HOUSTON, Aug 8 (Reuters) - Occidental Petroleum ( OXY )

on Thursday said it will focus on cutting debt and catching up

with promised production goals before an eagerly anticipated

expansion of its cash distribution program.

The U.S. oil producer posted better-than-expected second

quarter results on Wednesday, largely due to strong production

in Colorado, lower operating costs and onetime strong midstream

earnings, which sent shares up 1.54% in afternoon trading.

But the company failed to deliver the expected 170,000

barrels of oil equivalent per day (boepd) from recently acquired

assets. Its $12 billion acquisition of producer CrownRock

pushed debt levels up, forcing Occidental to put plans to

increase its cash distribution program on hold.

The strategy has sent share prices to a "much lower (level)

than we believe it should be," Chief Executive Vicki Hollub said

during a call with analysts to discuss results. But the company

is ahead of schedule to repay the debt and expand returns to

investors, she said.

Occidental now needs to deliver on its promised debt

reduction and asset sale goals before it can catch up with

capital returns delivered by peers, UBS oil analyst Josh

Silverstein said in a note.

The company said it plans to cut debt by $3.1 billion by the

third quarter, or about 70% of its near-term debt reduction

commitment.

Production goals from CrownRock assets will take longer than

expected due to weather events and other operational downtime

that led to a production rate 14,000 barrels short of the

target, Occidental's president for U.S. onshore resources

Richard Jackson told analysts.

Occidental had little visibility on CrownRock's production

plans and is now adjusting its plans. The company will focus on

cutting costs, rather than expanding production beyond the

target, he said.

Third-quarter production is expected to increase by about

140,000 boepd to 1.39 million boepd.