91 per diluted share and reached a critical financial milestone by reducing principal debt to $10 billion. Management reported that the company is executing a long-term strategy to add $4 billion in annual sustainable cash flow by 2030, primarily through operational efficiencies, lower decline rates, and significant interest expense savings. The company generated $2.8 billion in free cash flow during the quarter, benefiting from record production in New Mexico and the Powder River Basin. Management established a new principal debt target of $6 billion, which would bring the interest expense run rate down to approximately $400 million per year. Looking toward 2027, the company plans a capital budget of $5.9 billion to sustain production while advancing mid-cycle projects such as Gulf of America waterfloods and Permian enhanced oil recovery initiatives.

  • The company utilizes autonomous AI systems to manage approximately 50% of its AI-surveilled wells, representing 450,000 barrels of oil equivalent per day.
  • Management expects to reduce the total company base decline rate from 25% to 20% by 2030, which would lower the capital required to sustain production to approximately $4.5 billion.
  • Richard Jackson stated, “Once we achieved our $6 billion principal debt milestone, we will balance additional principal debt reduction and building cash” to prepare for the preferred equity redemption in August 2029.
  • The STRATOS direct air capture project is undergoing repairs to its calciner structural supports while continuing to build pellet inventory for its 2027 operational transition.
  • The company has identified 500 candidates for its EOR sidetrack program, which uses existing wellbores to accelerate production at lower costs than new grassroots wells.
  • Sunil Mathew noted that at $6 billion in principal debt, the company would achieve a debt-to-EBITDA ratio of one at $50 WTI, marking its strongest balance sheet position in a decade.
  • The company is exploring offshore opportunities in Peru, Colombia, and Trinidad and Tobago, targeting unrisked volumes of more than 2 billion barrels of oil equivalent.

INDUSTRY GLOSSARY

  • BOE: Barrels of oil equivalent, a unit of energy that combines oil and natural gas volumes based on their energy content.
  • EOR: Enhanced oil recovery, a technique used to increase the amount of crude oil that can be extracted from an oil field, often by injecting CO2 or steam.
  • STRATOS: The company’s large-scale direct air capture (DAC) facility designed to remove CO2 directly from the atmosphere.
  • WTI: West Texas Intermediate, a grade of crude oil used as a benchmark in oil pricing.
  • Waha Spread: The price difference between natural gas at the Waha hub in West Texas and other delivery points, such as the Gulf Coast.
  • DSU: Drill spacing unit, the geographic area assigned to a specific well or group of wells for regulatory and development purposes.
  • LOE: Lease operating expenses, the daily costs of operating oil and gas wells and related facilities.
  • DAC: Direct air capture, a technology that captures CO2 from the ambient air for storage or use in industrial processes.
  • Anthropogenic CO2: Carbon dioxide generated by human activity, such as industrial processing, as opposed to naturally occurring sources.

Full Conference Call Transcript

Operator: Good afternoon, and welcome to Occidental’s Third Quarter 2026 Earnings Conference Call. [Operator Instructions] Please note today’s event is being recorded. I’d now like to turn the conference over to Babatunde Cole, Vice President of Investor Relations. Please go ahead.

Babatunde Cole: Thank you, Rocco, and good afternoon, everyone, and thank you for participating in Occidental’s Third Quarter 2026 Earnings Conference Call. On the call with us today are Richard Jackson, President and Chief Executive Officer; Sunil Mathew, Senior Vice President and Chief Financial Officer; and Ken Dillon, Senior Vice President and President, International Oil and Gas Operations. This afternoon, we will refer to slides available on the Investors section of our website. The presentation includes a cautionary statement on Slide 2 regarding forward-looking statements that will be made on the call this afternoon. We’ll also reference a few non-GAAP financial measures today.

Reconciliations to the nearest corresponding GAAP measure can be found in the schedules to our earnings release and on our website. I will now turn the call over to Richard.

Richard Jackson: Thank you, Babatunde, and thank you all for joining our call today. This was another strong quarter for Oxy, and I would like to thank our teams for their continued focus on execution and consistent results. This quarter, we exceeded the midpoint of guidance for total company production, delivered strong results in midstream with over $300 million in adjusted pretax income and continue to drive efficiencies across our operations. A key highlight in the third quarter was achieving our $10 billion principal debt milestone, which is an important step in strengthening our financial position and creating additional capacity to deliver value.

Last quarter, I shared our pathway to add more than $4 billion of annual sustainable cash flow by 2030, an approximate 95% increase compared to 2025. Importantly, this increase is driven by durable improvements across the business, including oil and gas cost efficiencies, lower decline rates and lower debt interest. Looking ahead, we remain focused on executing this value improvement plan and on increasing and accelerating both the return on and the return of capital through the cycle. A key part of delivering this value improvement is our ability to unlock more from the subsurface through advanced resource recovery.

We were recently able to share and post a more detailed disclosure to demonstrate these capabilities, including our enhanced oil recovery operations. I would like to take a few minutes today to share these highlights before we get into third quarter results. Importantly, we apply our advanced recovery approach across the portfolio and at every stage of resource recovery from exploration and subsurface characterization through field development and production. This has resulted in a track record of adding and improving our resources while consistently delivering more production. In U.S. unconventional, our new well performance continues to deliver in both productivity and cost efficiency.

Across U.S. unconventional, our 2025 and 2026 wells have delivered top-tier performance in every basin with at least 10% above the industry average on a 6-month cumulative oil per lateral foot basis. That performance is driven by the detailed customized subsurface work we do for every drill spacing unit and well. In the Delaware, for example, we’ve shown that in some areas, increasing the number of wells per bench can deliver the same individual well performance and up to 2.5x the recovery per DSU. We also highlight how we apply the optimal approach for each DSU, whether that is multi-bench co-development or a phased bench development.

The aim is to maximize value by aligning our subsurface approach with the right technology, infrastructure and operating considerations. In conventional EOR, we have over 50 years’ experience and 2 billion BOE of resource. Most of this resource is across our 1.2 million acre position on the Permian Central Basin Platform, where we continue to expand EOR development, leveraging our extensive CO2 infrastructure. This year, our teams also found new ways to add resources and accelerate production through horizontal development in zones we have historically bypassed. Today, we are applying unconventional drilling and frac techniques to these zones and are seeing strong results.

To date, in 2026, we have drilled 8 conventional grassroots horizontal wells that are competitive in our portfolio with high oil cut production and lower decline. At the same time, we started an EOR sidetrack program to accelerate production in these same reservoirs by leveraging existing wellbores and infrastructure. After starting these sidetracks in late February, we now have drilled approximately 80 so far this year. This dual approach is both lower cost and efficient to further advance this resource opportunity while adding production this year. We have already identified 500 more sidetrack candidates to continue to accelerate production.

Additionally, our new conventional horizontal opportunities add more than 200 million BOE of development-ready resource with further upside through appraisal and CO2 EOR. In unconventional EOR, we have another 2 billion BOE of resources identified today. Our first 3 commercial projects are progressing towards injection by 2029 with more than 30 additional development-ready opportunities in the pipeline. Over the last 10 years, we piloted our approach across multiple basins and formations, demonstrating significant oil production uplift in economic miscible gas and CO2 utilization. These pilots have demonstrated approximately 45% uplift with further upside from additional injection.

In addition to CO2 EOR, we continue to advance a broader suite of technologies where applied together, we see the potential to increase estimated ultimate recovery by 70% to 140% per well. Additionally, in the Gulf of America, we are advancing waterfloods that give us another significant opportunity to recover more from existing fields and infrastructure. We have identified roughly 450 million BOE of waterflood resource at less than $40 breakeven, providing more than a decade of development runway today. Importantly, we also continue to outperform our base production. In U.S. onshore operations, we have averaged more than 13,000 BOE per day above our original annual plan in each of the last 3 years.

A key driver of this outperformance is our continued advancement in application of technology and AI across our operations. To date, approximately 9,000 or 68% of our artificial lift wells are under AI surveillance with predictive intelligence, supporting up to 7% annual production uplift and reducing failure frequency by 22% compared to 2023. Together, our advanced recovery technologies and approach help us add and improve resources while continuing to drive cost efficiencies. They also play a significant role in reducing Oxy’s overall decline rate from approximately 25% to 20%, supporting our sustainable cash flow improvement plan by 2030. I’ll now turn to a few specific third quarter operational highlights.

Our teams delivered another strong quarter, building on the operational and financial performance we have seen throughout 2026. Our U.S. onshore business outperformed the midpoint of guidance by 20,000 BOE a day. In New Mexico, we hit record gross operated production of 284,000 BOE per day, up about 23% since January. In the Powder River Basin, we ramped up activity and brought a record 27 wells online in the third quarter, which is more than any prior year. This drove more than 70% production growth compared to the first quarter with an average net production of 23,000 BOE per day in the third quarter.

In the Gulf of America, while third quarter production was affected by a third-party gas pipeline constraint and maintenance, we continue to advance our waterflood program. Our first project, the King Dome flood began first injection in July, supporting the broader waterflood opportunity across our GOA portfolio. In our EOR business, we continue to outperform and accelerate production. Our sidetrack program and conventional horizontals have added 10,000 BOE per day as of the end of the third quarter. This demonstrates how our teams were able to adjust this year as we reallocated capital and expense dollars to this fast-track opportunity. As we continue to expand our EOR opportunities, we are also making progress on securing low-cost CO2.

We have signed offtake agreements with 2 project developers to deliver 2 million metric tons per year of anthropogenic CO2 captured from third-party gas processing plants for use in our Permian EOR operations, which represent about 15% of our 2026 purchased CO2. These projects remain subject to final investment decision, which is expected early next year and represent tangible steps towards expanding access to low-cost CO2 to support our long-term EOR opportunity. Turning to STRATOS. We continue to make progress on the nontechnology-related repair, where we are adding structural supports to the calciner. We’ve also been making good progress commissioning unit operations.

To date, we have captured over 2,000 metric tons of atmospheric CO2 as part of building our pellet inventory. We remain on track to begin full plant start-up around the end of the year as we transition to operations in 2027. This strong business performance strengthens our pathway towards adding more than $4 billion of annual sustainable cash flow by 2030 through improved capital efficiency, lower cost and lower decline rates. We are already seeing progress on these key milestones in our plan.

This year, we remain on track to deliver more than 7% improvement in new well costs and are tracking towards a 3% improvement in domestic LOE and transportation despite higher prices for CO2, diesel and other categories impacted by commodity prices. These improvements, together with higher near-term oil prices have allowed us to accelerate our balance sheet progress and debt interest savings. We have achieved our $10 billion principal debt milestone and are now establishing a new milestone of $6 billion.

As we look towards 2027, under mid-cycle price scenarios, we will have opportunity to make meaningful progress towards our new principal debt milestone and expand our financial capacity for the preferred redemption in August of 2029 and accelerate our broader return of capital opportunities. At lower prices, our sustainable cash flow progress will focus on supporting principal debt reduction, and we will continue to make structural improvements across the business to grow a sustainable dividend at $50 WTI. In total, as we continue to execute our plan and improve our sustainable cash flow, we will be increasingly well positioned to deliver value and advance our cash flow priorities.

I’ll now turn the call over to Sunil to review the financials and to give more detail on these priorities.

Sunil Mathew: Thank you, Richard. In the third quarter, we generated adjusted earnings of $1.91 per diluted share and reported earnings of $1.61 per diluted share. The difference was largely driven by mark-to-market losses in marketing and crude hedges. Continued operational execution and cost discipline, combined with higher commodity prices enabled us to generate approximately $2.8 billion of free cash flow. During the quarter, we achieved our $10 billion principal debt milestone, marking another significant step in strengthening Oxy’s financial position. We repaid $1.8 billion of principal debt, bringing total year-to-date prepayments to $10.4 billion, while ending the quarter with $3.9 billion of unrestricted cash.

This progress gives us additional flexibility as we continue to strengthen our balance sheet and advance our cash flow priorities. Total production averaged 1.43 million BOE per day, exceeding the midpoint of guidance by 7,000 BOE per day. Strong base and new well performance across our U.S. onshore assets drove higher volumes more than offsetting lower-than-expected production in the Gulf of America and international. Gulf of America production declined during the quarter as maintenance activities and the third-party gas pipeline constraint required us to temporarily curtail production at certain facilities. Production was fully restored by late October. International volumes were marginally lower, primarily due to a change in gas processing mode to ethane rejection at Dolphin.

Continued operating efficiencies contributed to lower domestic lease operating expense of $8.54 per BOE, outperforming our guidance for the quarter. Midstream and marketing also outperformed, driven by stronger-than-expected sulfur pricing and sales volumes at Al Hosn. We also benefited from higher crude marketing margins due to timing impacts of cargo sales and commodity price movements, which are offset in mark-to-market. These factors contributed to adjusted pretax income of $309 million. Improved Permian gas realizations in the oil and gas segment largely offset the impact of narrower Waha to Gulf Coast spreads on midstream earnings. Looking ahead to the fourth quarter, we expect total company production to range between 1.43 million and 1.47 million BOE per day.

Our guidance reflects Gulf of America production curtailments related to the third-party gas pipeline constraint, which extended into the fourth quarter as well as the impact of the hurricane in early October. Excluding temporary downtime impact in the Gulf of America, our full year production guidance is slightly above the guidance we provided last quarter. Domestic lease operating expense is expected to increase in the fourth quarter due to higher CO2 costs and an increase in short-cycle, high-return workover opportunities. In midstream and marketing, we expect lower gas marketing income as additional Permian gas takeaway capacity comes online in the fourth quarter, along with lower sulfur pricing at Al Hosn.

Our strong third quarter results and improved fourth quarter guidance support full year guidance of $2 billion in adjusted pretax income. We expect total company capital spending to be approximately $1.3 billion in the fourth quarter, keeping full year 2026 capital spending within our original guidance range. As Richard shared, we continue to make significant progress strengthening the balance sheet and advancing our sustainable cash flow improvement plan. We achieved our $10 billion principal debt milestone ahead of expectations, accelerating interest expense savings. Consistent with what we have said previously, our focus is to further reduce net debt with a preference to continue lowering principal debt.

In line with this framework, we are establishing a new principal debt milestone of $6 billion. Beyond the $6 billion principal debt milestone, we will remain flexible in balancing further principal debt reduction with building cash ahead of the preferred equity redemption in August 2029. We plan to evaluate opportunistic share repurchases once we achieve a net cash position. A sustainable and growing dividend remains a foundational cash flow priority. Last quarter, we announced a second 8% increase to a quarterly dividend for 2026. Future increases will remain measured and disciplined, supported by a strong balance sheet and progress on annual sustainable cash flow improvement.

At $6 billion principal debt, our go-forward interest expense run rate will be approximately $400 million or approximately $1 billion lower than our 2025 interest expense, providing the opportunity for durable dividend increases through commodity cycles. As we shared on previous calls, our starting point for 2027 capital spending remains approximately $5.9 billion. At that level of investment, we continue to expect relatively flat production compared to 2026. The program includes continued investment in mid-cycle projects that are expected to reduce our base decline and sustaining capital over time, including Gulf of America waterflood projects, Permian EOR and select international opportunities.

These investments are an important part of our plan to lower Oxy’s total base decline from approximately 25% to 20% and reduce sustaining capital to approximately $4.5 billion by 2030. We also expect continued well cost and operating efficiencies across oil and gas to contribute to that progress and drive higher sustainable free cash flow. The 2027 program will advance our plan to deliver more than $4 billion of annual sustainable cash flow improvement by 2030 relative to 2025. Based on the initiatives underway, we expect approximately $700 million to $800 million of sustainable cash flow improvement in 2027 relative to 2026, including lower interest expense, roll-off of STRATOS capital and additional oil and gas efficiencies.

Combined with the improvement expected in 2026, this would bring our annual sustainable cash flow improvement to approximately $2 billion by year-end 2027, nearly half of our 2030 objective. As we finalize our 2027 plan, we will remain disciplined, flexible and prepared for market volatility. We will share more on our 2027 capital plan on the fourth quarter call following Board approval. I will now turn the call back to Richard for closing remarks.

Richard Jackson: Thank you, Sunil. We’ve made meaningful progress this year, and our teams continue to execute and outperform as we track towards adding more than $4 billion of annual sustainable cash flow by 2030. Our operational performance, continued cost efficiencies and achievement of the $10 billion principal debt milestone demonstrate that progress. Reaching our next $6 billion milestone will be another important step towards expanding our financial capacity and accelerating the return of capital to shareholders. Ultimately, we’re building a business that can perform through the cycles and create increasing and durable value for shareholders. With that, we would like to open it up for questions. As a reminder, Ken and Babatunde are also here with us today for Q&A.

Operator: [Operator Instructions] And today’s first question comes from Neil Mehta at Goldman Sachs.

Neil Mehta: I guess the first question is the $6 billion debt target. How do you come up with that number? Why is that the right number? And when you look at the forward curve, when do you think you can hit that number? We were thinking maybe it’s end of 2027. And at that point, should we assume that you’re in a position to be returning capital by 2028?

Richard Jackson: Great. Thanks, Neil. I’m going to start and then let Sunil go into some of the details on the play out of our priorities. I guess, first, just in context of the $6 billion first to say, very pleased with the progress of our plan. We’ve been able to continue to accelerate really most components. I think one thing I’d like to say as we get into the priorities and where it fits, we want to remain very focused, clear and consistent. And I think that has really been a part of the plan that we put together. Part of that is the ability to accelerate in terms of our cash flow priorities and accelerate return of capital.

I think the $6 billion is building capacity really at any price. So we think about building capacity for the dividend at lower prices like $50, but at mid-cycle, as we’re talking about, we’re able to accelerate a broader return of capital plan. I think the priorities for us stay the same, internally continue to improve the balance sheet, continue to improve resources, continue to improve cost efficiency and then follow our disciplined cash flow priorities. So I think that $6 billion is an important step in terms of principal debt that demonstrates or really provides that capacity and clarity as we go into the steps of our cash flow priorities.

But let Sunil walk through that and help on how we got there.

Sunil Mathew: Neil, we made significant progress on strengthening our balance sheet and the principal debt milestones that we set were based on achieving certain leverage metric. It was primarily debt to EBITDA. So at principal debt of $10 billion, the debt-to-EBITDA was approximately 1 at 60 WTI. And at principal debt of $6 billion, the debt-to-EBITDA is around 1 at 50 WTI, which is what we would like to maintain in the long term. Also at $6 billion principal debt, based on our debt-to-EBITDA metric and normalized for prices, our balance sheet will be the strongest that we’ve been in a decade.

Once we achieved our $6 billion principal debt milestone, we will balance additional principal debt reduction and building cash based on the macro and timing relative to the preferred redemption in August 2029. And with respect to your question on 2027, as we look at 2027 at mid-cycle or even current strip prices, we will have opportunity to make meaningful progress towards our new $6 billion principal debt milestone, which expands our financial capacity for the preferred redemption and accelerate our broader return of capital opportunity. So once we get there, we plan to evaluate opportunistic share repurchases and especially once we get to a net cash position.

So we don’t want to say when in ’27, we would get there, but you can assume that we would definitely get there and potentially a net cash position in 2027. And I would say in terms of dividend growth, as we look at total cash flow priorities, in terms of dividend growth, we will be measured, ensuring that we can support it through the cycle through a combination of strong balance sheet and increasing sustainable cash flow. So the progress on both of these will determine how we think about dividend growth and accordingly recommend to our Board.

Neil Mehta: And then Richard and team, just your thoughts on the trajectory of GOA production. You had — you produced 110 in the quarter because of some outages. You kind of guided to plus/minus 115 in Q4 for BOED. We were thinking next year maybe 125, but just your perspective on what ’27 looks like, recognizing it’s a transition year as you guys are working through the waterflood.

Richard Jackson: Yes. No, I appreciate. I’ll start and then Ken can provide more detail. I think, yes, I mean, the one key point you mentioned, I just want to reiterate, I would say we’re moving into the capacity to make investments in things like the waterfloods, which are meaningful. We’ve had success exploration. We continue development, but an important investment capability that we now have as we’ve improved the balance sheet is these mid-cycle GOA waterfloods. And so part of that is spending the bulk of our capital, especially going into next year around that project.

It has a bit of a delay in terms of production, but we think it’s really important as we think about the sustainable cash flow perspective that we’re putting together. But let me turn it over to Ken to walk through some of the moving parts.

Kenneth Dillon: Looking ahead to ’27, we’re currently optimizing the drilling schedule versus the available rig time. And as you said, we’re shifting capital to front-end load the water injection wells. We’re sequencing the others to match the prioritized inventory as well as looking at can we defer exploration and go into the following year in order to yield more development wells. Horn Mountain water injection wells will take 4 months to drill and complete and cost around $100 million each. So that gives you an idea of what the front end of the year looks like. I think we have some opportunities, but overall, I wouldn’t disagree with your assessment.

Operator: Our next question today comes from Doug Leggate with Wolfe Research.

Douglas George Blyth Leggate: Richard, I guess these are kind of addendums to Neil’s questions. But my first one is on the $4 billion free cash flow improvement. I want to try and articulate this correctly. A decent part of that is the reduction in the decline curve, the 25% to the 20%. What I’m trying to figure out is once you achieve that towards the end of the decade, does that reduced sustaining capital translate to a lower absolute spending number? Or do you keep the CapEx at a level for, for example, a pivot back to growth? That’s kind of my first question.

My second question is on what you just said about the dividend because we know you have a penalty on redeeming the prefs early. You also have a penalty on the threshold for buybacks. What you don’t have a penalty on is your dividend. And I’m thinking back to the Steve Chazen school of dividend aristocracy. You’ve got the portfolio of a major basically but you don’t have the dividend of a major. And the scale of the cost cutting, the interest charges, the prefs and so on, I think back to Anadarko in 2021 with an 80% step change in the dividend.

I’m wondering if that’s the kind of thing that’s on your mind about how you think about the disadvantage of procyclical buybacks, the preference share redemption and ultimately, the capacity for material step change in dividend. I hope that makes some kind of sense. But those are my 2 questions.

Richard Jackson: No, that’s great, Doug. Yes, I’ll start with the $4 billion and kind of the pieces on sustaining capital. I think we really like the sustainable cash flow the way we put this together. And let me just break it down so we can — on a few moving parts. In terms of cash from operations, continuing to drive, obviously, expenses, but also higher-margin production. And some of that’s even oilier production as we look at things like GOA or Powder River Basin or even our EOR. And so both of those are improving even with flat capital and flat production. So that’s one component. The other component is sustaining capital, as you mentioned, and 2 parts to that.

One is capital efficiency. So this new well and facility cost improvement that we continue to drive, we’re able to deliver more with less. We’re actually dropping 3 rigs at the end of this year, adding 15 more wells online. We’ve just continued to be able to drive that more productivity per dollar spent. And then the last piece, as you said, and have helped us highlight is really this decline rate. And so the decline rate comes from projects like GOA waterfloods that we’ve been able to point out, but also these opportunities in EOR that really came about this year. So as we look kind of to your last part of that question is really growth.

And so the way we think about growth is, one, we can improve the sustainable cash flow, cash from operations minus sustaining capital really without growth. So make that point. Two, growth for us will be, we call it measured and efficiency led. The returns are obviously important. We need to maintain cost efficiency and then the free cash flow timing as we put all these pieces together is really important. So if growth is a part, one, it is likely efficiency led. And if there’s more capital that goes there, it will be very measured, all the time making our sustaining cash flow better. So say that.

Let me jump to the dividend and buyback and then Sunil, if you’ve got anything you can add to that. I think, again, back to key points of our cash flow priorities. One, the stronger balance sheet and as we just have improved our financial strength, it really provides opportunity for all of the above, operational efficiency through the cycle, but a broader return of capital. You’re right, dividend for us is really how we think about the fundamental starting point for return of capital in the business. And it’s back to what is your cash from operations and your sustaining capital at $50.

And so that today with progress like our debt interest provides quite a bit of room for that. Buybacks, as we reach a net cash position, that becomes a part of our opportunity as well as we see dislocation as we see in our share price, if we see the right macro condition. Longer term, we would like that to be sizable and more countercyclical, which is back to why we need such a strong balance sheet to accomplish that. So let me just make sure Sunil gets any final points there, too.

Sunil Mathew: Doug, like I mentioned in my prepared remarks, at $6 billion principal debt, our interest expense savings alone will be approximately $1 billion lower than 2025. And if you look at our current annual dividend payout run rate, it is around $1.1 billion. So our current annualized common dividend run rate compared to, say, the fourth quarter of last year is higher by around $175 million, and that is primarily related to the 2 dividend increases we announced this year. So adjusting for that dividend increase, interest savings alone will be around $825 million lower than 2025, which provides the opportunity for a sustainable and growing dividend.

And we have also — like Richard just walked through, we have also highlighted the operational efficiency improvements in our $4 billion cash flow plan, which is again going to further support a sustainable and growing dividend. So like you correctly summarized, we do have the depth and quality in our portfolio. We are building a very strong balance sheet. We have outlined our $4 billion annual sustainable cash flow improvement plan which all leads to a sustainable and growing dividend. So we’re just being measured and disciplined, but that is something we are thinking through. And at the right time, we will be announcing the changes in the dividend.

And the last thing I would say is, like Richard highlighted, our stronger balance sheet also provides the opportunity to do buybacks through the commodity cycles, which will be our preference after the redemption of the preferred. And until then, we’ll just be opportunistic in terms of share repurchase.

Operator: Our next question today comes from Betty Jiang with Barclays.

Wei Jiang: I want to go to the Delaware CO2 offtake contract. It seems like that’s opening a new chapter for your EOR business. So I just want to understand how you’re thinking about incorporating those volumes into your EOR portfolio once they come online. Are you more thinking about that as a lower cost replacement for the CO2 that you’re already buying? Or does that let you to do more EOR and expand the opportunities potentially in the unconventional space? And longer term, like just given the size of the gas processing footprint in the Permian, how big could that CO2 supply become? And does that materially change the economics of your EOR projects?

Richard Jackson: Betty, thank you very much. Yes, we’re excited about this step here. I think just to frame a few of those points, today, these deals we’re talking about are 2 million tons a year that we’re able to capture the CO2. Today, Oxy purchases about 12 million tons a year. And so it’s a meaningful step. And I’ll get through kind of the market and opportunities in a moment. One thing to say is that it’s a meaningful reduction in cost as we’re able to put these pieces together between the developers, obviously, the gas processor and then our ability to pay for the offtake. And so about 30% of the cost of an EOR barrel is power and CO2.

So when you’re talking to move 15% or possibly even higher, that’s a pretty meaningful step change in sort of the total spend per barrel as we look at these EOR opportunities. The size of the prize, our team has kind of put together a look and estimate about 50 million tons per year of CO2 from sources like this. The 2 most meaningful are gas processing. And the other one I would highlight that we remain optimistic about is natural gas power generation. So we see about 10 million tons a year of gas processing and over 15 million tons a year of natural gas power generation. Obviously, there’s been a lot of talk about that in the Permian.

5 — just for reference, 5 gigawatts of power generation basically replaces our CO2 purchases today. And so again, a pretty meaningful. I would say in terms of where we go with the volumes, I think optionality is the word I would tell you. I think being in the Delaware Basin, obviously, it’s great proximity to our unconventional opportunities. But because of our CO2 infrastructure that we have, it’s also near pipelines and ability to get it to our Central Basin platform. So we’re very excited about this. The developers that we’re partnering with, we’re happy with that. They’re able to fund and build these.

And so it really is a type of partnership, capital-light approach that we really have intended for our CO2 sourcing. So I appreciate the opportunity to talk through all that.

Wei Jiang: That seems like a big opportunity long term. And then for my follow-up, if I can go back to just 2027 and hoping to get more color on the oil trajectory into next year. There’s been quite a bit of noise in the back half of the year because of the GOA outages. And in the early part of the year, you had the EOR divestiture and there’s also activity shift between the PRB and the DJ and the Rockies. So can you just help us think through like the oil trajectory into next year? And just high level, like should we expect oil volumes to grow on average on a year-over-year basis?

Sunil Mathew: Betty, it’s Sunil here. So like I mentioned again in my prepared remarks, with the $5.9 billion, we expect relatively flat production on a BOE basis. But on an oil basis, at a high level, we expect production to be flat to slight increase. And if you look at some of the contribution from the different business units, Permian production is expected to grow modestly both on a BOE and oil basis. So it is basically building on the results and learnings from our 2026 program, and we are high-grading our ’27 plan towards higher return opportunities and positioning us for modest production growth with strong capital efficiency. So like Richard said earlier, it is about doing more with less.

In terms of Rockies production, we expect it to be flat on a BOE basis, but we expect growth in the oilier Powder Basin offsetting the decline in DJ. We already talked about Gulf of America. We are still — the teams are still optimizing the drilling program between development and exploration. And like Ken mentioned, the 2 injectors are going to be front-end loaded in our drilling program. So there could be some reduction in the Gulf of America production due to the timing of these injectors compared to this year. The production could be lower. And with respect to international, the PSC impacts would largely impact the oil production in Oman and Algeria.

So overall, I would say the range is going to be largely driven by GOA and international.

Operator: Our next question today comes from Nitin Kumar with Mizuho.

Nitin Kumar: Thanks for the update on the advanced recovery. I’m going to actually go back to primary recovery for a minute. One of your peers has talked about the Barnett formation and you highlight well costs that are quite a bit below what they’re seeing today. Just curious, what do you see as the opportunity in the Barnett? And how does that fit into your overall development program?

Richard Jackson: Yes. Thanks for the question. We’ve been really pleased with the Barnett progress. As you know, we started several years ago really as part of our Ecopetrol JV, we were able to learn and appraise and advance that opportunity. So we’ve had several years at it, which I think has helped us. I think we’ve got still about 30% of all the online wells or wells that have been drilled in the Barnett have been Oxy’s. I would say a few pieces how we look at it, starting with the drilling costs where you went. I think we’ve been able to achieve more 10,000-foot laterals, and that’s really helped bring our drilling costs down.

We’ve been really less than $750 a foot for drilling completion and equip. We like to include that hookup component as well in our numbers which has been very good and certainly quite a bit of improvement since 2025. But as importantly as the well performance are even more important. And I think when you look at our 6-month oil per foot, we’ve been over 12.5 there, which has been quite a bit better than industry. I think we’ve got more than 10 of the top 15 wells on that metric. So that well performance, we’ve been very focused on. I would say the one thing we did this year is be able to do a bit more appraisal.

So we’ve gone on sort of delineate some of the areas for us, that means really on the eastern side of our position. And so we’ve been able to learn that. We’ll be coming back into the core for the remaining wells this year and into next year. So we expect these type performance to continue to improve. But overall, very pleased with that. It’s a big part of the Midland Basin and excited about our Barnett opportunities.

Nitin Kumar: Great. And I want to maybe touch on STRATOS. We haven’t talked about it yet, but you mentioned in the slides that there was a little bit of an incremental cost for some repairs, but you expect that project to be starting up at the end of the year. Given how the market for carbon credits has shifted, just if you could maybe give us a reminder of what is the — I know the CapEx rolls off next year, but what is the EBITDA opportunity? Or do you see that as sort of [indiscernible] this new CO2 offtake that you just signed?

Kenneth Dillon: It’s Ken here. Yes. As you said, we have had cost increases during the life of the project. Around 60% came from technology and operational improvements and phasing. The remainder is made up mainly of inflation, productivity and QA/QC during the life of the project. Spend next year will be minimal. In terms of the impact on the levelized cost of capture, it’s about 10% because of the leverage difference between CapEx and OpEx on the project. We can see potential ways to offset some of those OpEx elements following start-up, and we have some operational milestones to track those.

Richard Jackson: Yes. And I’ll just add, as we think about economics and maybe the market and even how it compares to these CO2 supply agreements we just have with the gas processing. I think start where Ken did. I think 2 key drivers: one, starting clearly OpEx. And so as we look at the opportunity for OpEx, we feel like that’s with far in our capability to think about a 10-plus percent improvement in OpEx, which will drive more than the capital that we’ve seen. And honestly, it’s just important for the technology longer term is to drive that component of it. So we’ll be very focused on OpEx. I think the outlook for EBITDA remains the same.

Obviously, that OpEx will help improve that. So next year will be a ramp-up. And then we pointed to project EBITDA in 2028 of $90 million to $130 million. So we remain on track for that. And the third part is how to further improve that would be the market. And I think unique for direct air capture is really that market component where your atmospheric CO2 is at a premium. And so we think about access to things like sustainable aviation fuel markets where this is quite a bit lower cost, both from a CDR credit and Oxy, we really see that enhanced oil recovery would fit in that sustainable aviation fuel basket.

And so both of those would support a premium for direct air capture. What we can control is bring the cost down, and we still see tremendous improvement. And as we get this operational, we hope to point to more where we can drive significantly the cost of this down to get to really the CO2 price that can fit into EOR as we gain more access into those premium markets. So hopefully, that helps tie the pieces together, but the first step is coming online and really delivering against the customer base that we have today to deliver that EBITDA.

Operator: Our next question today comes from James West at Melius Research.

James West: I wanted to touch on the dividend again. And just curious if you have some type of framework in place. I know you don’t want to get ahead of your skis. You don’t want to grow it too fast. You want it to be durable. But is there some way we can think about what to expect as you transition into the dividend growth story?

Richard Jackson: Yes. I appreciate the question to walk through that because that is a really important foundation for how we’re trying to build the business. So we think about the sustainable cash flow at $50. And so we look at our cash from operations. We look at our sustaining capital at $50, and we believe that cash flow is what we point to for dividend capability. I would say in the near term, we’ve been working on balance sheet, which we feel like, again, longer term, does things for operational continuity and broader return of capital things like share repurchases. But ultimately, we will always point to that $50 sustainable cash flow for how we think about a dividend.

And for us in the business and especially in operations, these are very clear drivers for our operational teams to capital efficiency, base decline, lower LOE. And all of those as we mark progress will be direct correlation to what we can do with the dividend. And obviously, debt interest is a big part of it this year.

James West: Okay. I think that’s really clear, Richard. And then maybe just a quick follow-up. You mentioned you’ve got AI on, I think, 68% or so of the wells watching the recoveries. And I’m curious if you could dive a little more deeper, give us a little more detail there on are you running some autonomous operations? Is it acting as just a data context for your engineers? How are you using that AI?

Richard Jackson: Yes. Excited about that. It’s moved quick for us in a good way, especially around our production operations. So a couple of pieces beyond what I was able to say in the prepared remarks. So you’re right, 9,000 wells are under AI surveillance today. It does 2 things. One, helps engineers, AI can work at night. And so it helps accelerate really the engineers’ access to what could be the dysfunctions, whether that’s downhole or even on surface with things like compression to optimize. The subset of that, that’s autonomous is about 50%. So meaningfully, we have quite a bit of production, especially in the Delaware Basin that operates autonomously. I think about 450,000 barrels a day.

And what that’s doing is as we, again, see dysfunctions or opportunities in things like our gas lift system, you’re able to reroute or optimize gas downhole across a larger network. So these are quite a few wells that are tied into an individual network that you’re able to optimize. Longer term, I think we’re drilling completions, square and scope. I think we will continue to drive up both the surveillance and the autonomous nature of our system. And then maybe on the front end is seismic. In the Gulf of America, I think this may be interesting or unique to Oxy.

We’re not only using wells to improve our seismic, a subsalt seismic — we’ve been able to use over 3,000 wells to help better generally characterize the subsurface, and that can help on things like waterfloods. So really optimizing placement and management of the waterflood. So lots of opportunity with AI. Ken has been pretty focused on that as well. So I’ll make sure if he has anything else to add.

Kenneth Dillon: Just building on what Richard said on the subsurface side. In Oman, for example, we inject 600,000 barrels a day of steam. All of that is now optimized injection in every well, every location by every pattern. So we see significant benefits there. In terms of operations, the teams here have done an amazing job of reducing failure frequency on every type of artificial lift. We’re now at our lowest failure rates in our history. And then the last thing is maintenance analysis. If you look at GOA, we’ve got 155 large rotating equipment elements offshore. 55% of our unplanned failures relate to seawater lift pumps. That analysis was done in about an hour.

So if we fix one bearing, we then reduce our unplanned failures by 55%. It’s shocking the speed that this is flowing through each department.

Operator: And our next question today comes from Arun Jayaram with JPMorgan Securities.

Arun Jayaram: I wanted to get your thoughts on how you’re thinking about the exploration portfolio. We noted that you guys have contracted a rig to do some work in Peru, maybe a couple of wells. I’d love to hear broadly how you’re thinking about exploration as we think about 2027.

Kenneth Dillon: Yes. If you look at the offshore exploration you mentioned, with our partnerships, we have 3 modest investment exploration opportunities included in our capital plans. These provide exposure to mean net unrisked target volumes of greater than 2 billion BOE, which is successful would be in the post 2030 development time frame with partners, which we could adjust then. That includes Trinidad and Tobago with Exxon, the Trujillo Basin, which is trending in Peru, as you mentioned, and then Komodo in Colombia, where we’ve made some permitting progress recently and where we’ve operated before.

Richard Jackson: Maybe I’ll just add one piece on that. I think the teams have done a great job between exploration and development, not just thinking about the finding cost and sort of the timing. I think we’ve been smart thinking longer term about finding and development costs, making sure it all fits our sustainable cash flow plan. And then as we think about 2030, making sure it all fits to improve. But we’ve got a great pipeline. Teams have done a great job. So it will be exciting as we’re able to pursue those in our future.

Arun Jayaram: Great. I just had one follow-up on the cash flow statement, maybe for Sunil. Sunil, in the discontinued ops line, you’ve had some outflows, I think, related to OxyChem and taxes. Can you just elaborate on that? It was about $450 million in the quarter and about $1.4 billion year-to-date.

Sunil Mathew: Arun, so with respect to the Q3 $455 million, around $415 million is related to tax and the balance, $40 million or $45 million is related to the environmental and transaction costs. And on a year-to-date basis of the $1.4 billion, around $1.2 billion is related to tax and the remaining is a combination again of environmental and transaction costs.

Operator: And this concludes our question-and-answer session. I’d like to turn the conference back over to Richard Jackson for any closing remarks.

Richard Jackson: Okay. Thank you again, everyone. We really appreciate the questions and your time today. Please have a good day.

Operator: Thank you. The conference has now concluded, and we thank you all for attending today’s presentation. You may now disconnect your lines, and have a wonderful day.

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The Best (and Worst) Real Estate Investing Advice for 2027


Dave:
There’s absolutely no shortage of advice on the internet for how real estate investors should handle the 2026 and 2027 markets. Some of it’s good advice. A lot of it is terrible advice. So today on On the Market, me, Kathy, James, and Henry are breaking down the best and worst advice for real estate investors heading into next year. This is On the Market. Let’s get to it. Hey everyone. Welcome to On the Market. I’m Dave Meyer, joined by Henry Washington, James Dainard, and Kathy Fettke today for an episode on the best and worst advice. I don’t know about you guys, but I’m hearing opinions all over the board on how to handle it. So you guys down today to try and separate some of the good advice

Kathy:
From

Dave:
The bad?

Kathy:
I’m looking for some good advice. I can’t wait to hear what you guys have to say.

James:
Yeah. If anybody can give me little hints, I could use it for 2027.

Dave:
Yeah. Guys, we have to give the advice. You know how a podcast works.

Kathy:
Got it.

Dave:
Shoot. So Henry always tries to get me going, so I’m going to make him go first. I want to hear Henry. Perfect. Henry, give us your bad one first. I want to hear the advice that makes you mad.

Henry:
I’ve been saying this for a long time. It’s not even related to this new market that we’re in. I just don’t like it when people say wholesaling is the best way to get started in real estate. It makes me angry. And here’s why. There’s a lot of bad wholesalers and there’s a lot of good wholesalers. And the reason I think there’s a lot of bad wholesalers is because it’s touted as this strategy where you don’t need money, you don’t need banks, you don’t need credit, you just go find a deal and then you mark it up a bunch and you make a bunch of money. But wholesaling isn’t a beginner strategy in my opinion, because if you are really good at wholesaling, you are really good at almost every aspect of real estate investing that happens before you buy the property, which means you’re an excellent marketer in generating leads, which means you’re an excellent communicator at talking to sellers and negotiating.
It means you’re an excellent underwriter of understanding what it’s actually going to take to renovate a property, how long it should take, what kind of money it’s going to cost you to renovate that property. It means you’re an excellent marketer on the sales side because not only do you have to market to find the deals, but you have to market to find the buyers for the deals and you’re an excellent communicator to them. The amount of being able to keep up with your leads, both on the buy side and the sell side in order to be very efficient, in order to underwrite effectively enough to leave yourself with profit and leave a flippersome profit, this is an advanced strategy in my opinion. And the better wholesalers are the ones who are experienced investors. In my opinion, the better wholesalers are the ones who probably started out flipping and then pivoted to wholesaling because it seemed a little bit easier because they got good at all the other parts of the business and they didn’t have to worry about the renovation.
So it just grinds my gears when people say, “Yeah, start out wholesaling and then move your way up.” I think it’s not the easiest way to start, in my personal opinion. I think if you want to be good at it, it takes a lot more experience.

Dave:
Henry, why do you think people give that advice so often?

Henry:
Because the one thing that really holds people back when they’re getting into real estate is they’re scared of not being able to have the money for deals. And so this is super attractive to them because they’re like, “I can do this strategy and I don’t need any money because I don’t actually end up owning the asset.” And I think that’s very attractive to people, but that’s only part of the story. There’s so many other parts of this that are hard and a seller is depending on you to sell their property for the price that you agreed to. These sellers oftentimes aren’t in the best situations and then you tie up their house for 30 days, 60 days, 90 days because you can’t find a buyer. The seller is the one who ends up losing in these transactions when a wholesaler’s not good. To me, that’s just not a beginner strategy.
And I want to be very clear. I’m not saying wholesaling is bad. I think it’s a tool in the tool belt used in the right situations. It’s great. I think you can absolutely make money wholesaling. I think there is absolutely a need for wholesalers. There’s investors out here who make money on all of their flips and all they do is buy from wholesalers. I think it can be done well and should be done well. My only beef is that throwing beginners into it creates a lot more bad ones than there are good ones.

Dave:
Can I say why I think it’s…

Henry:
Absolutely you can.

Dave:
Because people are trying to take advantage of people who don’t have money. There’s a lot of real estate gurus out there just saying that you can become a wholesaler and get rich quick. I think that is a big part of this because I mean, if you’re a good wholesaler, you could clear a 25, $50,000 check, especially during COVID. That’s awesome. It’s amazing if you’re good at that. And that’s appealing to people who might not understand the business and how complicated, as Henry just accurately pointed out, that it’s hard and complicated and takes some skill. But I’m curious your opinion, James, because you kind of started wholesaling, right?

James:
I’m going to disagree with you guys completely on both. Well, I think you guys are also both right like Dave. Yeah, people are trying to sell.That’s the hook for everyone. Get into money with no real estate or no money down, that’s wholesaling, right? But also I think the pitch was look how well I can grow my wholesaling business and you can make all this money and you can build out and spend all this, you got to mail and set up the lead processes. And honestly, most of the people spending this online are out of business right now because wholesaling is actually a very simple business. And I do think it is the greatest way to get going if you do it the right way. When I was 22, that’s how I got in the business, but I didn’t go start a business. I went to work for an investment company and would wholesale them direct deals.
And so they gave me the leads. I didn’t have any marketing costs besides gas. I mean, the beautiful thing about wholesaling is –

Henry:
Of course they gave you an easy button, James. That’s not how most wholesalers get started.

James:
This ain’t an easy button, getting in your car and banging on 50 doors a day. That is how you can make money wholesaling, face-to-face talking to people. And then the nice thing about getting going is this company would teach me how to underwrite the property. This is what their offer price needed to be and why. And so I was able as a young person to go, this is how investors look at things and they would buy the deal and give me the number. And my average check, it was not 25 grand, it was like 3,500 bucks, but I learned a lot and I made 3,500 bucks. And so I think as long as you do it the right way, you don’t need to take over the world. Go find an investor in your market that is buying deals. Go find Henry in Arkansas and go, “Hey, I want to work for you.
Give me a target list of properties. Let me cold call, let me bang on doors. You don’t need to spend more money. Have Henry give you an offer and go try to get the deal done.” You will learn so much. You’ll learn the basics and at the same time you can make money without having to spend it.

Dave:
All right. I like it. It got Henry going. All right. But now Henry, we got to hear your good advice.

Henry:
Oh man.

Dave:
What do you think the best advice is?

Henry:
I think the best advice right now, and this is more so for those investors who got in the game somewhere between 2015 and now. I think the best advice for the people in that bucket is you got to act like you’re a brand new investor again. We got spoiled in the past few years. We got spoiled in 2020 and 2021 where it was very easy to make money. We got spoiled in 2015, 16, 17, 18 and 19 because it was pretty easy to find deals that penciled. It was pretty easy to burr a deal and get all your money out fairly quickly. And now as the market has shifted, this group of investors has also gotten more seasoned. And as you get more seasoned, you get lazier in a sense. You don’t want to do the things, the hard work it took to get you to where you are.
Now you have resources, you want to hire people, you want to hire people. But what’s working right now is a lot of the dirty work that you were willing to do when you got started that you’re not willing to do anymore. And especially in this market where it’s hard to sell, but it’s a whole lot easier to buy. So if you get that hunger back, that hunger to scrounge up that really good deal, that hunger to generate the leads you need to get those really good deals, you can find yourself some of the most amazing deals you’ve ever purchased because of the market conditions right now. And the investors that are kind of failing or getting out of the space are the ones who systematized everything and the systems aren’t producing the results that they want them to produce anymore. The numbers aren’t quite there and they’re not making the necessary adjustments to go and scrounge up that good deal.
Because you can find a good deal on the MLS by making lower offers because there’s so many people that are struggling to sell. But if you now layer on top of that, the level of hustle you had when you first got started, you can literally get yourself deals for 40 cents on the dollar, 30 cents on the dollar, 50 cents on the dollar. There’s such opportunity out there right now and you need margin in this market. So if you can, like James said, he used to knock on doors. If you go knock on doors right now, you’re going to get screaming deals. If you ramp up your marketing right now, you’re going to get the best bang for your buck in your marketing. Like I was telling Dave in a previous episode, our last mail marketing campaign, the response rate is through the roof right now, and that’s just because sellers are struggling to sell.
And so now someone’s sending them mail saying, “Hey, I’d like to buy your property.” And they’re like, “Yeah, here, come talk to me.” So you’re going to get a higher return on the money you spend for your marketing right now, and you can get deeper discounted deals. It’s just if you act like you’re a hungry new investor again, you can clean up and in 10 years you’ll look like a frick-frecking genius.

Kathy:
Well, here’s the thing. I just don’t see James knocking on doors anymore, but –

James:
Oh, I still do.

Kathy:
Okay. Okay. Maybe I’m wrong there, but there are people who maybe don’t need to go back to what got them to where they are, but they have the wisdom and they have the knowledge and experience and maybe they can find the hungry people, train them to go do the thing that they used to do. But you’re just maybe not as hungry when you kind of have enough, I should say.

Henry:
When you’ve eaten a few steaks.

Dave:
I think that’s great advice, Henry, whether you hire someone else to do it, but I think you’re spot on. I see this in myself, not willing to put in some of the groundwork –

Kathy:
Yeah, me too.

Dave:
To do the stuff that I did 10 years ago, 15 years ago. But I do think you’re right that that’s kind of the game right now and I’m willing to do some of it, maybe not all of it. I’m not going to manage my properties again.

Henry:
Amen. Nope. Never again. Amen, bro.

Dave:
I’m not going to do that, but I might go look for some deals. I’ll go with James. James, you want to knock some doors? Let’s go.

James:
I love knocking doors. It’s the best. You never know what’s behind the door.

Henry:
It’s a hard pass for me, but you guys enjoy.

Dave:
All right. Well, Henry, that was very good advice. I like both of those. Who’s up next? James, what do you got? What’s the worst advice you’re hearing right now?

James:
So I’m going to piggyback off of getting started with Henry and it’s house hacking is the best way to get started in real estate right now.

Dave:
Those are fight words.

Henry:
Those are fighting words, buddy.

James:
Yeah, I know.

Dave:
BiggerPockets is going to fire you after that.

James:
Yeah. I just 100% don’t agree with it right now.

Dave:
Well, in Seattle.

James:
And it depends on the market. Yes. It depends. If you’re in a major metro city, I don’t agree with it right now because the cost of rent is so much lower than owning a home.

Henry:
I agree with that. I agree with you.

James:
The point being is when you’re house hacking, you want to be cheaper than what you could rent for. And if you look at the major metro cities, it doesn’t pencil right now.

Dave:
It doesn’t.

James:
Because rates are too high. They’re at the seven and a half percent. If your whole goal is to cover your living expense, not the right idea. Now, if it is to grow equity and get your path going for financial freedom and just building your portfolio, it could be a great thing because you can buy things very heavily discounted and you can put some equity in the bank in the next couple years. But the whole concept of house hacking on keeping your costs down, I just don’t agree. You can rent cheaper.

Dave:
I like this, James. I’m with you. I think it’s just a math problem. People just automatically assume house hacking’s the right way, but Seattle, no way. New York, LA, San Francisco, no way. But in the Midwest, I still think it works in cheaper markets for sure. But I’ve been saying this for a while, but I think if you live in Seattle or these expensive markets, rent and buy property in the Midwest or in the Southeast, that’s a better way than house hacking.

Henry:
Dave and I actually did a BPRE show about this very topic, like if house hacking makes sense, where and why. And that’s really what we talked about is in a lot of major metros, it’s just better to rent and invest somewhere else than it is to house hack in that market for the reasons that James just said. But in a lot of markets, house hacking is a great way to get started and it’s totally feasible. But Los Angeles, the numbers don’t work. Other areas of California, the numbers just don’t work. It’s just cheaper to rent and then take your investing money and take it to a market where you can actually get a return.

Kathy:
I think it just depends. It just depends on the property you find and if you could put an ADU on it, if it’s a five-bedroom house and you got a great deal on it and could rent a bunch of rooms. I think I’ve told you guys, one of my daughter’s ex-boyfriends who we kept because we’re like, “We love him. We’re keeping him as a friend and in our lives. He’s in the military and he bought a couple of places in San Antonio through house hacking and rents to other soldiers and is killing it. He’s living there free.” So again, it depends on your ability. And if you want to buy and get in the game and you only have to put three and a half percent down on your primary, it’s an easier way to get in than maybe some other ways. Maybe you just still don’t have the 20% even to buy in the Midwest potentially, whereas you might be able to put that three and a half percent down in house hack.
Even if it’s not covering everything, it’s at least bringing some income in.

James:
And I think that could change too, the incentives like we saw in 2008 when they would give you that tax credit when you buy. I think we might see those in 2027 somewhere, and that’s where you do want to jump on it because they’re incentivizing you to make this decision. But the incentives right now are to rent because you can get in some of these metro cities three months rent-free.

Dave:
Totally.

James:
And that’s hard to give up for ownership. I’d rather just save the money right now.

Dave:
Yeah, I’m with you. I think the point, James, is really important is that the advice is often blanket advice. We’re talking about bad advice. People are like, “Just house hack. It’s the right answer.” And there was a time that was true. From 2015 to 2022, it kind of was just like house hack, don’t overthink it. But now you do absolutely need to consider what’s the best use of their money. And I agree, in a lot of these expensive markets, it’s not. So then James, what’s your good advice? What’s the best advice you’re hearing right now?

James:
Well, I think 2026 and 27, it’s buy equity positions, not cash flow right now because I’m looking at multifamily deals and things aren’t really getting done right now. There’s not a lot of transactions because people can’t make them cashflow the way they want or people’s expectations of cash flow, getting a 6% return is just boring. It’s because people can buy or put it in the bank and make money, but the equity positions are real. I mean, we just closed on a property, it was 88 units, and the appraisal for the bank came in $2 million higher than our purchase price. And I would say it’s an average cash flow deal, but the location’s great, the building’s great, and that’s $2 million that we get to put in the bank in an area that yes, could go up and down, but over 10 years it’s going to be up.
So it’s so hard as an investor when there’s a lot of fear in the market that you just get locked up and can’t make a decision. But if the deal is good and you’re buying the right equity position or you’re buying well below replacement costs, those are the metrics that I’m trying to focus on right now. Because if I throw on my cash flow calc, it’s not going to look great.

Dave:
But do they cash flow at all?

James:
Yeah, they’ll cash flow. Yes. I mean that will be cash flow. Am I going to bur everything and get 100% of my money out and cash flow? No, that’s not going to happen. But everyone’s so afraid to leave money in a property right now because they want to hang on to cash. And I get that. I want cash too, but it’s okay to leave it if it’s a really good investment. If you are picking up the right property, the right purchase price, and you’re picking it up on the right discount, over 10 years it’s going to pay you back because the dips are there right now.

Dave:
I agree. As long as you can cash flow and hold onto these things, I think that’s the key. It doesn’t need to be great cash flow. I agree with you, but we don’t know how long this dip’s going to be. So you just want to make sure that you don’t get yourself in trouble by buying an equity position that you can’t maintain for the next couple of years.

James:
Yeah.

Dave:
All right. Well, I like that advice. There’s going to be a lot of those opportunities. Find equity right now to walk into equity. That’s one of the things the market is going to be giving us for sure over the next couple of years. All right. Well, we got to take a quick break, but we’ll be back with my best and worst advice and Kathy’s best and worst advice. Stick with us. Welcome back to On the Market. I’m Dave Meyer here with Henry, James and Kathy. Kathy, you’re up. Worst advice. What is just the dog poop advice that you’re hearing right now?

Kathy:
I mean, there’s so much, but one that comes up a lot and always has, it’s nothing new, is that you get started in single family and once you grow up as an investor, you get into multifamily and bigger deals. And I just don’t agree with that because to me it’s just two completely different businesses. And when I say multifamily, I’m not talking about two or four units. I’m talking about anything over five units because it’s a different game. It’s a totally different thing, different animal. So yeah, that advice just bothers me because I think you can scale with single family and I think you can grow incredible wealth with single family and you could do it with multifamily, but it’s not one or the other. And it’s not like you’re a low level, entry level investor if you just stick with single family.

Dave:
I totally agree with that. Do you think that advice is… I feel like a lot of those multifamily people have shut up recently.

James:
The advice is over. Oh man. The plan didn’t work.

Kathy:
The plan didn’t work. I mean, it’s just jumping, it’s diving into the deep end before you really know how to swim, and even some that knew how to swim are being taken down. For sure. And the difference, the huge difference as we know, is the financing. Financing is very different on multifamily or commercial real estate over, again, with multifamily over five units. With single family today, it’s a lot more predictable. Your expenses are pretty much more predictable, not always, but more so with multifamily if you’re on adjustable rate. If you can get a fixed rate on multifamily, that’s great, but I think it’s harder to do. But if you’re on adjustable, how do you plan for where rates are going to be? You just don’t know. And how do you know what cap rates are going to be if your plan is to sell at a certain cap rate?
That’s what so many people have gotten messed up with is making assumptions about where things are going to be in three to five years and you just don’t know. And if your business plan is completely dependent on that, boy, I don’t need to emphasize how stressful that is. So they’re just different businesses, but I think we all know people who stuck with single family and are not complaining today. They’re in a good shape today. Would you agree?

Henry:
Man, single family’s cool again, guys.

Dave:
Cool again. Yeah, it wasn’t cool for a few years, but now.

Henry:
I was talking to one of my first business partners just about this yesterday, about how a lot of people that pivoted into multifamily are struggling, and a lot of those same people were the ones telling me a few years ago that I needed to scale. I needed to do bigger deals. I needed to move into multifamily. That’s just the natural growth path. That’s what I should be doing. I invest in single family for reasons that have less to do with money and more to do with the impact I have. So I never felt like I needed to do that, but a lot of people get caught in that trap. Now a lot of those same people are like, “Man, I really need to build up a single family portfolio. I want to get out of some of this multifamily and get some singles and duplexes and small multis again.” I’m not faulting anybody for wanting to grow and scale if that’s truly what they want.
But if you’re comfortable in your asset class, in your niche, it’s okay to be comfortable there. It’s okay to not pivot. It’s okay to just get better at what you’re already good at if the reasons you’re doing it are producing what you want it to produce.

Kathy:
And it was really a theme at BPCon of the small and mighty investor, would you rather have 10 cash flowing properties very close to being paid off or paid off or have a small investment in a bunch of doors and not really making any money? I think the braggadociousness of how many doors you have, I think that conversation is dead.

Dave:
Hell yes. Thank God. I hate door count.

James:
It would just drive me bonkers as one of these people get online, they’re like, “Oh, what are you going to buy a single family house and cash flow 100 to $200 a house?” What does that do for you? You can’t pay your bills and they’re talking so much grief about this. I guarantee you every one of those people that were just the poo-pooing on that would happily take the $200 right now.

Kathy:
Yeah. It’s a different business. You go bigger, you have more employees, you might have to syndicate and bring in investors. It’s not as simple. And even experienced investors are realizing, whoa, this is rough waters. You can see swimmers out of the ocean who swim all the time and all of a sudden a big wave comes and wipes them out. And that’s really what we’re seeing, things that weren’t expected. I talked to someone at BP Con who now, and I think we’re seeing this all the time, but the bank wants reserves. And when those reserves aren’t there, which it’s not, cash flows are down, the bank wants more money and people have to put in lots more money

Dave:
That

Kathy:
They weren’t planning on. And again, maybe didn’t have it in their proformas.

Dave:
Well, I’m with you, Kathy. I think when you get into these boom times, people stray from the fundamentals, and I’m glad I didn’t, but I get why people do. It’s tempting. And some people really did hit home runs, so good for them. But I think the advice coming back to the fundamentals is very good. So with that, you told us your bad advice. What’s your good advice?

Kathy:
Well, I think you just literally said it. I just had a women’s retreat. It was awesome. And one of the things I saw is little me, little Kathy basically and these women, which was, “I’m really good at this thing I’ve been doing, so now I’m ready for this thing.” And one was really good at actually selling real estate, really good agent and actually successful at it and flipping, and all of a sudden now is ready to do RV parks. And it’s like, “Ooh, is this the time to be trying a new business?” And we’ve got to look at… So my advice is if you’re doing something that’s been successful, just do it better. Stick with it. Get your operations in order, cut expenses, increase income, get better at what you’re already good at. If you’re going to start something new, you got to understand you’re starting something new in a very tough time to start something new.
So that’s my advice.

Dave:
Yeah. I could pick apart the mobile home park thesis, but I think generally you’re absolutely right, Kathy. It’s something I hear all the time. I’m doing this, what’s next? Just keep doing what you’re doing.

Kathy:
Yeah, just do better.

Dave:
Yeah. Henry and I had a really good conversation. I don’t know if you guys know Paula Pant. She hosts the podcast, Afford Anything. We were talking to her about this and she was saying the same thing. It’s just this human drive to do more and try the next thing. And that’s totally understandable. I have fallen victim to that like everyone I think has. But her advice was just find another outlet for that energy. If you’re a good agent, just be a great agent and then find a hobby or volunteer. You can grow as a person and as a professional in other ways without taking on unnecessary risk or disrupting something that you’re good at. Risking something you’re good at and that’s working to try something unproven. That to me is just not worth it.

Henry:
James is over here like, “I know y’all ain’t talking to me.”

Dave:
James is like, “I’ll buy that mobile home park.”

Henry:
How much they want to sell it for?

James:
How much?

Dave:
All right. Well, I think that’s great advice, Kathy. I really think, especially in today’s day and age, when things were easy, sure, go take a shot. Right now, I would much rather see people really get good at something. That’s a surefire way to get rich and to be wealthy.

Kathy:
Or you do what Brian Burke is doing, where he went from multifamily into senior housing or assisted living, but he didn’t just jump in. He brought in, he hired an executive who’s done it for 30 years or whatever. So just got that 30 years experience. So that’s one way to jump into something new because you’re not really jumping in, you’re just learning, you’re apprenticing with somebody who’s already done it.

Dave:
All right. Well, I’ll give you my best and worst advice for 2027 right after this quick break. Stick with us. Welcome back to On the Market. I’m Dave Meyer joined today by Kathy, Henry and James. We’re giving our best and worst advice that we hear right now, and it is my turn. And my worst advice, James, this is going to conflict with what you said, but I think you might actually agree with me. I actually think you might agree with me. The worst advice that I hear constantly in any market, but especially in this market, is that your primary home is not an investment. And you hear very prominent real estate names, Grant Cardone and Robert Kiyosaki say that your primary home is not an investment. This drives me nuts because I think this is a choice. If you go out and buy your dream home in a fancy thing and you’re over leveraging yourself, yeah, that’s not an investment.
I agree with that. But if you want your primary home to be an investment, it can absolutely be an investment. Even James, even I agree with you, house hacking, it might not be the best, most optimal way to invest in certain markets right now, but if you want to buy a primary home and offset some of your costs, you can do that through house hacking. It might not be the optimal use of your money, but you absolutely can do it. Look at Kathy, she still does it. There’s absolutely ways to make money from your primary residence, from doing a live and flip to house hacking. I actually think I see more advanced investors getting back into house hacking right now, people who own a nice property, who are breaking off lots or who are building ADUs. I absolutely think your primary home can be a investment.
And I would argue that it’s more important now than it has been in our lifetimes because the cost of housing is just so expensive. Whether you’re a renter or a buyer, it’s expensive. So if you can find a way to even offset some of your cost of housing and think of it as an investment, you should do that.

Kathy:
I agree. Amen, brother.

James:
I mean, for everyone that didn’t buy during COVID, their primary residence, and they go, “Well, I’m never going to see this growth again,” this is the opportunity to get some good appreciation. I’m seeing homes sell for 300 grand less than they were trading for 12 months ago. That buyer in 12 months will see an equity gain from what they paid because they bought it on the dip. And so I mean, I would love to debate anybody on the primary residence is not an investment, and I will show them math, and there’s no way that they’ll be able to argue this math. It’s absurd to me when people say that.

Kathy:
Me too. I just had some friends visit and one of them has rented the same four bedroom house in Northern California for 20 years, just the most ideal tenant you could ever have. And I mean, I’m her friend, so trust me, I’ve been trying to get her to buy and she house hacks her rental. So that’s kind of cool. She rents out three of the rooms and her rent is very low. But dude, had you done that in a house hack, she’s already renting rooms and had locked in a low interest rate over the years, she would be a multi multimillionaire because the property is in the San Francisco Bay Area. So it’s like the argument might be, well, how could I do it? It’s too expensive. How can you do it? You find a way to do it. You find a way to do it.
You listen to BiggerPockets, you find out how to do it, but it can be done. And whether You get other partners.

Dave:
Three and a half percent down.

Kathy:
Yes, yes, yes, yes. So I couldn’t agree more is absolutely an investment, especially if you hold it.

James:
Or you sell it after two years.

Kathy:
Or do what James does.

James:
We’ll see what happens. I’m putting a sign in my yard soon.

Dave:
James, you’re going to have to tell us about your primary home investment if that one clicks out.

James:
Yeah, then I will debate anybody.

Dave:
All right. Well, our last piece of advice is my best advice right now. And I hear some people talking about this, but I think it should be talked about more. Right now, I think one of the best strategies you can use in real estate is paying off your debt, is using the money that you have or selling rentals that you don’t want anymore and paying down your debt. Because in a weird market, a weird economy like we’re in right now, a residential rental property with little to no debt on it is about as rock solid as you can get. We don’t know what’s going to happen with the stock market or crypto or gold or commercial real estate or even the housing market. But man, if you don’t have debt on these properties, put out a lot of cash flow and really, really low risk investment.That to me is a really appealing part of your portfolio.
I’m not saying you need to have no debt on any of it. I absolutely have debt on properties, but knowing that I have some properties that are paid off is a pretty good feeling knowing that one’s rock solid and we’ll provide cashflow in case I need it. And it also, to me, gets a lot of, for me personally, and I think for a lot of investors, gets you closer to your end game, which is to have a low risk long-term portfolio. And I know a lot of people out there say you’re crazy not to try and scale and to not leverage yourself as much as you can. That’s the benefit of real estate. I don’t know. It totally depends on where you are in your investing career. Young people newer probably need to use leverage. I’m with that. But I think if you’re a little bit later in your career, paying off debt right now, especially if you have any high interest rates, it makes a lot of sense to me.

Kathy:
I was just going to ask you that. Would you pay off low interest rate debt?

Dave:
No, no. No. Not anything that’s like three or 4%, but I think probably eventually I will.

Kathy:
I would keep those forever.

James:
I think that is some of the best advice people could have right now because I think the reason people are hurting is they just abuse debt. There’s too easy to get a hold of financing, too easy to hold to get money from other people, and now they’re in deep trouble. That was the lesson I learned in 2008 was don’t abuse debt. It will get you.

Henry:
This is absolutely something I’m considering and looking at right now too. I think it’s great advice. And people always say, “Well, you shouldn’t pay off your homes. Yo should scale.” But it’s not just because I’m selling some properties right now doesn’t mean I’m out of the game. I can go buy more. I’m just trying to secure a section of my portfolio for the future, for the long haul. And then maybe I’ll go build something else. I’m with you. I was talking to my wife about this as we were discussing the options and it was like, if I do this and I start building a rental portfolio again, how much better is that portfolio going to be? It’s a great time to buy right now. I know better what to go buy. I know more about what I like and what I don’t like. I know more about how to operate my properties.
I know I have so much more information and tools at my disposal now than I did when I first got started. I could build a much better portfolio.

Dave:
Exactly. It doesn’t have to be all of your portfolio, but finding opportunities to pay down debt I think is a really good thing to be thinking about right now. I’m definitely not two and a half percent mortgages that I have, Kathy. Absolutely not. But even 5% I’m considering paying off right now. I’d rather the cash flow. The other thing is right now, because we’re in this transitionary period and I personally am skeptical of the stock market and stuff and I could hold cash or I could pay off my mortgages and that’s essentially even if you pay off your 5% mortgage, you’re essentially getting a 5% return that’s better than a money market account. And then if the market changes, just refinance it. Then you can pull the money out. It doesn’t even need to be a permanent thing, but it can help you weather a confusing time like we’re in right now.

Kathy:
Another thing I used to teach is maybe you don’t have the means to really pay down your debt, but if you take the cash flow that you’re earning on some of these properties that maybe isn’t changing your life because it’s only a few hundred dollars and you just make that one extra payment. If you just take the cash flow, pay down the loan and make sure that the bank understands that’s what you’re doing, you can cut your 30-year mortgage down into 15.

Dave:
100%.

Kathy:
And even less. Yeah. So that was something actually I taught for years, Dave, was just take your cashflow. You don’t need it today.You’ve got a job. And maybe take all of it from your entire portfolio and pay one down. Pay your highest interest rate property with all the cash flow and watch, like you said, watch that get paid off at not just your stress levels, but your cashflow gets better.

Dave:
The math on that is very compelling. I won’t get into it, but if you look at the math of paying down your mortgages quickly, it usually is a very good return and is worth your time. So I’m totally with you, Kathy.

Kathy:
Yeah.

Dave:
All right. Well, this was a lot of fun. Some good advice, some bad advice, but always a lot of fun hanging out with you guys. Kathy, James, Henry, thanks for being here and thank you all for watching this episode of On the Market. We’ll see you guys next time.

Kathy:
See you soon.

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