Occidental Petroleum · 10-Q · Item 2 MD&A

Item 2. Management's Discussion and Analysis of Financial Condition and Results of Operations

The following discussion should be read together with the Consolidated Condensed Financial Statements and the notes to the Consolidated Condensed Financial Statements, which are included in this report in Part I, Item 1; the information set forth in Risk Factors under Part II, Item 1A; the Consolidated Financial Statements and the notes to the Consolidated Financial Statements, which are included in Part II, Item 8 of the 2025 Form 10-K; and the information set forth in Risk Factors under Part I, Item 1A of the 2025 Form 10-K.

CAUTIONARY STATEMENT REGARDING FORWARD-LOOKING STATEMENTS

Portions of this report contain forward-looking statements within the meaning of Section 27A of the Securities Act of 1933, as amended, and Section 21E of the Securities Exchange Act of 1934, as amended. All statements other than statements of historical fact are "forward-looking statements" for purposes of federal and state securities laws, including, but not limited to: any projections of earnings, revenue or other financial items or future financial position or sources of financing; any statements of the plans, strategies and objectives of management for future operations or business strategy; any statements regarding future economic conditions or performance; any statements of belief; and any statements of assumptions underlying any of the foregoing.

Words such as "estimate," "project," "predict," "will," "would," "should," "could," "may," "might," "anticipate," "plan," "intend," "believe," "expect," "aim," "goal," "target," "objective," "commit," "advance," "guidance," "priority," "focus," "assumption," "likely" or similar expressions that convey the prospective nature of events or outcomes are generally indicative of forward-looking statements. You should not place undue reliance on these forward-looking statements, which speak only as of the date of this report unless an earlier date is specified. Unless legally required, the Company does not undertake any obligation to update, modify or withdraw any forward-looking statement as a result of new information, future events or otherwise.

Actual outcomes or results may differ from anticipated results, sometimes materially. Forward-looking and other statements regarding the Company's sustainability efforts and aspirations are not an indication that these statements are necessarily material to investors or require disclosure in the Company's filings with the SEC. In addition, historical, current and forward-looking sustainability-related statements may be based on standards for measuring progress that are still developing, internal controls and processes that continue to evolve and definitions, assumptions, data sources and estimates or measurements that are subject to change in the future, including through rulemaking or guidance. Factors that could cause results to differ from those projected or assumed in any forward-looking statement include, but are not limited to: general economic conditions, including slowdowns and recessions, domestically or internationally; the Company's indebtedness and other payment obligations, including the need to generate sufficient cash flows to fund operations; the Company's ability to successfully monetize select assets and repay or refinance debt and the impact of changes in the Company's credit ratings or future increases in interest rates; assumptions about energy markets; global and local commodity and commodity-futures pricing fluctuations and volatility; supply and demand considerations for, and the prices of, the Company's products and services; actions by OPEC and non-OPEC oil producing countries; results from operations and competitive conditions; future impairments of the Company's proved and unproved oil and gas properties or equity investments, or write-downs of productive assets, causing charges to earnings; unexpected changes in costs; government actions (including the effects of announced or future tariff increases and other geopolitical, trade, tariff, fiscal and regulatory uncertainties), war (including the Russia-Ukraine war and conflicts in the Middle East) and political conditions and events (such as in Latin America); inflation, its impact on markets and economic activity and related monetary policy actions by governments in response to inflation; availability of capital resources, levels of capital expenditures and contractual obligations; the regulatory approval environment, including the Company's ability to timely obtain or maintain permits or other government approvals, including those necessary for drilling and/or development projects; the Company's ability to successfully complete, or any material delay of, field developments, expansion projects, capital expenditures, efficiency projects, acquisitions or divestitures; risks associated with acquisitions, mergers and joint ventures, such as difficulties integrating businesses, uncertainty associated with financial projections or projected synergies, restructuring, increased costs and adverse tax consequences; uncertainties and liabilities associated with acquired and divested properties and businesses, including retained liabilities and indemnification obligations associated with the chemical business; uncertainties about the estimated quantities of oil, NGL and natural gas reserves; lower-than-expected production from development projects or acquisitions; the Company's ability to realize the anticipated benefits from prior or future streamlining actions to reduce fixed costs, simplify or improve processes and improve the Company's competitiveness; exploration, drilling and other operational risks; disruptions to, capacity constraints in, or other limitations on the pipeline systems that deliver the Company's oil and natural gas and other processing and transportation considerations; volatility in the securities, capital or credit markets, including capital market disruptions and instability of financial institutions; HSE risks, costs and liability under existing or future federal, regional, state, provincial, tribal, local and international HSE laws, regulations and litigation (including related to climate change or remedial actions or assessments); legislative or regulatory changes, including changes relating to hydraulic fracturing or other oil and natural gas operations, retroactive royalty or production tax regimes, and deep-water and onshore drilling and permitting regulations; the Company's ability to recognize intended benefits from its business strategies and initiatives, such as the Company's low-carbon ventures businesses and announced GHG emissions reduction targets or net-zero goals; changes in government grant or loan programs; potential liability resulting from pending or future litigation, government investigations and other proceedings; disruption or interruption of production or facility damage due to accidents, chemical releases, labor unrest, weather, power outages, natural disasters, cyber-attacks, terrorist acts or insurgent activity; the scope and duration of global or regional health pandemics or epidemics and actions taken by government authorities and other third parties in connection therewith; the creditworthiness and performance of the Company's counterparties, including financial institutions, operating partners and other parties; failure of risk management; the Company's ability to retain and hire key personnel; supply, transportation and labor constraints; reorganization or restructuring of the Company's operations; changes in state, federal or international tax rates, deductions, incentives or credits; and actions by third parties that are beyond the Company's control.

Additional information concerning these and other factors that may cause the Company's results of operations and financial position to differ from expectations can be found in the Company's other filings with the SEC, including the Company's 2025 Form 10-K, Quarterly Reports on Form 10-Q and Current Reports on Form 8-K.

CURRENT BUSINESS OUTLOOK

T1The Company's financial results are significantly influenced by crude oil prices and, to a lesser extent, NGL and natural gas prices and commodity market differentials. The average WTI price per barrel was $92.79 for the three months ended June 30, 2026, compared with $71.93 for the three months ended March 31, 2026. The average WTI price per barrel was $82.36 for the six months ended June 30, 2026, compared with $67.58 for the six months ended June 30, 2025.

Changes in commodity prices may affect the Company's capital allocation decisions, including the level and timing of investments, which could affect future production volumes. Oil prices are expected to remain volatile due to a variety of factors, including geopolitical developments, macroeconomic conditions and their impact on global energy demand, actions by OPEC and non-OPEC producing countries, and changes in U.S. trade policy.

T2Commodity prices during the second quarter benefited in part from risk premiums associated with the conflict involving Iran and resulting disruptions to regional energy markets and trade flows. Although shipping activity through the Strait of Hormuz improved during portions of the quarter following diplomatic efforts, recent developments have underscored the continued fragility of those conditions. Ongoing geopolitical uncertainty, potential disruptions to maritime transportation and energy infrastructure, and evolving governmental responses could continue to influence commodity prices and contribute to market volatility. The duration, scope and ultimate outcome of the conflict remain uncertain and could continue to affect energy markets, global economic conditions and commodity prices.

T3Recent U.S. trade policy actions, including the implementation of tariff replacement measures, could also affect the Company's operations and financial performance. Although the Company has not experienced a material impact to date, tariffs or tariff replacement measures imposed on suppliers could increase costs over time. In addition, broader economic impacts and uncertainty associated with evolving trade policies could affect demand for the Company's products and the prices realized for its production.

STRATEGIC PRIORITIES

The Company is focused on delivering a unique shareholder value proposition with its portfolio of oil and gas and midstream and marketing assets, as well as its ongoing development of carbon management and sequestration solutions and GHG emissions reduction efforts. The Company conducts its operations with an emphasis on technical expertise, HSE, sustainability and social responsibility, and is advancing integrated technologies in CO2, power and midstream to enable differentiated resource recovery and value.

In order to maximize shareholder returns, the Company intends to:

■Maintain safe and responsible operations;

■Execute from a strong balance sheet;

■Deliver a sustainable and growing dividend; and

■Sustain base production.

T4In August 2026, the Board increased the quarterly dividend by 8% to $0.28 per share, which will be payable on October 15, 2026 to shareholders of record as of September 10, 2026.

OXYCHEM TRANSACTION

T5The Company completed the sale of OxyChem on January 2, 2026 in an all-cash transaction for an adjusted sales price of $9.5 billion, subject to additional post-closing adjustments. The transaction resulted in a gain of approximately $3.1 billion, net of taxes. OxyChem is reported as discontinued operations, with its assets and liabilities classified as held for sale as of December 31, 2025.

See Note 1 - General in the Notes to Consolidated Condensed Financial Statements in Part I, Item 1 of this Form 10-Q for additional information regarding the OxyChem Transaction.

DEBT

As of June 30, 2026, the Company's debt was rated Baa3 by Moody's Investors Service, BBB by Fitch Ratings and BB+ by Standard and Poor's. T6Any downgrade in the Company's credit ratings could affect its ability to access capital markets and increase its cost of capital. In addition, Occidental or its subsidiaries may be requested, may elect to provide or in some cases may be required to provide collateral in the form of cash, letters of credit, surety bonds or other acceptable support as financial assurance of their performance and payment obligations under certain contractual arrangements, such as pipeline transportation contracts, oil and gas purchase contracts and certain derivative instruments; certain permits, including with respect to carbon capture, utilization and sequestration activities; and environmental remediation matters.

T7During the six months ended June 30, 2026, the Company used after-tax proceeds from the OxyChem Transaction and cash from operations to repay approximately $8.6 billion of debt. For information on the Company's debt activity, see Note 3 - Long-Term Debt in the Notes to Consolidated Condensed Financial Statements in Part I, Item 1 of this Form 10-Q for additional information.

As of June 30, 2026, substantially all of the Company's outstanding debt was fixed rate.

CONSOLIDATED RESULTS OF OPERATIONS AND ITEMS AFFECTING COMPARABILITY

The following table sets forth earnings of each operating segment and corporate items:

Three months ended

millions

% Change

Net income

Oil and gas (a)

$

%

$

Midstream and marketing (a)

%

Total

%

Unallocated Corporate Items (a)

Interest expense, net

%

Income tax expense

%

Corporate and other items, net

%

Income from continuing operations

$

%

$

Discontinued operations, net of taxes

(4)

%

Net income

$

%

$

Less: Net income attributable to noncontrolling interest

%

Less: Preferred stock dividends

—

%

Net income attributable to common stockholders

$

%

$

Net income per share attributable to common stockholders - diluted

$

%

$

(a) Refer to the Items Affecting Comparability table which sets forth items affecting the Company's earnings that vary widely and unpredictably in nature, timing and amount.

Six months ended

millions

% Change

Net income

Oil and gas (a)

$

%

$

Midstream and marketing (a)

%

Total

%

Unallocated Corporate Items (a)

Interest expense, net

(7)

%

Income tax expense

%

Corporate and other items, net

(3)

%

Income from continuing operations

$

%

$

Discontinued operations, net of taxes

%

Net income

$

%

$

Less: Net income attributable to noncontrolling interest

%

Less: Preferred stock dividends

—

%

Net income attributable to common stockholders

$

%

$

Net income per share attributable to common stockholders - diluted

$

%

$

(a) Refer to the Items Affecting Comparability table which sets forth items affecting the Company's earnings that vary widely and unpredictably in nature, timing and amount.

ITEMS AFFECTING COMPARABILITY

The following table sets forth items affecting the comparability of the Company's earnings that vary widely and unpredictably in nature, timing and amount:

Three months ended

Six months ended

millions

Oil and gas

Crude oil derivative gains (losses)

$

$

$

$

—

Losses on sales of assets and other, net

—

Legal reserves and other

—

—

—

Total oil and gas

Midstream and marketing

Derivative gains (losses), net

Gains (losses) on sales of assets and other, net (a)

—

Asset impairments and other charges (a)

—

Total midstream and marketing

Corporate

Early debt extinguishment

—

Early retirement costs

—

Acquisition-related costs and other

—

—

—

Total corporate

8

Income tax impact on items affecting comparability

Gains (losses) from continuing operations

Discontinued operations, net of taxes

(4)

Total

$

$

$

$

(a) Includes amounts from income from equity investments and other in the Consolidated Condensed Statements of Operations.

Excluding the impact of items affecting comparability, net income increased for the three months ended June 30, 2026, compared to the three months ended March 31, 2026, primarily due to higher realized crude oil prices in the oil and gas segment and higher marketing margins related to the timing of crude sales and natural gas transportation capacity optimization activities in the Permian. These increases were partially offset by lower domestic realized natural gas prices in the oil and gas segment.

First six months of 2026 compared to the first six months of 2025

Excluding the impact of items affecting comparability, net income increased for the six months ended June 30, 2026, compared to the same period in 2025, primarily due to higher realized crude oil prices in the oil and gas segment, higher marketing margins from natural gas transportation capacity optimization activities in the Permian, the timing of crude sales, lower long-haul crude transportation costs, higher sulfur prices at Al Hosn and lower interest expense due to reduced long-term debt. These increases were partially offset by lower domestic realized natural gas prices in the oil and gas segment.

SELECTED STATEMENTS OF OPERATIONS ITEMS

Net sales increased to $8.1 billion for the three months ended June 30, 2026, compared to $5.2 billion for the three months ended March 31, 2026, primarily due to higher crude oil prices and higher marketing margins related to the timing of crude sales and natural gas transportation capacity optimization activities in the Permian. These increases were partially offset by lower domestic realized natural gas prices in the oil and gas segment.

Gains (losses) on sales of assets and other, net were a gain of $180 million for the three months ended June 30, 2026, compared with a loss of $202 million for the three months ended March 31, 2026. The gain on sale of assets and other, net

for the three months ended June 30, 2026 included a gain of $220 million from a pro-rata ownership reduction in WES following an acquisition made by WES. The loss on sale of assets and other, net for the three months ended March 31, 2026 reflected a loss of approximately $200 million on the divestiture of non-core oil and gas interests and certain gas processing plants in the Permian Basin.

Interest and debt expense, net decreased to $108 million for the three months ended June 30, 2026, compared to $432 million for the three months ended March 31, 2026, primarily due to premiums paid on early debt extinguishment in the three months ended March 31, 2026 and lower interest expense in the three months ended June 30, 2026 as a result of lower outstanding debt.

Income tax expense increased to $915 million for the three months ended June 30, 2026, compared to $154 million for the three months ended March 31, 2026, primarily due to higher pre-tax income earned in the three months ended June 30, 2026.

First six months of 2026 compared to the first six months of 2025

Net sales increased to $13.3 billion for the six months ended June 30, 2026, compared to $11.0 billion for the same period in 2025, primarily due to higher realized crude oil prices in the oil and gas segment, higher sulfur prices at Al Hosn, and higher marketing margins related to the timing of crude sales and natural gas transportation capacity optimization activities in the Permian. These increases were partially offset by lower domestic realized natural gas prices and derivative losses on the crude oil collars in the oil and gas segment.

Income tax expense increased to $1.1 billion for the six months ended June 30, 2026, compared to $569 million for the same period in 2025, primarily due to higher pre-tax income in the six months ended June 30, 2026.

SEGMENT RESULTS OF OPERATIONS

OVERVIEW OF SEGMENT RESULTS

The Company's principal businesses consist of two reporting segments: oil and gas and midstream and marketing. The oil and gas segment explores for, develops and produces oil and condensate, NGL and natural gas. The midstream and marketing segment purchases, markets, gathers, processes, transports and stores oil (including condensate), NGL, natural gas, CO2 and power; optimizes its transportation and storage capacity; and invests in entities that conduct similar activities, including WES. The midstream and marketing segment also includes the Company's low-carbon ventures businesses.

OIL AND GAS SEGMENT

The following table sets forth average daily sales volumes for oil and NGL in Mbbl and for natural gas in MMcf:

Three months ended

Six months ended

Sales Volumes per Day

Oil (Mbbl)

United States

International

NGL (Mbbl)

United States

International

Natural Gas (MMcf)

United States

International

Total Sales Volumes (Mboe) (a)

(a) Natural gas volumes have been converted to Boe based on energy content of six Mcf of gas to one barrel of oil. Conversion to Boe does not necessarily result in price equivalency.

The following table presents the Company's average realized prices and average index prices for the periods presented:

Three months ended

Six months ended

Average Realized Prices

Oil ($/Bbl)

United States

$

$

$

$

International

$

$

$

$

Total Worldwide

$

$

$

$

NGL ($/Bbl)

United States

$

$

$

$

International

$

$

$

$

Total Worldwide

$

$

$

$

Natural Gas ($/Mcf)

United States

$

$

$

$

International

$

$

$

$

Total Worldwide

$

$

$

$

Average Index Prices

WTI oil ($/Bbl)

$

$

$

$

Brent oil ($/Bbl)

$

$

$

$

NYMEX gas ($/Mcf)

$

$

$

$

Average Realized Prices as Percentage of Average Index Prices

Worldwide oil as a percentage of average WTI

%

%

%

%

Worldwide oil as a percentage of average Brent

%

%

%

%

Worldwide NGL as a percentage of average WTI

%

%

%

%

Domestic natural gas as a percentage of average NYMEX

%

%

(8)

%

%

Oil and gas segment earnings were $2.8 billion for the three months ended June 30, 2026, compared with $1.0 billion for the three months ended March 31, 2026. The increase was primarily driven by higher realized crude oil and NGL prices and derivative gains, partially offset by lower domestic natural gas realizations.

Average daily sales volumes were generally consistent for the three months ended June 30, 2026, compared with the three months ended March 31, 2026, as modest increases in domestic NGL and natural gas volumes were largely offset by lower international oil, NGL, and natural gas volumes.

First six months of 2026 compared to the first six months of 2025

Oil and gas segment earnings were $3.9 billion for the six months ended June 30, 2026, compared with $2.6 billion for the same period in 2025. The increase was primarily driven by higher realized crude oil prices and higher sales volumes, partially offset by lower domestic natural gas realizations and crude oil derivative losses.

Average daily sales volumes increased for the six months ended June 30, 2026, compared with the same period in 2025, primarily due to development activity and new wells coming online in the Permian and the effect in 2025 of a third-party pipeline disruption affecting the Company's Gulf of America operations. These increases were partially offset by lower international sales volumes associated with disruptions resulting from conflict in the Middle East.

The following table analyzes the impacts of changes in average realized prices and sales volumes on the Company's domestic and international oil, NGL and natural gas revenues:

Increase (Decrease) Related to

millions

Price Realizations

Net Sales Volumes

United States Revenue

Oil

$

$

$

$

NGL

(7)

$

Natural gas

—

$

Total

$

$

$

$

International Revenue

Oil (a)

$

$

$

$

NGL

$

Natural gas

2

(4)

$

Total

$

$

$

$

Increase (Decrease) Related to

millions

Price Realizations

Net Sales Volumes

United States Revenue

Oil

$

$

$

$

NGL

Natural gas

Total

$

$

$

$

International Revenue

Oil (a)

$

$

$

$

NGL

7

Natural gas

4

Total

$

$

$

$

(a) Includes the impact of international production sharing contracts.

(b) Excludes "other" oil and gas revenue. See Note 2 - Revenue in the Notes to Consolidated Condensed Financial Statements in Part I, Item 1 of this Form 10-Q for additional information regarding other revenue.

MIDSTREAM AND MARKETING SEGMENT

Midstream and marketing segment earnings for the three months ended June 30, 2026 were $1.3 billion, compared to segment losses of $87 million for the three months ended March 31, 2026. Excluding the impact of items affecting comparability, second quarter results improved primarily due to higher crude margins driven by the timing impact of crude marketing, reflecting the lag between the purchase of crude volumes and their subsequent sale, and higher gas margins from transportation capacity optimizations.

First six months of 2026 compared to the first six months of 2025

Midstream and marketing segment earnings for the six months ended June 30, 2026 were $1.3 billion, compared to segment losses of $33 million for the same period in 2025. Excluding the impact of items affecting comparability, the increase reflected higher crude margins driven by the timing impact of crude marketing, higher gas margins from transportation capacity optimization, and lower crude marketing transportation costs. Results also benefitted from higher sulfur prices at Al Hosn.

DISCONTINUED OPERATIONS, NET

Discontinued operations, net includes the results of OxyChem for all periods presented and the gain recognized upon closing the OxyChem transaction on January 2, 2026. See Note 1 - General.

Select results for discontinued operations are reflected in the following table:

Three months ended

Six months ended

millions

Income (loss) before income taxes

$

$

$

$

Income tax benefit (expense)

Income (loss) from discontinued operations, net of tax

$

(4)

$

$

$

Income from discontinued operations, net of taxes of $3.1 billion increased for the six months ended June 30, 2026, compared to $245 million for the same period in 2025. The increase was primarily due to the $3.1 billion gain recognized upon closing the OxyChem Transaction.

INCOME TAXES

The following table sets forth the calculation of the worldwide effective tax rate for income:

Three months ended

Six months ended

millions, except percentages

Income before income taxes

$

$

$

$

Income tax expense

Domestic - federal and state

International

Total income tax expense

Income from continuing operations

$

$

$

$

Worldwide effective tax rate (continuing operations)

%

%

%

%

The Company estimates its annual effective income tax rate in recording its quarterly provision for income taxes in the various jurisdictions in which the Company operates, adjusted for certain discrete items. Each quarter, the Company updates these rates and records a cumulative adjustment to its income taxes by applying the rates to the pre-tax income excluding certain discrete items. The Company's quarterly estimate of its effective tax rates can vary significantly based on various forecasted items, including future commodity prices, capital expenditures, expenses for which tax benefits are not recognized and the geographic mix of pre-tax income and losses.

The worldwide effective tax rates for the periods presented in the table above are primarily driven by the Company's jurisdictional mix of income. U.S. income is taxed at a U.S. federal statutory rate of 21%, while international income is subject to tax at statutory rates as high as 55%.

LIQUIDITY AND CAPITAL RESOURCES

SOURCES AND USES OF CASH

T8As of June 30, 2026, the Company's sources of liquidity included $4.2 billion of cash and cash equivalents and $4.2 billion of borrowing capacity under its RCF, which matures on June 30, 2028. There were no borrowings outstanding under the Company's RCF as of June 30, 2026.

Operating Cash Flows

Operating cash flow from continuing operations was $6.5 billion for the six months ended June 30, 2026, compared to $4.8 billion for the six months ended June 30, 2025. Operating cash flow from continuing operations for the six months

ended June 30, 2026 included $183 million in cash settlements related to crude oil collars. The increase, compared to the same period in 2025, was primarily due to higher net income in 2026 resulting from the sharp increase in crude oil prices beginning in March 2026 and higher natural gas margins from gas transportation capacity optimization in the marketing segment.

Operating cash flow used by discontinued operations was $926 million for the six months ended June 30, 2026, compared to operating cash flow from discontinued operations of $347 million for the six months ended June 30, 2025. The decrease was primarily due to estimated tax payments made related to the sale of OxyChem in the first quarter of 2026.

Investing Cash Flows

The Company's net cash used by investing activities from continuing operations was $3.4 billion for the six months ended June 30, 2026, compared to $2.2 billion for the six months ended June 30, 2025. The year-over-year change was primarily due to $1.5 billion in proceeds from divestitures in the prior year.

Capital expenditures, the majority of which related to the oil and gas segment, were $3.1 billion for the six months ended June 30, 2026, compared to $3.4 billion for the six months ended June 30, 2025.

Cash flow provided by investing activities from discontinued operations was $9.5 billion for the six months ended June 30, 2026, primarily reflecting proceeds from the OxyChem Transaction.

Financing Cash Flows

The Company's net cash used by financing activities from continuing operations was $9.5 billion for the six months ended June 30, 2026, which included $8.6 billion of principal payments on long-term debt and $0.8 billion of payments of common and preferred cash dividends. See Note 3 - Long-Term Debt in the Notes to Consolidated Condensed Financial Statements in Part I, Item 1 of this Form 10-Q.

Net cash used by financing activities for the six months ended June 30, 2025 was $2.2 billion, which included $2.3 billion of payments on long-term debt, $0.8 billion of payments of common and preferred cash dividends and proceeds of approximately $890 million from the exercise of common stock warrants.

As of the date of this filing, the Company is in compliance with all covenants in its financing agreements, and it has no remaining debt maturities due in 2026, $48 million in 2027, $14 million in 2028, $352 million in 2029, and $11.4 billion thereafter. The Company expects cash on hand, operating cash flows and funds available from the RCF to be sufficient to meet its near-term debt maturities, operating expenditures, capital expenditures and other obligations for the next 12 months from the date of this filing.

The Company has provided financial assurances through a combination of cash, letters of credit and surety bonds. As of June 30, 2026, the Company had no outstanding letters of credit under the RCF.

For additional information, see Risk Factors in Part I, Item 1A of the Company's 2025 Form 10-K.

ENVIRONMENTAL LIABILITIES AND EXPENDITURES

See Note 7 - Environmental Liabilities and Expenditures in the Notes to Consolidated Condensed Financial Statements in Part I, Item 1 of this Form 10-Q and the Environmental Liabilities and Expenditures section of Management's Discussion and Analysis of Financial Condition and Results of Operations in the 2025 Form 10-K for additional information regarding the Company's environmental liabilities and expenditures.

LAWSUITS, CLAIMS, COMMITMENTS AND CONTINGENCIES

The Company accrues reserves for outstanding lawsuits, claims and proceedings when it is probable that a liability has been incurred and the liability can be reasonably estimated. The Company has disclosed its reserve balances for environmental remediation matters and its estimated range of reasonably possible additional losses for such matters. See Note 7 - Environmental Liabilities and Expenditures and Note 8 - Lawsuits, Claims, Commitments and Contingencies in the Notes to Consolidated Condensed Financial Statements in Part I, Item 1 of this Form 10-Q for further information.