Occidental Petroleum (NYSE:OXY) is breaking the mold of energy exploration and production companies. Oil prices have collapsed over the past few months, and the typical response by management teams in the E&P space is to cut production. The rationale is that instead of absorbing losses on unprofitable drilling opportunities, it's often wise to curtail production until commodity prices become supportive once again.

But that's not the direction Occidental is heading. Instead, the company is keeping production going during the downturn in oil prices. This could prove to be wise if the decline turns out to be temporary. However, under a more sustained downturn, Occidental management runs the risk of looking foolish.

Here is a rundown of Occidental Petroleum's most recent conference call, featuring a few interesting things management had to say about the state of the business.

Production going strong
"For the fifth consecutive quarter, we continued our strong domestic oil production growth." -- Chris Stavros, chief financial officer.

Occidental Petroleum met its own production guidance for the third quarter and grew its U.S. oil production by about 8%. Occidental isn't slowing down simply because oil prices have gone south. The company is doing its part to keep the ongoing domestic energy boom going full throttle. This is possible because Occidental has significant operations in some of the highest-producing onshore oil fields in the country. Two of these are the Permian Basin and its California assets. Occidental's Permian resources business was particularly strong, with production growth of 26% year over year.

Operational effectiveness intact
"The overall business is operating well." -- Steve Chazen, president and chief executive officer.

This is a simple quote, but it accurately sums up Occidental Petroleum. Despite the state of the oil market, Occidental has maintained high levels of operational effectiveness. Occidental's 2014 annualized return on equity is 12% and its return on capital employed is 10%. These numbers are a great sign that the business continues to make money and create value for shareholders, even in a difficult environment.

Shrewd financial management at work
"We also repurchased 4.7 million shares of our stock during the quarter." -- Stavros.

Occidental Petroleum is wisely repurchasing shares while the stock struggles. After trading well above $100 per share just a few months ago, the stock is down to around $88. Many companies shy away from buying back shares when their stock drops, which is counterintuitive. The best time to repurchase shares is when the stock price drops, because each dollar spent buys more shares.

As Chazen put it, "We expect to generate a large amount of cash proceeds from initiatives I have mentioned. While we expect the bulk of these proceeds will be used to repurchase our own shares."

There's even more cash on the way, due to the planned spinoff of Occidental's California business. Recently, Occidental received $5 billion from a bond offering completed by California Resources. Occidental will receive an additional $1.2 billion from California Resources as part of the spinoff. That means there are even greater share repurchases in store.

Free cash flow set to grow
"We expect our overall capital program to decline in 2015." -- Chazen.

For several years, Occidental Petroleum spent heavily on long-term investments designed to fuel the company's future. These projects include the BridgeTex pipeline, and the Al Hosn gas project, a huge endeavor to develop one of the largest natural gas fields in the Middle East. These initiatives are nearing completion, which means capital spending is set to drop. This should make Occidental's free cash flow look much better going forward, as it won't have nearly the same spending requirements as seen in recent years.

In all, Occidental is a strong company that had a strong third quarter. Unfortunately, its operating strength is masked by falling oil prices. This makes things look worse than they actually are. Occidental has a premier asset footprint, generates healthy returns, and its cash flow is set to improve going forward thanks to its long-term investments nearing completion.

Bob Ciura has no position in any stocks mentioned. The Motley Fool has no position in any of the stocks mentioned. Try any of our Foolish newsletter services free for 30 days. We Fools may not all hold the same opinions, but we all believe that considering a diverse range of insights makes us better investors. The Motley Fool has a disclosure policy.