We are pleased to implement this new framework, beginning with an increase in the quarterly common dividend to $0.13 per share.
We diligently delivered on these cash flow priorities throughout 2021, including the repayment of approximately $6.7 billion of debt.
We now expect that our net debt will be below $25 billion by the end of the first quarter of 2022, which will mark a change in how excess cash flow will be allocated going forward.
Multiple drilling and completion records were set across our domestic and international businesses as our production for the year averaged 1.167 million BOE per day.
That's 27,000 BOE per day higher than our initial guidance.
Our reserves for year-end 2021 increased to 3.5 billion BOE, representing a reserve replacement ratio of 241%.
We are proud to be one of only a few oil and gas companies with net-zero goals that are aligned with the Paris Agreement's 1.5-degree Celsius pathway.
In December, Oxy became the first U.S. upstream oil and gas company to enter into a sustainability-linked revolving credit facility, which includes absolute reductions in our combined Scopes 1 and 2 CO2 equivalent emissions as the key performance indicator.
We set additional interim emission targets to further refine our net-zero pathway, including a short-term target to reduce our CO2 equivalent emissions to approximately 3.7 million metric tons per year below our 2021 level and to accomplish that by 2024.
We set a medium-term target to facilitate the geologic storage or use of 25 million metric tons per year of CO2 in Oxy's value chain by 2032.
We also endorsed the Methane Guiding Principles and Oil and Gas Methane Partnership 2.0, a climate and clean air coalition initiative led by the United Nations Environment program.
We continue to apply free cash flow toward reducing debt and strengthening our balance sheet, repaying an additional $2.2 billion of debt in the fourth quarter.
OxyChem delivered record earnings for the second consecutive quarter as performance throughout the year culminated in 2021 being OxyChem's strongest in over 30 years.
We have sized our capital plan to sustain production in 2022 at 1.155 million BOE per day while investing in high-return projects that will provide cash flow stability throughout the cycle.
Our sustaining capital, which we define as the capital required to sustain production in the $40 WTI environment over a multiyear period, remains industry-leading.
Our multiyear sustaining capital is expected to increase from our 2021 capital budget of $2.9 billion, the reduced inventory of drilling uncompleted wells and additional investment in our Gulf of Mexico and EOR assets, to optimize the long-term productivity of our reservoirs and facilities.
As we expect net debt to fall below $25 billion by the end of the first quarter, our focus has expanded to returning capital to shareholders, beginning with the increase in our common dividend to $0.13 per share and the reactivation and expansion of our share repurchase program.
The increase in the dividend to $0.13 per share is consistent with our intention to initially increase the dividend to a level that approximates the yield of the S&P 500.
Any future production growth will be limited to an average annual rate of approximately 5%.
As Vicki mentioned, the first phase of our shareholder return framework consists of the debt reduction; an increase in the common dividend to $0.13 per share; and the reactivation, expansion of our share repurchase program.
With net debt expected to be below $25 billion by the end of the first quarter, we are ready to begin returning more capital to shareholders, but we'll continue to prioritize debt reduction to focus on our medium-term goal of regaining our investment-grade credit rating.
We then prioritized retirement of an initial $5 billion of debt to drive our net debt toward our next milestone of $20 billion.
We intend to provide our shareholders with a competitive common dividend while maintaining a long-cycle cash flow breakeven at $40 WTI or less.
In addition to increasing the common dividend to $0.13 per share, we intend to purchase approximately $3 billion of outstanding shares of common stock.
We intend to make substantial progress toward retiring an additional $5 billion of debt before initiating share repurchases.
In the fourth quarter, we announced an adjusted profit of $1.48 and a reported profit of $1.37 per diluted share.
The purchase and sale prices of these transactions largely offset each other, while the EOR acquisition added approximately 5,000 BOE per day of low-decline production, as well as increasing our inventory of potential CCUS opportunity.
We exited the fourth quarter with approximately $2.8 billion of unrestricted cash on the balance sheet after repaying approximately $2.2 billion of debt in the quarter.
In total, last year, we paid approximately $6.7 billion of debt and retired $750 million of notional interest rate swaps.
We estimate that the balance sheet improvements executed in 2021 will reduce interest and financing costs by almost $250 million per year going forward, which will fund approximately half of the increase in our common dividend.
It was primarily driven by higher accounts receivable balance due to higher commodity prices and, to a lesser extent, an increase in inventories, including a higher number of barrels on the water at year-end.
In addition to cash on hand, we have $4.4 billion of committed unutilized bank facility.
We expect our full year production to average 1.155 million BOE per day in 2022.
The increase in Permian production is expected to result in domestic cash margins improving by -- in 2022 as the companywide oil cut increases approximately 54.5%.
The mid-cycle level of capital we intend to spin this year provides flexibility to sustain production in 2023 and beyond at our multiyear sustaining capital level of $3.2 billion in a $40 price environment.
On past earnings calls, we had discussed several of the initiatives Low Carbon Ventures is developing and Oxy's ambition to achieve net zero before 2050.

Summary:
We are pleased to implement this new framework, beginning with an increase in the quarterly common dividend to $0.13 per share.
As we expect net debt to fall below $25 billion by the end of the first quarter, our focus has expanded to returning capital to shareholders, beginning with the increase in our common dividend to $0.13 per share and the reactivation and expansion of our share repurchase program.
The increase in the dividend to $0.13 per share is consistent with our intention to initially increase the dividend to a level that approximates the yield of the S&P 500.
As Vicki mentioned, the first phase of our shareholder return framework consists of the debt reduction; an increase in the common dividend to $0.13 per share; and the reactivation, expansion of our share repurchase program.
In addition to increasing the common dividend to $0.13 per share, we intend to purchase approximately $3 billion of outstanding shares of common stock.
It was primarily driven by higher accounts receivable balance due to higher commodity prices and, to a lesser extent, an increase in inventories, including a higher number of barrels on the water at year-end.