Source: ConocoPhillips.

The steep drop in the oil price over the past year and a half is causing oil companies both small and large to dramatically alter their plans. In particular, oil companies are cutting expenses to the bare bone, leading many to reduce or suspend dividend payments while also firmly putting the brakes on production growth. Occidental Petroleum (OXY -0.02%), however, is one of the few that's not cutting either, which was a pleasant surprise this quarter.

The dividend is staying put
Income investors got a real pleasant surprise when the company announced that its dividend wasn't going down in 2016. That's after soon-to-be-CEO Vicki Hollub said on the company's conference call that, "we don't see a threat to our dividend going through this cycle." The company's ability to maintain its payout is in large part due to the fact that it has more than $4.4 billion of cash on the balance sheet, and another $1.2 billion in cash coming in the door from a lawsuit settlement and non-core assets sales. That's on top of the fact that last quarter it generated more than $944 million in operating cash flow. While that cash flow will come down along with the oil price, the company only expects to spend $3 billion on capex in 2016. When combined with its expected dividend outlay of $2.23 billion, the company believes it has enough cash, cash flow, and balance sheet capacity to weather the current downturn and keep its dividend intact.

That's something few of its peers are in a position to do, with ConocoPhillips (COP -0.34%) being the latest to slash its payout, with it falling 66% even after the company said time and again that the dividend was safe and is top priority. While the company could have maintained its payout given that it has plenty of balance sheet capacity, that would have meant increasing its debt. That's something ConocoPhillips is now reluctant to do given the significant tightening of credit in the sector as well as its view that we could be in a low oil price environment for a prolonged period of time.

Production will continue to grow
The other pleasant surprise is the fact that Occidental plans to remain a growth company, which is something few of its peers plan to do this year. Occidental Petroleum has a history of growth, with its production surging 14% last year thanks to a 47% increase in production from the company's Permian Resources segment. That growth was pretty remarkable considering that the company spent 36% less on capex than it spent in 2014. That number is expected to fall even further with the company only planning to spend $3 billion on capex in 2016, which is 46.5% less than it spent last year. However, even with that big reduction it expects production to be 2%-4% above last year's average.

Contrast this with ConocoPhillips, for example, which not only cut its dividend this quarter, but cut its spending plan so that its production in 2016 will be roughly flat with what it produced in 2015. Meanwhile, smaller producers like Continental Resources (CLR) are actually planning to let their production decline in 2016. In Continental Resources case it expects its production to decline 9.8% from its 2015 average. That's a steep decline for a company that grew its production 25% over the prior year. That said, at the current ~$30 oil price Continental Resources doesn't have the cash flow to maintain its production rate, let alone grow it.

Investor takeaway
Occidental Petroleum has proven why cash is king. With a cash rich balance sheet that alone can fund the company's 2016 needs, it is in the position to maintain its dividend and still grow its production when others cannot. That said, its cash won't last forever if oil prices don't improve, so it might be joining its peers at this time next year in making big cuts if oil stays lower for a really prolonged period of time.