Occidental Petroleum Corporation ( OXY ) shares are trading lower on Friday after the company announced that it has signed a framework agreement with XRG, the investment arm of ADNOC, to explore a potential joint venture aimed at building a Direct Air Capture facility in South Texas.

Under the agreement, XRG may invest as much as $500 million in a plant designed to extract 500,000 metric tons of carbon dioxide from the atmosphere annually.

The signing took place during U.S. President Donald Trump’s official visit to the United Arab Emirates, with Occidental CEO Vicki Hollub and ADNOC Group CEO Sultan Ahmed Al Jaber leading the ceremony.

Also Read: Trump’s $1.2 Trillion ‘Made in America’ Win: Boeing, GE, And Others Secure Qatar Mega-Deal

This initiative follows the companies’ broader interest in developing carbon management projects across the U.S. and the UAE, formalized through a memorandum of understanding in 2023.

The proposed DAC facility would be located on King Ranch in Kleberg County, Texas. The site, spanning about 165 square miles, has the geological capacity to store an estimated 3 billion tons of CO₂.

The initial plant, now in front-end engineering and design, is expected to handle 500,000 tons annually. It will be positioned near existing infrastructure along the Gulf Coast, optimizing carbon transport and storage logistics.

The U.S. Department of Energy previously committed up to $650 million to support the development of the South Texas DAC Hub.

Occidental has also made headway with its first DAC facility, STRATOS, in West Texas, which is on track to become operational in 2025.

“We are proud to advance our decades-long partnership with ADNOC and XRG on our South Texas DAC Hub, which we believe will deliver game-changing technology to support U.S. energy independence and global goals,” said Hollub.

Khaled Salmeen, XRG’s COO, added that the agreement highlights XRG’s focus on strategic U.S. investments in transformative, low-carbon energy projects.

Price Action: OXY shares are trading lower by 1.49% to $42.73 at last check on Friday.

Read Next:

Trump Unveils ‘Historic And Transformative’ $600 Billion Saudi Deal, Predicts Markets Will ‘Go A Lot Higher’

Image via Shutterstock