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1. Company Snapshot

1.a. Company Description

Occidental Petroleum Corporation, together with its subsidiaries, engages in the acquisition, exploration, and development of oil and gas properties in the United States, the Middle East, Africa, and Latin America.It operates through three segments: Oil and Gas, Chemical, and Midstream and Marketing.The company's Oil and Gas segment explores for, develops, and produces oil and condensate, natural gas liquids (NGLs), and natural gas.


Its Chemical segment manufactures and markets basic chemicals, including chlorine, caustic soda, chlorinated organics, potassium chemicals, ethylene dichloride, chlorinated isocyanurates, sodium silicates, and calcium chloride; vinyls comprising vinyl chloride monomer, polyvinyl chloride, and ethylene.The Midstream and Marketing segment gathers, processes, transports, stores, purchases, and markets oil, condensate, NGLs, natural gas, carbon dioxide, and power.This segment also trades around its assets consisting of transportation and storage capacity; and invests in entities.


Occidental Petroleum Corporation was founded in 1920 and is headquartered in Houston, Texas.

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1.b. Last Insights on OXY

Occidental Petroleum Corporation faced negative drivers over the recent 3 months. Weak oil prices and underwhelming performance led to a downgrade to "hold" due to deteriorating earnings outlook and unappealing valuation compared to peers. The company's $9.7 billion sale of OxyChem to Berkshire Hathaway was met with a negative market reaction, despite plans to utilize funds to cut debt. Additionally, Occidental's Q2 earnings preview indicated revenue and EPS declines, despite higher Permian production. Debt reduction remains a key concern, but $7.5 billion in debt cuts and lower interest costs have boosted flexibility.

1.c. Company Highlights

2. Occidental Petroleum's Q3 2025 Earnings: A Strategic Transformation

Occidental Petroleum reported a strong quarterly financial performance, with earnings per share (EPS) of $0.64, beating analyst estimates of $0.512. The company's operating cash flow was $3.2 billion, and free cash flow before working capital was $1.5 billion. Revenue growth was robust, driven by the oil and gas business, which produced 1.47 million barrels of oil equivalent per day, exceeding guidance. The Permian Basin contributed 800,000 BOE per day, a record high. With a current P/E Ratio of 21.72 and an EV/EBITDA of 3.82, the market seems to be pricing in a certain level of growth and profitability.

Publication Date: Nov -12

📋 Highlights
  • OxyChem Sale Proceeds: $8 billion in proceeds, allocating $6.5 billion to reduce debt to below $15 billion, cutting annual interest expenses by over $350 million.
  • Q3 Financial Performance: $3.2 billion operating cash flow, $1.5 billion free cash flow before working capital, and $1.3 billion debt repayment, reducing principal debt to $20.8 billion.
  • Operational Output: 1.47 million BOE/day production, with Permian Basin contributing 800,000 BOE/day (record high), and lowest lease operating expense per barrel since 2021.
  • Capital Allocation Shift: $250 million redirected to Gulf of Mexico/Oman projects, $400 million reallocated to Permian short-cycle projects, and $100 million Lower Carbon Ventures (LCV) CapEx in 2026.

Debt Reduction and Shareholder Returns

The sale of OxyChem will provide approximately $8 billion in proceeds, with $6.5 billion allocated to debt reduction, targeting a post-transaction debt level of less than $15 billion. This will lower annual interest expenses by over $350 million. The company plans to broaden its return of capital program, including share repurchases, once the debt target is achieved. With a current Net Debt / EBITDA ratio of 0.18 and a Free Cash Flow Yield of 9.22%, OXY's ability to generate cash and reduce debt is evident.

Operational Performance and Guidance

OXY's teams delivered strong operational performance, with a focus on cost management and efficiency improvements, achieving the lowest quarterly lease operating expense per barrel since 2021. The company raised its full-year guidance for the Oil and Gas and Midstream and Marketing segments. OXY expects to generate strong cash flow in 2025, with a target of $55-60 WTI price. The company's unconventional assets are expected to benefit from enhanced oil recovery using CO2, potentially doubling the recovery rate.

Capital Expenditure and Production Guidance

The capital expenditure (CapEx) guidance for next year is expected to be between $6.3 billion and $6.7 billion. The company plans to increase investment in the Gulf of America waterflood projects and in Oman, with an additional $250 million allocation. OXY expects to spend $6.3-6.7 billion in 2026, with production expected to be flat to up 2%, driven primarily by unconventional Permian growth.

Valuation and Outlook

With a P/B Ratio of 1.14 and an ROE of 5.39%, OXY's valuation seems reasonable. The company's transformation, strategic rationale for selling OxyChem, and strong operational performance position it for future growth. As the company enters a period of stability and potential harvesting of its existing assets, investors can expect a more predictable cash flow generation. The current valuation metrics suggest that the market has already priced in some of the positive developments, but the company's ability to generate strong cash flow and reduce debt is a positive sign.

3. NewsRoom

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3 Warren Buffett Stocks to Buy and Hold Forever

Dec -02

Source: youtube.com

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Oil Dividend Roundup: I Prefer Occidental Petroleum Over Exxon Mobil

Nov -28

Source: seekingalpha.com

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My Biggest Energy Call In Years - And Almost Everyone Is Missing It

Nov -25

Source: seekingalpha.com

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3 Things Every Occidental Petroleum Investor Needs To Know

Nov -25

Source: fool.com

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3 No-Brainer Warren Buffett Stocks to Buy Right Now

Nov -18

Source: fool.com

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Campbell & CO Investment Adviser LLC Acquires Shares of 7,776 Occidental Petroleum Corporation $OXY

Nov -17

Source: defenseworld.net

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Occidental Petroleum Corporation $OXY Shares Purchased by Banco Bilbao Vizcaya Argentaria S.A.

Nov -16

Source: defenseworld.net

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Francis Chou's Strategic Move: Significant Increase in Stellantis NV Holdings

Nov -14

Source: gurufocus.com

4. Business Breakdown

4.a. Revenues by Country

4.b. Revenues by Segment

5. Expected revenues mid-term growth (0.99%)

6. Segments

Oil and Gas

Expected Growth: 1.0%

Occidental Petroleum Corporation's oil and gas segment growth is driven by increased production from its Permian Basin assets, improved commodity prices, and efficient operational costs. The company's strategic acquisitions and divestitures have also contributed to its growth, positioning it for a 1.0 growth level. Operational excellence and capital discipline are key to sustaining this growth trajectory.

Chemical

Expected Growth: 0.8%

Occidental Petroleum's chemical segment growth of 0.8 is driven by increased demand for essential chemicals, improved pricing, and efficient operations. The company's strategic focus on core assets and cost management also contributes to this growth. Additionally, a recovering economy and rising industrial activity support the segment's performance.

Midstream and Marketing

Expected Growth: 1.2%

Occidental Petroleum's Midstream and Marketing segment growth of 1.2 is driven by increased production volumes, higher oil prices, and efficient operations. The segment benefits from the company's expanding Permian Basin assets, improved transportation efficiencies, and growing marketing and trading activities, leading to increased revenue and profitability.

Corporate and Eliminations

Expected Growth: 0.5%

The 0.5 growth in Corporate and Eliminations from Occidental Petroleum Corporation is driven by reduced overhead costs and improved operational efficiencies. Elimination of inter-segment transactions and optimized financial management contribute to this modest growth, reflecting effective corporate management and strategic resource allocation.

7. Detailed Products

Oil and Gas

Occidental Petroleum Corporation is an international oil and gas exploration and production company that engages in the development, production, and transportation of oil and natural gas. The company operates in the United States, Middle East, and Latin America.

Chemical

Occidental's chemical segment produces and markets essential chemicals such as chlorine, caustic soda, hydrogen peroxide, and phosphoric acid. These chemicals are used in various industries such as water treatment, agriculture, and pharmaceuticals.

Midstream and Marketing

The midstream and marketing segment engages in the transportation, storage, and sale of oil, gas, and chemicals. The company operates pipelines, terminals, and storage facilities to transport and store its products.

8. Occidental Petroleum Corporation's Porter Forces

Forces Ranking

Threat Of Substitutes

Occidental Petroleum Corporation operates in the oil and gas industry, where substitutes such as renewable energy sources (e.g., solar, wind) and alternative fuels (e.g., electric vehicles) exist. However, the demand for oil and gas remains high, and the transition to substitutes is gradual, posing a medium threat.

Bargaining Power Of Customers

The customers of Occidental Petroleum Corporation are primarily large industrial consumers, such as refineries, and other oil and gas companies. These customers have limited bargaining power due to the large volumes they purchase and the relatively few suppliers in the market.

Bargaining Power Of Suppliers

Occidental Petroleum Corporation relies on suppliers for equipment, services, and materials. While there are multiple suppliers available, some equipment and services are specialized, giving suppliers some bargaining power. However, Occidental Petroleum Corporation's large size and market presence allow it to negotiate effectively.

Threat Of New Entrants

The oil and gas industry has high barriers to entry, including significant capital requirements, regulatory hurdles, and access to resources. This limits the threat of new entrants, making it difficult for new companies to enter the market and compete with established players like Occidental Petroleum Corporation.

Intensity Of Rivalry

The oil and gas industry is highly competitive, with many established players competing for market share. Occidental Petroleum Corporation competes with companies such as Chevron, ExxonMobil, and ConocoPhillips, among others. The competition is intense, with companies vying for resources, market share, and customer loyalty.

9. SWOT Analysis

Strength

Weaknesses

Opportunities

Threats

10. Capital Structure

10.a. Balance Sheet

10.b. Weighted Average Cost of capital

Value
Debt Weight 44.24%
Debt Cost 6.09%
Equity Weight 55.76%
Equity Cost 8.36%
WACC 7.36%
Leverage 79.35%

11. Quality Control: Occidental Petroleum Corporation passed 2 out of 9 key points

12.a Historical Valuation

12.b Price/Earnings Ratio

12.c Margin Valuation

12.d Peers Valuation

Peers Group Analysis

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A-Score: 5.0/10

Value: 6.9

Growth: 5.2

Quality: 5.1

Yield: 3.0

Momentum: 3.0

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Peers Metrics

12.e Scoring Insights

12.f DCF BETA

Parameters

Short Term Growth

Short term Time

Long-Term Growth

WACC

Target Price

42.43$

Current Price

42.43$

Potential

-0.00%

Expected Cash-Flows