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Globe and Mail
8 hours ago
- Business
- Globe and Mail
Can OXY Stock Continue to Benefit From its Permian Basin Focus?
Occidental Petroleum Corporation OXY is among the largest operators in the Permian Basin, a major hub for U.S. oil and gas production. The company has strengthened its footprint in the region with the acquisition of CrownRock L.P. In 2025, the Permian is expected to contribute about 55% of Occidental's total output. Due to improved drilling efficiency and infrastructure optimization, Occidental has reduced its Permian capital spending by $100 million for the year. Despite the spending reduction, Occidental plans to invest $3.5 billion to $3.7 billion in the Permian throughout 2025 to upgrade and expand operations. In the first quarter alone, 125 wells were brought online and the company aims to drill 515 to 565 wells by year-end. Occidental controls 1.5 million acres in unconventional areas and 1.4 million acres in conventional zones, underscoring its strong regional presence. Operational efficiency remains a key focus. The company projects a 15% reduction in drilling time per well and an 11% drop in average well costs in 2025 compared with 2024. These improvements stem from enhanced well designs, consistent scheduling and technology upgrades that streamline development. Occidental holds a decade's worth of high-return inventory in the Permian under current economic and technical conditions. Ongoing advances in drilling technology are improving output, reducing environmental impact and enabling access to previously untapped resources. This positions Occidental for long-term value creation from its Permian-focused strategy. Other Operators in the Permian Basin The Permian Basin, due to its richness in reserves, draws big oil and gas operators and makes it highly competitive. The operators compete to increase acreage in this region. EOG Resources EOG and ConocoPhillips COP are among the top producers in the Permian region. Both EOG Resources and ConocoPhillips hold substantial volumes of assets in the Permian region and are going to benefit from high-return, low-carbon and capital-flexible assets. Strong production volumes from the Permian Basin act as a tailwind for EOG Resources and ConocoPhillips. A substantial volume of cash flow of these companies comes from the Permian. OXY Stock's Price Performance Occidental's shares have lost 11.4% in the past three months compared with the Zacks Oil and Gas- Integrated- United States industry's 8.8% decline. OXY Stock Trading at a Premium Occidental Petroleum's shares are currently trading at a premium compared with the industry. OXY's current trailing 12-month Enterprise Value/Earnings before Interest, Tax, Depreciation and Amortization (EV/EBITDA) is 4.96X compared with the industry average of 4.65X. It indicates that the company is presently marginally overvalued compared with its industry. Occidental's ROE Lower Than the Industry Return on equity, a profitability measure, reflects how effectively a company utilizes its shareholders' funds to generate income. The trailing 12-month ROE of OXY is 16.6%, a tad lower than its industry's 16.89%. OXY's Zacks Rank Occidental currently has a Zacks Rank #3 (Hold). You can see the complete list of today's Zacks #1 Rank (Strong Buy) stocks here. Zacks Names #1 Semiconductor Stock It's only 1/9,000th the size of NVIDIA which skyrocketed more than +800% since we recommended it. NVIDIA is still strong, but our new top chip stock has much more room to boom. With strong earnings growth and an expanding customer base, it's positioned to feed the rampant demand for Artificial Intelligence, Machine Learning, and Internet of Things. Global semiconductor manufacturing is projected to explode from $452 billion in 2021 to $803 billion by 2028. See This Stock Now for Free >> Want the latest recommendations from Zacks Investment Research? Today, you can download 7 Best Stocks for the Next 30 Days. Click to get this free report ConocoPhillips (COP): Free Stock Analysis Report EOG Resources, Inc. (EOG): Free Stock Analysis Report
Globe and Mail
19-05-2025
- Business
- Globe and Mail
OXY Trading at a Premium at 4.99X: Time to Hold or Sell the Stock?
Occidental Petroleum Corporation 's OXY shares are currently trading at a premium compared to the Zacks Oil and Gas - Integrated - United States industry. OXY's current trailing 12-month Enterprise Value/Earnings before Interest, Tax, Depreciation and Amortization (EV/EBITDA) is 4.99X compared with the industry average of 4.76X. It indicates that the company is presently marginally overvalued compared to its industry. Occidental, being a low-cost operator and possessing high-quality assets in different locations across the globe, has a competitive advantage over its peers. Yet, as of Dec. 31, 2024, there were no active commodity hedges in place, so if commodity prices drop substantially, it can adversely impact Occidental's performance. OXY Stock Trading at a Premium Another company operating in this space, Hess Corporation HES, is trading at an EV/EBITDA of 7.41X, at a premium compared to its industry. Occidental's shares have gained 10.3% last month, outperforming its industry's rally of 8.4%. Price Performance (One Month) Should you consider adding OXY stock to your portfolio only based on positive price movements? Let's delve deeper and find out the factors that can help investors decide whether it is a good entry point to add OXY stock to their portfolio. Factors Contributing Toward OXY Stock's Stable Performance Occidental continues to gain from its strategic acquisition, which boosts its production volumes and the top line. The acquisition of CrownRock assets boosted OXY's production volumes and lowered its well operating costs. Occidental's primary objective is to enhance its balance sheet and reduce capital servicing costs. In 2024, the company successfully met its short-term debt reduction goal of $4.5 billion and plans to further decrease its outstanding debt by mid-2027 using free cash flow and proceeds from non-core asset divestitures. The company's emphasis on developing its Permian Basin resources has proven advantageous, with strong performance reported in this core area. For 2025, Occidental anticipates total production to range between 1,390 and 1,440 thousand barrels of oil equivalent per day (Mboe/d), with the Permian region contributing approximately 760–786 Mboe/d. International production for 2025 is projected to fall between 226 and 236 Mboe/d. The company is employing advanced seismic imaging techniques to discover new oil and gas reserves. These seismic surveys are essential for exploration, providing more precise insights into potential drilling locations compared to traditional methods. As a low-cost operator with high-quality assets globally, Occidental holds a competitive edge over many of its industry peers. Its disciplined capital investments have strengthened its infrastructure, with over $7 billion invested in 2024. The company plans to invest between $7.2 billion and $7.4 billion in 2025, significantly more than Hess Corporation's planned $4.5 billion investment in the same year. Occidental also continues to benefit from strategic acquisitions that enhance production capacity and revenues. The acquisition of CrownRock assets, for instance, has not only increased production volumes but also reduced per-well operating costs. OXY Stock's Earnings Surprise History The stable performance of the company allowed it to surpass earnings estimates in each of the last four reported quarters, the average earnings surprise being 24.34%. Another stock, ConocoPhillips COP, operating in the space, surpassed earnings estimates in three out of the last four quarters and missed expectations in a quarter, resulting in an average positive surprise of 1.94%. Headwind for OXY Stock Occidental's operational performance is influenced by changes in demand and the volatility of both global and local commodity prices. The company remains vulnerable to fluctuations in the commodity markets, and as of Dec. 31, 2024, it had no active commodity hedging strategies in place. A significant decline in commodity prices from current levels could negatively affect Occidental's financial performance. Occidental's Earnings Estimates are Going Down The Zacks Consensus Estimate for Occidental's 2025 and 2026 earnings per share has moved down 30.06% and 29.06%, respectively, in the past 60 days. Occidental's ROE Lower Than the Industry Return on equity, a profitability measure, reflects how effectively a company utilizes its shareholders' funds to generate income. The trailing 12-month ROE of OXY is 16.89%, a tad lower than its industry's 16.6%. Like Occidental, ConocoPhillips' ROE is also marginally lower than its industry and OXY at 16.54%. Wrapping Up Occidental's efforts to reduce debt, along with the strength of its domestic and international operations and the positive impact of recent acquisitions, are expected to support its performance. Yet, the company faces challenges from volatile commodity prices and returns that currently lag behind industry averages. Declining earnings estimates are also a concern. Despite the headwinds, it is advisable to keep this Zacks Rank #3 (Hold) stock in your portfolio, given its strong domestic operations and exposure to the prolific Permian Basin. You can see the complete list of today's Zacks #1 Rank (Strong Buy) stocks here. 7 Best Stocks for the Next 30 Days Just released: Experts distill 7 elite stocks from the current list of 220 Zacks Rank #1 Strong Buys. They deem these tickers "Most Likely for Early Price Pops." Since 1988, the full list has beaten the market more than 2X over with an average gain of +23.0% per year. So be sure to give these hand picked 7 your immediate attention. See them now >> Want the latest recommendations from Zacks Investment Research? Today, you can download 7 Best Stocks for the Next 30 Days. Click to get this free report ConocoPhillips (COP): Free Stock Analysis Report Hess Corporation (HES): Free Stock Analysis Report
Yahoo
13-05-2025
- Business
- Yahoo
Occidental Petroleum Is Showing Why It Has Become a Top Warren Buffett Stock
Occidental Petroleum produced solid first-quarter results. The oil company continues to repay debt. It will deliver significantly more free cash flow from non-oil and gas sources starting next year. 10 stocks we like better than Occidental Petroleum › Warren Buffett's company, Berkshire Hathaway (NYSE: BRK.A)(NYSE: BRK.B), has invested nearly $280 billion into other publicly traded companies. One of its top holdings is Occidental Petroleum (NYSE: OXY). Buffett's company owns 28.2% of the oil company's outstanding shares, which are currently worth $11 billion. That's its seventh-largest investment at 3.9% of the portfolio. The oil company recently reported its first-quarter results, which showcased once again why Buffett's company has made it a top holding. Occidental has built an oil company that can grow shareholder value in a variety of market conditions. Occidental Petroleum reported solid Q1 results earlier this week. The oil giant produced an average of nearly 1.4 million barrels of oil equivalent (BOE) per day during the period, slightly higher than the midpoint of its production guidance. That enabled the company to generate $3 billion of operating cash flow and $1.2 billion of free cash flow after funding its capital spending to maintain and grow its production. "In the first quarter, our teams' sustained focus on operational excellence unlocked additional efficiencies and supported the delivery of resilient free cash flow," commented CEO Vicki Hollub in the earnings press release. The oil company used its strong free cash flow to pay its quarterly dividend, which it increased by 9% earlier this year. It retained the rest to help repay debt following last year's $12 billion debt-funded acquisition of CrownRock ($9.1 billion of new debt and assuming $1.2 billion of existing debt). The company has repaid $2.3 billion of debt so far this year, aided by closing $1.3 billion of non-core asset sales. It has now repaid $6.8 billion of debt since the third quarter of last year, exceeding its target of repaying at least $4.5 billion within 12 months of closing the CrownRock deal. The company has repaid all its maturing debt for this year and only has $284 million due over the next 14 months. Occidental's rapid progress in reducing debt puts it in a much stronger position to weather the recent slump in oil prices. Its debt reduction has lowered its interest expenses, which will help mute some of the impact of lower oil prices on its free cash flow. Meanwhile, with minimal debt maturities over the next several quarters, Occidental won't need to sell assets at lower values to shore up its balance sheet if oil continues to fall. "We continue to rapidly advance toward our debt reduction goals, and we believe our deep, diverse portfolio of high-quality assets positions us for success in any market environment," stated Hollub in the earnings press release. The company continues to work toward its next debt target of getting its principal balance below $15 billion. It still has a ways to go to reach that goal, given its more than $24 billion long-term debt balance at the end of Q1. The company plans to continue chipping away at debt as it generates excess free cash flow after paying dividends over the next few years. Occidental's free cash flow will get a significant boost starting in 2026 from non-oil and gas sources. It will benefit from generating an additional $1 billion in free cash flow next year through a combination of incremental earnings from its chemicals and midstream segments, falling capital spending in those areas, and additional interest savings. It expects to get another $500 million boost to its free cash flow in 2027 from these same drivers. These catalysts will help improve the resiliency of its free cash flow during periods of lower oil prices while enhancing its upside potential when prices rise. There's a reason Warren Buffett's company has invested so heavily in Occidental Petroleum. The oil company has several significant value-creating catalysts ahead. Continued debt reduction will steadily shift value from creditors to shareholders, while the free-cash-flow growth ahead from its non-oil businesses and interest expense savings will boost its bottom line. These factors should enable Occidental Petroleum to grow value for shareholders (including Berkshire) even in a more volatile oil market. Before you buy stock in Occidental Petroleum, consider this: The Motley Fool Stock Advisor analyst team just identified what they believe are the for investors to buy now… and Occidental Petroleum wasn't one of them. The 10 stocks that made the cut could produce monster returns in the coming years. Consider when Netflix made this list on December 17, 2004... if you invested $1,000 at the time of our recommendation, you'd have $614,911!* Or when Nvidia made this list on April 15, 2005... if you invested $1,000 at the time of our recommendation, you'd have $714,958!* Now, it's worth noting Stock Advisor's total average return is 907% — a market-crushing outperformance compared to 163% for the S&P 500. Don't miss out on the latest top 10 list, available when you join . See the 10 stocks » *Stock Advisor returns as of May 5, 2025 Matt DiLallo has positions in Berkshire Hathaway. The Motley Fool has positions in and recommends Berkshire Hathaway. The Motley Fool recommends Occidental Petroleum. The Motley Fool has a disclosure policy. Occidental Petroleum Is Showing Why It Has Become a Top Warren Buffett Stock was originally published by The Motley Fool Error in retrieving data Sign in to access your portfolio Error in retrieving data Error in retrieving data Error in retrieving data Error in retrieving data
Yahoo
10-04-2025
- Business
- Yahoo
Why Occidental Petroleum Stock Plunged 10% Today
Shares of Occidental Petroleum (NYSE: OXY) crashed today and were trading 10% lower as of 12:20 p.m. ET. Ironically, Occidental Petroleum just revealed that it realized higher average prices for oil and gas in its first quarter versus the fourth quarter, which is good news for the company and its investors. Why did the stock then crash today? There are three things to keep in mind. First, Occidental Petroleum's worldwide average realized price for crude oil was $71.07 per barrel in Q1 versus $69.73 per barrel in the fourth quarter. Even better, its average worldwide realized natural gas liquid prices jumped almost 19% sequentially, while its average realized domestic natural gas price surged nearly 92% to $2.42 per thousand cubic feet. The problem is, unless Occidental Petroleum increased its production in Q1, the benefits of higher prices won't flow through its top and bottom lines. Unfortunately, I suspect low production, given the harsh winter, plant outages, and weak drilling activity in Q4. Second, although Occidental Petroleum realized higher prices over Q4, its year-over-year comparisons don't look good, since the oil and gas producer realized $76.04 per barrel for crude oil worldwide in Q1 2024. Third, and the biggest reason why Occidental Petroleum shares plummeted today, were oil prices. With the tariff war escalating between the U.S. and China, prices of crude oil dropped more than 3% this morning, with the West Texas Intermediate (WTI) plunging below the $60 mark. While plunging oil prices hurts nearly every oil and gas producer, it's a bigger headwind for Occidental Petroleum, given its high debt load. The company largely funded its $12 billion CrownRock acquisition with debt last year -- also one of the biggest reasons why Occidental stock slumped 17% in 2024. Occidental Petroleum, however, already repaid debt worth $4.5 billion in debt within months of the acquisition and expects to cut debt further in 2025 using its cash flows and proceeds from the sale of noncore assets. Meanwhile, CrownRock's Permian assets and Occidental's non-oil businesses should continue to add more value. The near-term ride could be bumpy, but this Warren Buffett-owned oil stock looks like a great buy long term. Before you buy stock in Occidental Petroleum, consider this: The Motley Fool Stock Advisor analyst team just identified what they believe are the for investors to buy now… and Occidental Petroleum wasn't one of them. The 10 stocks that made the cut could produce monster returns in the coming years. Consider when Netflix made this list on December 17, 2004... if you invested $1,000 at the time of our recommendation, you'd have $509,884!* Or when Nvidia made this list on April 15, 2005... if you invested $1,000 at the time of our recommendation, you'd have $700,739!* Now, it's worth noting Stock Advisor's total average return is 820% — a market-crushing outperformance compared to 158% for the S&P 500. Don't miss out on the latest top 10 list, available when you join . See the 10 stocks » *Stock Advisor returns as of April 5, 2025 Neha Chamaria has no position in any of the stocks mentioned. The Motley Fool recommends Occidental Petroleum. The Motley Fool has a disclosure policy. Why Occidental Petroleum Stock Plunged 10% Today was originally published by The Motley Fool Sign in to access your portfolio
Yahoo
28-03-2025
- Business
- Yahoo
Is Occidental Petroleum Stock a Buy Now?
Occidental Petroleum (NYSE: OXY) has slumped over the past year. Shares of the oil giant are down more than 20%. That's largely due to weakening oil prices. Wes Texas Intermediate (WTI), the primary U.S. oil price benchmark, has fallen more than 15% to just under $70 per barrel. While oil prices have an effect on Occidental's cash flows, it has several catalysts unrelated to oil that could boost shareholder value in the future. Here's a look at whether they make the oil stock a buy right now. Occidental Petroleum made a needle-moving acquisition last year, closing its $12 billion purchase of CrownRock. The deal added high-margin oil and gas production and enhanced its inventory of drilling locations with low breakeven levels. The company estimates that the highly accretive deal will boost its free cash flow by $1 billion in its first year of ownership based on WTI's averaging $70 a barrel. The only concern was the debt it took on to close the deal. Occidental assumed all of CrownRock's $1.2 billion of existing debt and issued $9.1 billion of new debt to fund the purchase. The added debt is a concern, given the volatility of oil prices. However, Occidental has rapidly repaid debt after closing the deal. It initially targeted to reduce its debt by at least $4.5 billion within 12 months of closing the deal through a combination of free cash flow and noncore asset sales. It has already achieved that target seven months ahead of schedule. The company's near-term priority is to continue trimming its debt by retaining free cash flow after paying dividends and selling additional noncore assets to repay debt as it matures. This deleveraging will steadily transfer value from creditors to shareholders. It will also cut the company's interest expenses, positioning it to generate additional free cash flow in the future. It has been using those savings to increase its dividend, which it boosted by another 9% this year. Occidental Petroleum continues to invest heavily in expanding its oil and gas operations. In addition to buying CrownRock, it spent $5.3 billion on oil and gas capital projects last year and plans to invest $5.8 billion to $6 billion more this year. However, the company is also investing capital to grow its chemicals business, OxyChem, and build out its lower-carbon energy platform. Those investments should start paying dividends over the next two years. The company is spending over $1.5 billion across several projects to expand OxyChem, including modernizing and expanding its Battleground plant. The company expects to see the full benefits of a plant enhancement project later this year while wrapping up construction on Battleground by the middle of 2026. Once complete, these projects should add $325 million of annualized earnings before taxes, interest, depreciation, and amortization (EBITDA) in 2026 and beyond. Occidental Petroleum is also building the first of what could be many carbon capture and storage (CCS) projects. The company and its partner Blackrock are constructing the STRATOS direct air capture project in Texas to capture carbon dioxide directly from the air. They expect to start operations on the first phase, which will capture 250,000 tons of carbon dioxide per year, by the third quarter of 2025. Meanwhile, phase two, which will also involve 250,000 tons of annual capacity, should start capturing carbon dioxide by the middle of next year. Occidental is monetizing the project by selling carbon credits to a variety of customers to help them reduce their carbon emissions. It will also use the captured carbon dioxide to enhance the recovery of oil from legacy fields to produce lower-carbon oil that it will sell to customers. The company believes CCS has tremendous potential. Occidental estimates it could become a $3 trillion to $5 trillion global industry in the coming decades. That drives its view that the company could eventually generate as much earnings and cash flow from providing CCS solutions as it currently does from producing oil and gas. Oil prices will continue to drive Occidental Petroleum's stock price in the short term. However, the energy company has several long-term value catalysts unrelated to oil prices. It's using its oil-fueled cash flows to repay debt, expand OxyChem, and build out a lower-carbon energy business, which should all boost its cash flows in the future. That non-oil upside potential makes Occidental look like a compelling buy, especially now that its stock price is much lower. Ever feel like you missed the boat in buying the most successful stocks? Then you'll want to hear this. On rare occasions, our expert team of analysts issues a 'Double Down' stock recommendation for companies that they think are about to pop. If you're worried you've already missed your chance to invest, now is the best time to buy before it's too late. And the numbers speak for themselves: Nvidia: if you invested $1,000 when we doubled down in 2009, you'd have $312,980!* Apple: if you invested $1,000 when we doubled down in 2008, you'd have $42,421!* Netflix: if you invested $1,000 when we doubled down in 2004, you'd have $537,825!* Right now, we're issuing 'Double Down' alerts for three incredible companies, and there may not be another chance like this anytime soon.*Stock Advisor returns as of March 24, 2025 Matt DiLallo has no position in any of the stocks mentioned. The Motley Fool recommends Occidental Petroleum. The Motley Fool has a disclosure policy. Is Occidental Petroleum Stock a Buy Now? was originally published by The Motley Fool Sign in to access your portfolio
