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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's recent performance was driven by impressive Q4 earnings, marked by record production and strategic debt reduction. The company's aggressive debt reduction efforts, including a $6 billion debt repayment, have enhanced its financial strength. Additionally, its international assets have delivered outsized profitability due to Brent pricing and lower DD&A costs. The company's Q4 earnings call highlighted a 27% year-over-year increase in cash flow from operations, excluding OxyChem. (Source: Occidental Petroleum Corp (OXY) Q4 2025 Earnings Call Highlights)

1.c. Company Highlights

2. Occidental Petroleum's Strong 2025 Execution and Guidance

Occidental Petroleum (OXY) reported an adjusted profit of $0.31 per diluted share in the fourth quarter, significantly beating estimates of $0.1649. The company's free cash flow before working capital was $4.3 billion in 2025, driven by its disciplined capital allocation and strong asset base. Normalized cash flow from operations increased 27% year-over-year, excluding OxyChem. OXY's financial performance was robust, with a record annual production of 1.4 million barrels of oil equivalent per day, exceeding guidance while spending $300 million less in oil and gas capital.

Publication Date: Feb -22

📋 Highlights
  • Free Cash Flow Resilience:: Generated $4.3 billion in free cash flow before working capital despite 14% oil price decline in 2025.
  • Debt Reduction:: Repaid $4 billion in debt, lowering principal debt to $15 billion, with a tender offer to reduce further to $14.3 billion.
  • Production Efficiency:: Achieved record 1.4 million BOE/day production, exceeding guidance while cutting oil and gas capital by $300 million.
  • 2026 Capital Plan:: Capped at $5.5–$5.9 billion, a $550 million reduction from 2025, with 70% allocated to U.S. onshore projects.
  • Operational Cost Savings:: Reduced well costs by 7% and facilities/construction costs by 5%, driving $1.2 billion in 2026 free cash flow improvement.

Operational Highlights

OXY achieved a 107% organic reserves replacement ratio and a total resource base of 16.5 billion barrels of oil equivalent, providing over 30 years of low-cost opportunity. The company's Midstream segment delivered outstanding results, with adjusted pretax income exceeding guidance. Permian production grew 4% year-on-year, while Rockies production was down year-on-year due to a transition to the Powder River Basin.

Guidance and Outlook

OXY expects to produce 1.45 million BOE per day in 2026, with first-quarter volumes lower due to reduced activity, winter storm impact, and planned turnarounds. Production will increase in the second quarter, driven by stronger Permian volumes. The company has reduced its capital expenditure (CapEx) guide by $800 million, with $300 million in savings from efficiency gains and $100 million from reduced exploration CapEx. OXY expects to improve free cash flow by over $1.2 billion in 2026, driven by operational savings and interest savings.

Valuation and Return Metrics

Occidental Petroleum's current valuation metrics indicate a P/E Ratio of 22.33, EV/EBITDA of 5.87, and a Dividend Yield of 1.85%. The company's Return on Invested Capital (ROIC) stands at 3.63%, while its Return on Equity (ROE) is 6.43%. With a Net Debt / EBITDA ratio of 1.77, OXY's leverage metrics have improved significantly. Analysts estimate next year's revenue growth at 7.3%, indicating a positive outlook for the company's financial performance.

Long-term Prospects

OXY's disciplined capital allocation, strong asset base, and operational performance will drive resilient performance and enhanced capital efficiency. The company has structural savings, including a 28% reduction in well costs, and development efficiencies. OXY's production trajectory will benefit from these efficiencies and mid-cycle project optimization. The company is optimizing, not deferring, projects like Horn Mountain and EOR, with an expected uplift in late 2027.

3. NewsRoom

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Occidental Petroleum Stock Rises Amid Middle East Conflict Concerns

Mar -06

Source: benzinga.com

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Why Occidental Petroleum Stock Rocketed Nearly 17% in February

Mar -06

Source: fool.com

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If Oil Hits $100 These Are the Energy Dividends You Want to Own

Mar -06

Source: 247wallst.com

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Occidental Announces Total Consideration for its Cash Tender Offers and Consent Solicitations for Certain of its Senior Notes and Debentures

Mar -05

Source: globenewswire.com

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Warren Buffett's Oil Bet Looks Genius, Here Is What to Buy Next

Mar -05

Source: 247wallst.com

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Stock Market Today: Major Indexes Retreat After Rebounding Yesterday; Dow Drops 800 Points; Oil Jumps Further as Iran Claims to Have Attacked Tanker

Mar -05

Source: investopedia.com

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Chaos & Crude: 3 Energy Stocks Built to Thrive in This Market

Mar -05

Source: marketbeat.com

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Occidental Announces Early Tender Results and Upsize in Cash Tender Offers and Consent Solicitations for Certain of its Senior Notes and Debentures

Mar -05

Source: globenewswire.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: 5.1/10

Value: 6.8

Growth: 5.2

Quality: 5.2

Yield: 4.0

Momentum: 2.5

Volatility: 7.0

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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

54.19$

Current Price

54.19$

Potential

-0.00%

Expected Cash-Flows