Latest news with #OccidentalPetroleum
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3 days ago
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Occidental vs. Hess: Which Energy Stock Deserves a Spot in Your Folio?
The companies belonging to the Zacks Oil & Gas – Integrated - United States industry offer a strong investment case based on energy security, solid infrastructure, and supportive regulations. The U.S. shale boom has improved cost efficiency, scalable production, and access to top-tier pipelines and refineries, boosting profitability and resilience. U.S. companies are well-positioned to meet long-term domestic natural gas demand, driven by power generation and coal-to-gas transition, as well as rising LNG companies' selective overseas production activities offer valuable diversification and access to higher-margin barrels in specific regions, often through long-term production sharing agreements. This global presence helps mitigate risks from localized downturns or regulatory changes while enabling them to capitalize on growing demand in emerging markets. Amid such a backdrop, let us focus on Occidental Petroleum OXY and Hess Corporation HES as they are navigating through industry challenges to provide strong returns to Petroleum is a strong investment opportunity, combining steady cash flow from its Permian Basin and global oil and gas assets with a growing focus on carbon management solutions. Supported by Berkshire Hathaway's backing, the company offers long-term value through its balanced approach to traditional energy production and scalable low-carbon Corporation offers a compelling investment opportunity, underpinned by its strategic assets and commitment to sustainable growth. It is also proactively transitioning towards sustainable energy and has invested in renewable energy projects. These initiatives align with its goal to reduce greenhouse gas emissions and diversify its energy portfolio. HESS is undergoing a major transition with its pending acquisition by Chevron, which is currently under arbitration due to disputes over its Guyana stocks mentioned above are the key operators in the Oil and Gas industry space. Let us dive deeper and closely compare the fundamentals of the two stocks to determine which is a better investment option for investors. The Zacks Consensus Estimate for Occidental Petroleum's earnings indicates a year-over-year decline of 32.66% for 2025 and growth of 14.38% for 2026. Image Source: Zacks Investment Research The Zacks Consensus Estimate for Hess Corporation's earnings indicates a year-over-year decline of 38.53% for 2025 and growth of 20.14% for 2026. Image Source: Zacks Investment Research Dividends are regular payments made by a company to its shareholders and represent a direct way for investors to earn a return on their investment. They are an important indicator of a company's financial health and stability, often signaling strong cash flow and consistent the dividend yield for Occidental Petroleum is 2.33%, while the same for Hess Corporation is 1.53%. The dividend yield of OXY is higher than the S&P 500's yield of 1.6%. ROE is an essential financial indicator that evaluates a company's efficiency in generating profits from the equity invested by its shareholders. It demonstrates how well management is utilizing the capital provided to increase earnings and deliver value. OXY's current ROE is 16.6% compared with HES' ROE of 21.78%, the industry's ROE of 16.94%. The Zacks Oil & Energy sector is a capital-intensive one, and huge investments are required at regular intervals to upgrade, maintain and expand operations. The usage of new evolving technology also requires investments. Occidental Petroleum's debt-to-capital currently stands at 40.64% compared with Hess Corporation's debt-to-capital of 41.48%. Occidental Petroleum appears to be cheaper compared with Hess Corporation on trailing 12-month Enterprise Value/Earnings before Interest Tax Depreciation and Amortization (EV/EBITDA).OXY is currently trading at 4.87X, while HES is trading at 7.23X compared with its sector's 4.59X. Last month, shares of Occidental Petroleum gained 4.5% compared with Hess Corporation's rally of 2.1%. Image Source: Zacks Investment Research Occidental Petroleum's persistent focus on Permian resources has been beneficial for the company. Nearly 83% of Occidental's production comes from its domestic assets. Stable international operation and ongoing reduction of debt will continue to act as a operations, particularly assets in Guyana, are a major source of oil and gas production for Hess Corporation. Based on the above discussion, we will suggest OXY, which carries a Zacks Rank #3 (Hold), should be in your oil and gas portfolio and avoid Hess Corporation, carrying a Zacks Rank #5 (Strong Sell) for the time can see the complete list of today's Zacks #1 Rank (Strong Buy) stocks here. 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 Hess Corporation (HES) : Free Stock Analysis Report Occidental Petroleum Corporation (OXY) : Free Stock Analysis Report This article originally published on Zacks Investment Research ( Zacks Investment Research
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4 days ago
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Should You Buy Occidental Petroleum While It's Trading Below $45?
Occidental Petroleum is a large oil and natural gas company. The company has been growing via acquisitions, an approach that is likely to continue. The company is likely to grow more quickly than some of its largest peers, but it is also likely to be more volatile. 10 stocks we like better than Occidental Petroleum › A lot has changed about Occidental Petroleum (NYSE: OXY) since around 2020. Some of the changes were good and some weren't, though how you view the company may depend a little bit on your approach to investing. Occidental Petroleum has some very well-known supporters, but does that make it a buy while the shares trade below $45? Occidental Petroleum, which is usually just shortened to Oxy, is a large business, with a market cap of around $40 billion. However, large is a relative term, as that valuation is relatively small compared to the largest players in the energy sector. For instance, industry giant ExxonMobil (NYSE: XOM) has a market cap of around $440 billion. This difference actually plays an important role in whether or not you might want to buy Oxy stock today. That's because ExxonMobil is one of the largest integrated energy companies on the planet. And Oxy is basically trying to grow to a point where it can compete with companies like ExxonMobil. The primary route that Oxy has used to grow its business of late has been acquisitions. The process started to ramp up in 2019 when Oxy bought Anadarko Petroleum. With the financial support of Warren Buffett and Berkshire Hathaway (NYSE: BRK.A)(NYSE: BRK.B) it managed to steal Anadarko away from Chevron (NYSE: CVX). But the deal led to a sea change for Oxy because it leaned heavily on debt to get the Anadarko deal done. When oil prices plunged during the coronavirus pandemic, it was forced to cut its dividend and refocus its financials around debt reduction. To Oxy's credit, it has dramatically improved its financial situation concerning its balance sheet. Its debt-to-equity ratio rose to nearly 2x following the Anadarko deal but is now down to around 0.7x. And it has inked two more acquisitions since it completed the Anadarko acquisition, so it has been much more prudent about its purchases. That's a good thing. But the dividend remains well below where it was prior to the dividend cut. What's interesting is that the dividend yield remains notably lower, as well. This is basically a function of the market recognizing that Oxy is taking a different approach with its business. It is now more focused on growth. That's not a bad thing, but it is very different from what you will get from industry giants like ExxonMobil and Chevron. These two integrated energy companies lean more toward reliable dividends despite operating in a volatile industry. From a top-level perspective, Oxy's financial performance and stock price will always be impacted heavily by the often volatile prices of oil and natural gas. That's no different than what you'd end up facing with ExxonMobil or Chevron. However, when you dig a little bit deeper, Oxy is more growth-oriented than ExxonMobil or Chevron, and that creates both opportunity and risk. Even with the financial support of Berkshire, Oxy got out over its skis with the Anadarko transaction. Although it has been more prudent since that point, the misstep shows that execution is vital to Oxy's growth approach and, importantly, that it hasn't always executed at a high level. Investors took the brunt of the hit, noting the steep stock price decline and dividend cut that were the fallout. An investment in ExxonMobil or Chevron probably won't expose you to the same kind of risk, or at least not at the same level, given their larger scales. It is interesting to note that Buffett (through Berkshire) owns both Oxy and Chevron stock. That basically means he is invested in an industry giant that produces reliable dividends and a smaller peer that is focused on growth. That could be the best option for long-term investors looking at the energy sector more broadly. But if you have to choose just one investment, Oxy is the riskier choice and the one that likely has more long-term upside. If you choose to buy Oxy, however, go in knowing two important facts. First, no energy producer can fully avoid the impact that commodity prices will have on its business, which is why Oxy's price is below $45 today. And, second, Oxy's focus on growth increases risk in a sector that is already on the risky side. The second factor here should be the one you pay the most attention to if you plan to own whatever energy stock you buy for the 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 $653,389!* Or when Nvidia made this list on April 15, 2005... if you invested $1,000 at the time of our recommendation, you'd have $830,492!* Now, it's worth noting Stock Advisor's total average return is 982% — a market-crushing outperformance compared to 171% 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 19, 2025 Reuben Gregg Brewer has no position in any of the stocks mentioned. The Motley Fool has positions in and recommends Berkshire Hathaway and Chevron. The Motley Fool recommends Occidental Petroleum. The Motley Fool has a disclosure policy. Should You Buy Occidental Petroleum While It's Trading Below $45? was originally published by The Motley Fool Error while retrieving data Sign in to access your portfolio Error while retrieving data Error while retrieving data Error while retrieving data Error while retrieving data
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5 days ago
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Occidental Petroleum: Navigating Market Pressures with Berkshire's Backing
Warren Buffett's (Trades, Portfolio), Berkshire Hathaway has further increased its investment in Occidental Petroleum. The conglomerate now owns approximately 265 million shares, representing about 28.2% of Occidental's outstanding shares. Despite the increased stake, Buffett has indicated that Berkshire does not intend to take a controlling interest in Occidental. Warning! GuruFocus has detected 3 Warning Sign with OXY. Occidental's stock has faced challenges recently, declining approximately 21% from its 2025 peak of $53.20 to close at $42.16, with a low of $34.78 in the previous month. Despite these fluctuations, Berkshire's continued investment underscores its confidence in Occidental's long-term prospects. Berkshire Hathaway has become the largest shareholder in Occidental Petroleum. However, this partnership could not shield Occidental (NYSE:OXY) from a significant decline in its stock during the first quarter of 2025. Falling oil prices and the market shock triggered by a Trump-era event known as "Liberation Day," widely regarded as a grey swan event that disrupted global sentiment, further intensified the decline. Brent is still down nearly 13% year over year. Recent signs of economic recovery are partially driven by easing tensions and de-escalating the tariff conflict between the U.S. and China. For at least a few months, the two superpowers have been negotiating a trade agreement that may or may not be chart below illustrates OXY's notably poor performance compared to some of its competitors. OXY has declined by 33% year-over-year, a significant drop compared to ExxonMobil (NYSE:XOM). While negotiations between the U.S. and China are underway, the long-term effects on the global economy remain concerning. Warren Buffett (Trades, Portfolio) has steadily increased his stake in Occidental Petroleum since 2022. His involvement began in 2019 when Berkshire Hathaway invested $10 billion in Occidental in preferred stock with an 8% annual dividend, helping finance the company's acquisition of Anadarko Petroleum. Occidental ultimately outbid Chevron by offering $76 per share, surpassing Chevron's $65 per share proposala move widely viewed as overpaying. The deal's hefty price tag and high debt load pushed Occidental to the brink of financial distress in the following years. Today, Occidental's stock trades around $42.16, well below Anadarko's acquisition price, highlighting the deal's long-term cost. This analysis also excludes the impact of suspended or reduced dividends, further underscoring Occidental's financial strain Hathaway's investment in Occidental included high-yielding preferred shares and lucrative warrants, which likely played a key role in attracting Buffett's interest. While crossing the 20% ownership threshold often signals a potential takeover, Buffett has publicly stated he has no intention of acquiring the company outright. Instead, this is a strategic, long-term bet on the enduring importance of oil and gas. Despite the global shift toward renewable energy, Buffett seems confident that traditional energy sources will remain essential to the world economy for decades. When Warren Buffett (Trades, Portfolio) began investing in Occidental Petroleum, I took notice; who wouldn't? His track record speaks volumes. So, like many others, I followed his lead and purchased more shares. Fast forward 18 months, and here's the honest truth: Unfortunately, it hasn't paid off. OXY has experienced a significant decline from the price range where Buffett was buying, which was around $51 to $60+. It closed today at $41.13, meaning that anyone who followed his trades during that time is likely facing a sizeable loss. In contrast, the broader market has recovered from the liberation day effect. It can be difficult to accept that even one of the greatest investors in the world can make a wrong call, at least in the short term. There were valid reasons to be bullish: oil prices were strong, Buffett's stake suggested deep conviction, and OXY has some top-tier assets. But debt, environmental liabilities, and oil market volatility have weighed heavily. Lesson learned? Even the best make mistakes sometimes. While I still respect Buffett's long-term perspective, this experience reinforced a key rule for me: don't just follow the money, understand the business, the risks, and your own timeline. In the short term, oil prices are expected to experience moderate volatility, which may allow OXY to stabilize and regain some value lost recently. This volatility will be influenced by weak demand from China and ongoing global economic uncertainty while also being supported by geopolitical risks and OPEC+ supply management. Over the medium term, prices may trend higher due to years of underinvestment in production and sustained demand, even as the energy transition continues. U.S. oil production will likely be a stabilizing factor, although it will adopt a more disciplined growth approach. The market is projected to remain within the $65$85 range, with potential for upward movement if supply tightens unexpectedly. Occidental Petroleum Corporation (NYSE:OXY) is a prominent American oil and gas exploration and production company based in Houston, Texas. As one of the largest independent oil and natural gas companies in the United States, OXY operates in the U.S., the Middle East, and Latin America. This article updates my previous publication on GuruFocus from January 6, 2025. In 1Q25, Occidental Petroleum reported $6.843 billion in revenue, a 14% increase year-over-year. The revenue discussed comprises three main segments: the oil and gas segment, OxyChem (the chemical division), and the midstream and marketing division. Overall, these results exceeded market expectations. Below are the details presented in one chart: The oil and gas segment was the primary contributor to the 1Q25 financial results, generating $5.697 billion in revenue and $1.7 billion in pre-tax income fueled by a 19% increase in production and rising commodity prices. OxyChem, the chemical division, generated $1.246 billion in revenue and achieved a pre-tax income of $185 million, surpassing expectations despite facing challenges with pricing and costs. The midstream and marketing segment generated $203 million but reported a pre-tax loss of $77 million, mainly due to losses from derivatives. The company reported a positive free cash flow in 1Q25, which was significantly lower than I had anticipated. The free cash flow, calculated by subtracting capital expenditures from cash generated from operations, amounted to a disappointing $240 million in 1Q25. This figure marks the lowest free cash flow since 2021, as illustrated in the chart below. Nevertheless, OXY increased its quarterly dividend to $0.24 per share for 2025, reflecting a 9% rise from the $0.22 per share paid last year. According to the company's earnings release and financial statements for 1Q25, there were no share buybacks during this period. OXY calculates free cash flow using a different formula, reporting it as $1.155 billion, including "working capital and other." This approach is somewhat misleading, as it does not accurately represent the true free cash flow. Ultimately, deciding whom to trust on this issue is up to you. On a different note, EBITDA was $3.567 billion in 1Q25, 19.4% higher than reported in 1Q24. Cash from operations totaled $2.148 billion, while capital expenditures (CapEx) reached $1.908 billion. Despite the company's progress, Occidental Petroleum's debt situation is a significant concern. This issue is particularly troubling due to the recent decline in oil prices. The company's free cash flow has decreased to a level that hinders its ability to reduce its substantial debt burden effectively. As of 1Q25, the net debt was approximately $22.18 billion. However, during the quarter, Occidental repaid $2.3 billion of its debt, which was supported by asset sales following the acquisition of CrownRock LP in August 2024. The company's cash, cash equivalents, and marketable securities totaled $2.612 billion, while its long-term debt, including the current portion, stood at $24.787 billion. The upstream segment is the most significant part of the company, accounting for 83.3% of total revenue. This quarter, the company reported strong production results, with total oil equivalent production reaching 1,391K barrels of oil equivalent per day (Boepd). However, this represents a slight decline from 1,463K Boepd in the previous quarter. Specifically, U.S. oil equivalent production was 1,167K Boepd, down from 1,233K Boepd in the prior quarter. While this production level remains solid, it does show some signs of weakness, as illustrated in the graph below: In the first quarter of 2025, Occidental Petroleum reported domestic oil and gas operating costs of $9.05 per barrel of oil equivalent (BOE). This figure shows a slight improvement from the fourth quarter of 2024, when the LOE was $9.15 per BOE. The decrease in operating expenses is primarily due to the integration of CrownRock's assets, which include 1,700 new wells, 750 of which have breakeven costs below $40 per barrel. Furthermore, Occidental has reduced its drilling and completion costs by 12% compared to 2023, with an additional improvement of 7% expected by 2025. The US production breakdown by region was as follows: The Permian segment is the most productive, accounting for approximately 64.6% of U.S. production in 1Q25. However, the significant increase year-over-year came from the Rockies and the Gulf of America. In contrast, this quarter, international production reached 224K barrels of oil equivalent per day (Boepd). Additionally, oil production comprised 50.6% of the total production for this quarter. The company sold oil for $71.07 per barrel, a decrease from $76.04 last year. The price of natural gas liquids (NGL) increased to $25.94, up from $22.14 last year. Additionally, the company sold its (global) natural gas for $2.30 per thousand cubic feet (Mcf), compared to $1.68 last year. NGL and natural gas have seen significant year-over-year increases, while oil prices have remained stable around $72 per barrel. Note: The chart has been adjusted to account for the dividend. Occidental is currently trading within a descending channel pattern, with resistance at $48.75 and support at $41.10. With the relative strength index (RSI) at 47 descending, the retracement to the previously formed support level of about $41 is justified, and it may then bounce higher once again toward the 200-day moving average (200MA). The RSI, however, implies that OXY might exhibit additional weakness before being oversold, pointing to a potential breakdown if oil keeps declining. Please look at the chart above for more information. I recommend adopting a Last-In-First-Out (LIFO) strategy for 6070% of your position. Set your target price just below the 200-day moving average, around $48 to $50. Given the current level of uncertainty in the market, using a LIFO strategy for the majority of your investment is advisable. A descending channel is generally recognized as a bearish continuation pattern. It forms when the price consistently declines between two parallel downward-sloping lines: a resistance level and a support level. As I mentioned a few months ago, this pattern emerged from a descending trend, and we recently experienced a breakout. However, we now find ourselves in the opposite situation, where a potential breakdown may occur at the end of this new cycle. Making a decision right now is exceedingly difficult due to the high levels of volatility and unpredictability. Therefore, maintaining a healthy financial position at all times is wise. Taking profits above $48 gradually and aiming for a higher resistance level at $54 is a good trading strategy. Alternatively, if the anticipated breakdown pattern occurs, watch for a retreat between $41 and $39 to begin accumulating once more. Note: It is essential to frequently update the TA chart to remain relevant, as we operate in an extremely volatile environment. This article first appeared on GuruFocus.
Yahoo
5 days ago
- Business
- Yahoo
Occidental Petroleum: Navigating Market Pressures with Berkshire's Backing
Warren Buffett's (Trades, Portfolio), Berkshire Hathaway has further increased its investment in Occidental Petroleum. The conglomerate now owns approximately 265 million shares, representing about 28.2% of Occidental's outstanding shares. Despite the increased stake, Buffett has indicated that Berkshire does not intend to take a controlling interest in Occidental. Warning! GuruFocus has detected 3 Warning Sign with OXY. Occidental's stock has faced challenges recently, declining approximately 21% from its 2025 peak of $53.20 to close at $42.16, with a low of $34.78 in the previous month. Despite these fluctuations, Berkshire's continued investment underscores its confidence in Occidental's long-term prospects. Berkshire Hathaway has become the largest shareholder in Occidental Petroleum. However, this partnership could not shield Occidental (NYSE:OXY) from a significant decline in its stock during the first quarter of 2025. Falling oil prices and the market shock triggered by a Trump-era event known as "Liberation Day," widely regarded as a grey swan event that disrupted global sentiment, further intensified the decline. Brent is still down nearly 13% year over year. Recent signs of economic recovery are partially driven by easing tensions and de-escalating the tariff conflict between the U.S. and China. For at least a few months, the two superpowers have been negotiating a trade agreement that may or may not be chart below illustrates OXY's notably poor performance compared to some of its competitors. OXY has declined by 33% year-over-year, a significant drop compared to ExxonMobil (NYSE:XOM). While negotiations between the U.S. and China are underway, the long-term effects on the global economy remain concerning. Warren Buffett (Trades, Portfolio) has steadily increased his stake in Occidental Petroleum since 2022. His involvement began in 2019 when Berkshire Hathaway invested $10 billion in Occidental in preferred stock with an 8% annual dividend, helping finance the company's acquisition of Anadarko Petroleum. Occidental ultimately outbid Chevron by offering $76 per share, surpassing Chevron's $65 per share proposala move widely viewed as overpaying. The deal's hefty price tag and high debt load pushed Occidental to the brink of financial distress in the following years. Today, Occidental's stock trades around $42.16, well below Anadarko's acquisition price, highlighting the deal's long-term cost. This analysis also excludes the impact of suspended or reduced dividends, further underscoring Occidental's financial strain Hathaway's investment in Occidental included high-yielding preferred shares and lucrative warrants, which likely played a key role in attracting Buffett's interest. While crossing the 20% ownership threshold often signals a potential takeover, Buffett has publicly stated he has no intention of acquiring the company outright. Instead, this is a strategic, long-term bet on the enduring importance of oil and gas. Despite the global shift toward renewable energy, Buffett seems confident that traditional energy sources will remain essential to the world economy for decades. When Warren Buffett (Trades, Portfolio) began investing in Occidental Petroleum, I took notice; who wouldn't? His track record speaks volumes. So, like many others, I followed his lead and purchased more shares. Fast forward 18 months, and here's the honest truth: Unfortunately, it hasn't paid off. OXY has experienced a significant decline from the price range where Buffett was buying, which was around $51 to $60+. It closed today at $41.13, meaning that anyone who followed his trades during that time is likely facing a sizeable loss. In contrast, the broader market has recovered from the liberation day effect. It can be difficult to accept that even one of the greatest investors in the world can make a wrong call, at least in the short term. There were valid reasons to be bullish: oil prices were strong, Buffett's stake suggested deep conviction, and OXY has some top-tier assets. But debt, environmental liabilities, and oil market volatility have weighed heavily. Lesson learned? Even the best make mistakes sometimes. While I still respect Buffett's long-term perspective, this experience reinforced a key rule for me: don't just follow the money, understand the business, the risks, and your own timeline. In the short term, oil prices are expected to experience moderate volatility, which may allow OXY to stabilize and regain some value lost recently. This volatility will be influenced by weak demand from China and ongoing global economic uncertainty while also being supported by geopolitical risks and OPEC+ supply management. Over the medium term, prices may trend higher due to years of underinvestment in production and sustained demand, even as the energy transition continues. U.S. oil production will likely be a stabilizing factor, although it will adopt a more disciplined growth approach. The market is projected to remain within the $65$85 range, with potential for upward movement if supply tightens unexpectedly. Occidental Petroleum Corporation (NYSE:OXY) is a prominent American oil and gas exploration and production company based in Houston, Texas. As one of the largest independent oil and natural gas companies in the United States, OXY operates in the U.S., the Middle East, and Latin America. This article updates my previous publication on GuruFocus from January 6, 2025. In 1Q25, Occidental Petroleum reported $6.843 billion in revenue, a 14% increase year-over-year. The revenue discussed comprises three main segments: the oil and gas segment, OxyChem (the chemical division), and the midstream and marketing division. Overall, these results exceeded market expectations. Below are the details presented in one chart: The oil and gas segment was the primary contributor to the 1Q25 financial results, generating $5.697 billion in revenue and $1.7 billion in pre-tax income fueled by a 19% increase in production and rising commodity prices. OxyChem, the chemical division, generated $1.246 billion in revenue and achieved a pre-tax income of $185 million, surpassing expectations despite facing challenges with pricing and costs. The midstream and marketing segment generated $203 million but reported a pre-tax loss of $77 million, mainly due to losses from derivatives. The company reported a positive free cash flow in 1Q25, which was significantly lower than I had anticipated. The free cash flow, calculated by subtracting capital expenditures from cash generated from operations, amounted to a disappointing $240 million in 1Q25. This figure marks the lowest free cash flow since 2021, as illustrated in the chart below. Nevertheless, OXY increased its quarterly dividend to $0.24 per share for 2025, reflecting a 9% rise from the $0.22 per share paid last year. According to the company's earnings release and financial statements for 1Q25, there were no share buybacks during this period. OXY calculates free cash flow using a different formula, reporting it as $1.155 billion, including "working capital and other." This approach is somewhat misleading, as it does not accurately represent the true free cash flow. Ultimately, deciding whom to trust on this issue is up to you. On a different note, EBITDA was $3.567 billion in 1Q25, 19.4% higher than reported in 1Q24. Cash from operations totaled $2.148 billion, while capital expenditures (CapEx) reached $1.908 billion. Despite the company's progress, Occidental Petroleum's debt situation is a significant concern. This issue is particularly troubling due to the recent decline in oil prices. The company's free cash flow has decreased to a level that hinders its ability to reduce its substantial debt burden effectively. As of 1Q25, the net debt was approximately $22.18 billion. However, during the quarter, Occidental repaid $2.3 billion of its debt, which was supported by asset sales following the acquisition of CrownRock LP in August 2024. The company's cash, cash equivalents, and marketable securities totaled $2.612 billion, while its long-term debt, including the current portion, stood at $24.787 billion. The upstream segment is the most significant part of the company, accounting for 83.3% of total revenue. This quarter, the company reported strong production results, with total oil equivalent production reaching 1,391K barrels of oil equivalent per day (Boepd). However, this represents a slight decline from 1,463K Boepd in the previous quarter. Specifically, U.S. oil equivalent production was 1,167K Boepd, down from 1,233K Boepd in the prior quarter. While this production level remains solid, it does show some signs of weakness, as illustrated in the graph below: In the first quarter of 2025, Occidental Petroleum reported domestic oil and gas operating costs of $9.05 per barrel of oil equivalent (BOE). This figure shows a slight improvement from the fourth quarter of 2024, when the LOE was $9.15 per BOE. The decrease in operating expenses is primarily due to the integration of CrownRock's assets, which include 1,700 new wells, 750 of which have breakeven costs below $40 per barrel. Furthermore, Occidental has reduced its drilling and completion costs by 12% compared to 2023, with an additional improvement of 7% expected by 2025. The US production breakdown by region was as follows: The Permian segment is the most productive, accounting for approximately 64.6% of U.S. production in 1Q25. However, the significant increase year-over-year came from the Rockies and the Gulf of America. In contrast, this quarter, international production reached 224K barrels of oil equivalent per day (Boepd). Additionally, oil production comprised 50.6% of the total production for this quarter. The company sold oil for $71.07 per barrel, a decrease from $76.04 last year. The price of natural gas liquids (NGL) increased to $25.94, up from $22.14 last year. Additionally, the company sold its (global) natural gas for $2.30 per thousand cubic feet (Mcf), compared to $1.68 last year. NGL and natural gas have seen significant year-over-year increases, while oil prices have remained stable around $72 per barrel. Note: The chart has been adjusted to account for the dividend. Occidental is currently trading within a descending channel pattern, with resistance at $48.75 and support at $41.10. With the relative strength index (RSI) at 47 descending, the retracement to the previously formed support level of about $41 is justified, and it may then bounce higher once again toward the 200-day moving average (200MA). The RSI, however, implies that OXY might exhibit additional weakness before being oversold, pointing to a potential breakdown if oil keeps declining. Please look at the chart above for more information. I recommend adopting a Last-In-First-Out (LIFO) strategy for 6070% of your position. Set your target price just below the 200-day moving average, around $48 to $50. Given the current level of uncertainty in the market, using a LIFO strategy for the majority of your investment is advisable. A descending channel is generally recognized as a bearish continuation pattern. It forms when the price consistently declines between two parallel downward-sloping lines: a resistance level and a support level. As I mentioned a few months ago, this pattern emerged from a descending trend, and we recently experienced a breakout. However, we now find ourselves in the opposite situation, where a potential breakdown may occur at the end of this new cycle. Making a decision right now is exceedingly difficult due to the high levels of volatility and unpredictability. Therefore, maintaining a healthy financial position at all times is wise. Taking profits above $48 gradually and aiming for a higher resistance level at $54 is a good trading strategy. Alternatively, if the anticipated breakdown pattern occurs, watch for a retreat between $41 and $39 to begin accumulating once more. Note: It is essential to frequently update the TA chart to remain relevant, as we operate in an extremely volatile environment. This article first appeared on GuruFocus. 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
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24-05-2025
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Occidental Petroleum price target raised to $44 from $42 at BofA
BofA raised the firm's price target on Occidental Petroleum (OXY) to $44 from $42 and keeps a Neutral rating on the shares. The firm, which refreshed its refiners estimates and notes it is below consensus for 2025 and 2026 EBITDA, points out that its price objectives for the 'Majors' Chevron, ExxonMobil, and Occidental are 'little changed,' but adds that it revised up its targets for refiners, as they no longer embed a worse case recessionary environment. Easily unpack a company's performance with TipRanks' new KPI Data for smart investment decisions Receive undervalued, market resilient stocks right to your inbox with TipRanks' Smart Value Newsletter Published first on TheFly – the ultimate source for real-time, market-moving breaking financial news. Try Now>> See Insiders' Hot Stocks on TipRanks >> Read More on OXY: Disclaimer & DisclosureReport an Issue Occidental Petroleum price target raised to $44 from $42 at Citi CVX, OXY, XOM: China Is Top Buyer of Canadian Crude Oil Via the Trans Mountain Pipeline Occidental Petroleum put volume heavy and directionally bearish Occidental Petroleum, ADNOC's XRG agree to evaluate joint venture White House reports $200B in deals between U.S. and UAE firms, Bloomberg says
