Latest news with #OccidentalPetroleum
Yahoo
21 hours ago
- Business
- Yahoo
JPMorgan Lowers PT for Occidental Petroleum (OXY), Keeps Neutral Rating
Occidental Petroleum Corporation (NYSE:OXY) is one of the 10 Best Oil and Gas Stocks to Buy Now. On May 9, JPMorgan lowered its price target on Occidental Petroleum Corporation (NYSE:OXY) from $52 to $47 and kept a 'Neutral' rating. JPMorgan analysts highlighted the corporation's Q1 2025 results and the management's efforts to cut costs amid a challenging oil price environment. Oil derricks in the background with a few workers in the foreground, emphasizing the company's oil and gas production activities. Occidental Petroleum Corporation (NYSE:OXY) reported that it reduced drilling cycle times in the Permian Basin by 15% through enhanced well designs and strong execution. These actions led to a 10% decrease in well costs year-over-year, exceeding the target of 5-7% that the company had set just a few months ago. Thanks to these improvements, the corporation plans to decommission two drilling rigs in the Permian in 2025. However, Occidental Petroleum Corporation (NYSE:OXY) aims to bring more wells online and with slightly increased production even with this reduced rig count. The corporation has lowered its full-year capital guidance by $200 million. Additionally, Occidental Petroleum Corporation (NYSE:OXY) aims to cut its operational expenses by $150 million in 2025. Occidental Petroleum Corporation (NYSE:OXY) is an American multinational energy company with assets mainly in the US, the Middle East, and North Africa. It is one of the largest oil and gas producers in the US. While we acknowledge the potential of OXY as an investment, we believe certain AI stocks offer greater upside potential and carry less downside risk. If you're looking for an extremely undervalued AI stock that also stands to benefit significantly from Trump-era tariffs and the onshoring trend, see our free report on the best short-term AI stock. READ NEXT: 11 Stocks That Will Bounce Back According To Analysts and 11 Best Stocks Under $15 to Buy According to Hedge Funds. Disclosure: None. Error al recuperar los datos Inicia sesión para acceder a tu cartera de valores Error al recuperar los datos Error al recuperar los datos Error al recuperar los datos Error al recuperar los datos
Yahoo
3 days ago
- Business
- Yahoo
Should You Buy Occidental Petroleum While It's Below $50?
Berkshire Hathaway's cost basis on its Occidental position is above $50 a share. The oil company expects to deliver roughly $1.5 billion of incremental annual free cash flow by 2027, unrelated to oil prices. It has additional upside catalysts from rising oil prices and its carbon capture and storage business. 10 stocks we like better than Occidental Petroleum › Shares of Occidental Petroleum (NYSE: OXY) have dipped over the past year. They've fallen from a peak of more than $60 a share to less than $50. That's largely due to a decline in oil prices, which have fallen from over $80 a barrel to their recent level just above $70 per barrel. Here's a look at several reasons why you should buy the oil stock while it's below $50 a barrel. Warren Buffett's Berkshire Hathaway has been snapping up shares of Occidental in recent years. Buffett's company owns over 264.9 million shares (26.9% of Occidental's outstanding shares). Those shares are currently worth more than $12.6 billion. That's 4.4% of Berkshire's investment portfolio, making Occidental its sixth-largest position. Berkshire's cost basis on its Occidental position is in the low $50s. Buffett's company has capitalized on opportunities to add to its position when the oil stock has dipped below $50 a share over the past year. In addition to buying shares on the open market, Buffett's company holds warrants to buy another $5 billion of Occidental's stock at $59.62 apiece. His company received those warrants when it made its $10 billion preferred stock investment in Occidental in 2019 to support its purchase of Anadarko Petroleum. Oil prices have a major impact on Occidental Petroleum's cash flow and stock price because its oil and gas business is its biggest moneymaker. While its fossil fuel business will continue to be its main profit driver, the company expects to capture a roughly $1.5 billion improvement in its free cash flow over the next few years, unrelated to oil prices. Occidental Petroleum expects to reach an inflection point next year that will boost its free cash flow by $1 billion in 2026. It anticipates its chemical business (OxyChem) will deliver more than $450 million of incremental free cash flow in 2026 from the benefits of expansion projects, including its Battleground plant and the roll-off of the associated capital spending. Meanwhile, the company expects to capture about $450 million in additional earnings in its midstream business as legacy contracts roll off and it reduces capital spending in that segment. Finally, Occidental anticipates its debt repayment strategy will deliver over $135 million in annual interest expense savings in 2026. The company sees the total free-cash-flow improvement from these catalysts rising to around $1.5 billion in 2027. This meaningful improvement will provide it with a higher foundation of stable base cash flows. Occidental can use that incremental excess free cash flow to grow shareholder value via dividend increases, repurchases (common shares and Berkshire's preferred stock), and additional debt repayment. On top of the visible growth from Occidental's non-oil businesses, it has additional upside potential from higher oil prices. If the current conflicts in the Middle East or between Russia and Ukraine escalate to the point where major energy infrastructure gets destroyed, oil prices could spike. Likewise, an unexpected supply issue elsewhere (potentially caused by a natural disaster or human decision) could also drive up crude prices. Meanwhile, Occidental is also building a carbon capture and storage business that could start paying off over the next year. It's starting up its initial direct air capture (DAC) unit, Stratos, this year and expects to be at full capacity by the middle of 2026. It has been commercializing the project by selling carbon credits to companies seeking to decarbonize their operations. Getting this project up and running will showcase the company's ability to commercialize this technology, which Occidental believes could be a big moneymaker over the long term. It would prove to the market that the company can continue developing DAC projects, which would enhance its long-term growth prospects. The dip in Occidental's stock price has caused it to trade below Buffett's purchase level. On top of that, the company has many upside catalysts, many of which don't rely on improving oil prices. Given all that, the dip below $50 looks worth buying for those seeking lower-risk exposure to the 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 $660,821!* Or when Nvidia made this list on April 15, 2005... if you invested $1,000 at the time of our recommendation, you'd have $886,880!* Now, it's worth noting Stock Advisor's total average return is 791% — a market-crushing outperformance compared to 174% 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 June 9, 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. Should You Buy Occidental Petroleum While It's Below $50? was originally published by The Motley Fool
Yahoo
3 days ago
- Business
- Yahoo
The $54 Billion Asset Wall Street Ignores.
Introduction: A Legacy of Patient Capital Founded in 1920, Occidental Petroleum (NYSE:OXY) has steadily built a formidable position in the Permian Basin through patient, disciplined capital allocation, underscored by strategic acquisitions supported notably by Berkshire Hathaway. With Anadarko Petroleum acquired in 2019 and CrownRock more recently, Occidental now holds extensive acreage in the Delaware sub-basin, famous for its multiple, deeper, highly productive geological layers. Warning! GuruFocus has detected 6 Warning Sign with FANG. The company's position today is rooted in legacy assets that stretch back decades. The acquisition of Anadarko brought more than 6,000 wells, many drilled into only a subset of the available zones. Occidental now controls an estimated 20,000 producing wells and holds thousands of permitted or identified drilling locations, including underdeveloped zones left untouched by prior operators. As disclosed in its Q1 2025 investor presentation, Occidental estimates it has approximately 18,000 future drilling locationsrepresenting a decades-long inventory of high-quality wells. What Are We Buying? Investing in an exploration and production (E&P) company means buying two things: current productionrepresented by existing wellsand the potential for future production, which in Occidental's case includes a vast backlog of undeveloped drilling locations. Occidental dramatically reduces capital expenditure by drilling new wells on long-depreciated sites. Much of its acreage is held by production (HBP), and many leases were originally granted on legacy federal terms that include a 12.5% royalty ratewell below current Permian norms. Recent legislation has increased federal royalty minimums to 16.67%, while some New Mexico state leases in premium zones now demand up to 25%. This means Occidental avoids paying an additional 412.5% per barrel in royalties relative to new entrantsequating to a $3$9 per barrel advantage at $70 oil and materially enhancing the net present value of each new well. The recycling of infrastructureroads, water systems, and drilling padsminimizes the need for costly surface development and accelerates returns on new production. In 2024, Occidental drilled 550 new wells and allocated $2.8 billion to that activity, representing only the portion of total capex dedicated to well development. This results in a per-well cost of approximately $5.09 million.: Occidental further benefits from its strategy of increasing pad density by adding new wells to existing sites. This approach spreads fixed costsleases, compressors, oil-handling infrastructureacross more output and enhances late-life economics as operating costs replace capital expenditure as the dominant cost category. Furthermore, the fixed and substantial costs required to return each site to its original stateknown as plugging and abandonment liabilitiesare also spread across more wells. This means Occidental's wells are not only cheaper to drill and operate, but also cheaper to shut in, even though they tend to recover their investment more quickly thanks to higher early production. Occidental also benefits from its leadership in CO? injection for enhanced oil recovery. It is by far the largest operator in the U.S. in this field, injecting roughly 2.6 billion cubic feet per day. Because current legislationspecifically the Inflation Reduction Act of 2022awards tax credits for CO? sequestration, Occidental's dominance in this area results in lower effective tax rates, further strengthening its cash generation. These benefits are not yet fully visible in the earnings statement, as the credits only began scaling significantly in 2023 and continue to ramp up in 2024 and beyond. The inventory of 18,000 locations represents a $54 billion hidden asset when considering Occidental's $3 million per-well cost advantage across 18.000 wells. It is capital efficiencyearned through years of disciplined developmentthat now sets the company apart. In addition to being cheaper to drill, Occidental's wells are also more productive initially. The same Q1 2025 presentation shows that Occidental leads the industry in first-year production per well. Because its pay zones are deeper, reservoir pressure is greater, and wells yield more upfront. This means capital is returned more quicklya vital advantage in a volatile commodity market. What Are We Paying? Despite its structural advantages, Occidental trades at a lower valuation than many of its peers. Its price-to-free-cash-flow ratio and market cap per barrel of daily production are both below average: This means investors today are paying nothing for Occidental's hidden assetsits inventory of long-depreciated pads that can be revisited at low cost, or its leadership in CO? injection, which materially lowers its tax rate. These advantages enhance both return on capital and capital efficiency but the market gives Occidental no credit for them. Margin of Safety: Getting More for Less Occidental is not simply a low-cost operatorit is a low-cost operator with a long runway of growth, significant tax advantages, and industry-leading productivity. Yet it trades at a lower price-to-free-cash-flow multiple and market cap per BOE than many peers. That gapbetween what you're buying and what you're payingis what value investing is all about. A Long View: Who Is Buying? Some of the most patient and respected value investors in the world have built stakes in Occidental. Berkshire Hathaway continues to add to its position. Other shareholders include Francis Chou (Trades, Portfolio), Bruce Berkowitz (Trades, Portfolio), and Prem Watsa (Trades, Portfolio)figures known for their focus on long-duration compounders. These investors are not reacting to next week's rig count. They're not looking for a quarterly popthey're buying long-term optionality backed by physical resources and long-cycle infrastructure. They are allocating capital based on decades-long advantages in geology, tax structure, infrastructure, and cost discipline. Their involvement provides a final vote of confidence in Occidental's long-term value proposition. Risks and Resilience One long-term risk to oil producers is a structural decline in demandso-called "peak oil." Occidental is better positioned than most for such a scenario, thanks to its small market share. Even if global oil demand falls 50% by 2040, Occidental can still grow by displacing higher-cost barrels, particularly in industrial, chemical, and fertilizer markets that remain oil- and gas-dependent. Geopolitical risks are also relatively muted. Occidental's operations are concentrated in the United Statesmainly Texas and Oklahoma. These regions offer robust physical security and minimal risk of activism or expropriation. These regions are socially and politically aligned with energy development, making them inhospitable terrain for activists to disrupt. Finally, while Occidental carries significant debt, it has successfully pushed most maturities out beyond the near term. This reduces refinancing risk and gives management the flexibility to prioritize long-term capital allocation over short-term market volatility. Sources and Methodology Occidental Petroleum 2024 10-K Diamondback Energy 2024 10-K EOG Resources 2024 10-K Pioneer Natural Resources 2023 10-K Occidental Q1 2025 Investor Presentation Estimated CO? tax credit benefit ($1.20 per barrel) based on current legislation (~$60 per metric ton CO?). Typical well NPV ($12 million) sourced from TGS Weekly Spotlight 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
Yahoo
3 days ago
- Business
- Yahoo
The $54 Billion Asset Wall Street Ignores.
Introduction: A Legacy of Patient Capital Founded in 1920, Occidental Petroleum (NYSE:OXY) has steadily built a formidable position in the Permian Basin through patient, disciplined capital allocation, underscored by strategic acquisitions supported notably by Berkshire Hathaway. With Anadarko Petroleum acquired in 2019 and CrownRock more recently, Occidental now holds extensive acreage in the Delaware sub-basin, famous for its multiple, deeper, highly productive geological layers. Warning! GuruFocus has detected 6 Warning Sign with FANG. The company's position today is rooted in legacy assets that stretch back decades. The acquisition of Anadarko brought more than 6,000 wells, many drilled into only a subset of the available zones. Occidental now controls an estimated 20,000 producing wells and holds thousands of permitted or identified drilling locations, including underdeveloped zones left untouched by prior operators. As disclosed in its Q1 2025 investor presentation, Occidental estimates it has approximately 18,000 future drilling locationsrepresenting a decades-long inventory of high-quality wells. What Are We Buying? Investing in an exploration and production (E&P) company means buying two things: current productionrepresented by existing wellsand the potential for future production, which in Occidental's case includes a vast backlog of undeveloped drilling locations. Occidental dramatically reduces capital expenditure by drilling new wells on long-depreciated sites. Much of its acreage is held by production (HBP), and many leases were originally granted on legacy federal terms that include a 12.5% royalty ratewell below current Permian norms. Recent legislation has increased federal royalty minimums to 16.67%, while some New Mexico state leases in premium zones now demand up to 25%. This means Occidental avoids paying an additional 412.5% per barrel in royalties relative to new entrantsequating to a $3$9 per barrel advantage at $70 oil and materially enhancing the net present value of each new well. The recycling of infrastructureroads, water systems, and drilling padsminimizes the need for costly surface development and accelerates returns on new production. In 2024, Occidental drilled 550 new wells and allocated $2.8 billion to that activity, representing only the portion of total capex dedicated to well development. This results in a per-well cost of approximately $5.09 million.: Occidental further benefits from its strategy of increasing pad density by adding new wells to existing sites. This approach spreads fixed costsleases, compressors, oil-handling infrastructureacross more output and enhances late-life economics as operating costs replace capital expenditure as the dominant cost category. Furthermore, the fixed and substantial costs required to return each site to its original stateknown as plugging and abandonment liabilitiesare also spread across more wells. This means Occidental's wells are not only cheaper to drill and operate, but also cheaper to shut in, even though they tend to recover their investment more quickly thanks to higher early production. Occidental also benefits from its leadership in CO? injection for enhanced oil recovery. It is by far the largest operator in the U.S. in this field, injecting roughly 2.6 billion cubic feet per day. Because current legislationspecifically the Inflation Reduction Act of 2022awards tax credits for CO? sequestration, Occidental's dominance in this area results in lower effective tax rates, further strengthening its cash generation. These benefits are not yet fully visible in the earnings statement, as the credits only began scaling significantly in 2023 and continue to ramp up in 2024 and beyond. The inventory of 18,000 locations represents a $54 billion hidden asset when considering Occidental's $3 million per-well cost advantage across 18.000 wells. It is capital efficiencyearned through years of disciplined developmentthat now sets the company apart. In addition to being cheaper to drill, Occidental's wells are also more productive initially. The same Q1 2025 presentation shows that Occidental leads the industry in first-year production per well. Because its pay zones are deeper, reservoir pressure is greater, and wells yield more upfront. This means capital is returned more quicklya vital advantage in a volatile commodity market. What Are We Paying? Despite its structural advantages, Occidental trades at a lower valuation than many of its peers. Its price-to-free-cash-flow ratio and market cap per barrel of daily production are both below average: This means investors today are paying nothing for Occidental's hidden assetsits inventory of long-depreciated pads that can be revisited at low cost, or its leadership in CO? injection, which materially lowers its tax rate. These advantages enhance both return on capital and capital efficiency but the market gives Occidental no credit for them. Margin of Safety: Getting More for Less Occidental is not simply a low-cost operatorit is a low-cost operator with a long runway of growth, significant tax advantages, and industry-leading productivity. Yet it trades at a lower price-to-free-cash-flow multiple and market cap per BOE than many peers. That gapbetween what you're buying and what you're payingis what value investing is all about. A Long View: Who Is Buying? Some of the most patient and respected value investors in the world have built stakes in Occidental. Berkshire Hathaway continues to add to its position. Other shareholders include Francis Chou (Trades, Portfolio), Bruce Berkowitz (Trades, Portfolio), and Prem Watsa (Trades, Portfolio)figures known for their focus on long-duration compounders. These investors are not reacting to next week's rig count. They're not looking for a quarterly popthey're buying long-term optionality backed by physical resources and long-cycle infrastructure. They are allocating capital based on decades-long advantages in geology, tax structure, infrastructure, and cost discipline. Their involvement provides a final vote of confidence in Occidental's long-term value proposition. Risks and Resilience One long-term risk to oil producers is a structural decline in demandso-called "peak oil." Occidental is better positioned than most for such a scenario, thanks to its small market share. Even if global oil demand falls 50% by 2040, Occidental can still grow by displacing higher-cost barrels, particularly in industrial, chemical, and fertilizer markets that remain oil- and gas-dependent. Geopolitical risks are also relatively muted. Occidental's operations are concentrated in the United Statesmainly Texas and Oklahoma. These regions offer robust physical security and minimal risk of activism or expropriation. These regions are socially and politically aligned with energy development, making them inhospitable terrain for activists to disrupt. Finally, while Occidental carries significant debt, it has successfully pushed most maturities out beyond the near term. This reduces refinancing risk and gives management the flexibility to prioritize long-term capital allocation over short-term market volatility. Sources and Methodology Occidental Petroleum 2024 10-K Diamondback Energy 2024 10-K EOG Resources 2024 10-K Pioneer Natural Resources 2023 10-K Occidental Q1 2025 Investor Presentation Estimated CO? tax credit benefit ($1.20 per barrel) based on current legislation (~$60 per metric ton CO?). Typical well NPV ($12 million) sourced from TGS Weekly Spotlight 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
Yahoo
4 days ago
- Business
- Yahoo
Prediction Occidental Petroleum Will Soar Over the Next 5 Years. Here's 1 Reason Why.
Occidental Petroleum has taken on a lot of debt to make acquisitions over the years. The oil company recently hit its near-term debt-reduction target. Achieving the company's next debt goal would transfer a lot of value from creditors to shareholders. 10 stocks we like better than Occidental Petroleum › Occidental Petroleum (NYSE: OXY) has a multitude of potential upside catalysts. From higher oil prices to Warren Buffett's buying to its non-oil growth drivers, the oil company has a lot of positives. However, I see one factor potentially playing a major role in driving up Occidental's stock price in the coming years -- deleveraging its balance sheet. Here's why I think it could give the oil stock the fuel to soar over the next five years. Debt has been an issue for Occidental Petroleum over the years. It borrowed a boatload of money in 2019 to buy Anadarko Petroleum, but that move backfired the next year when crude prices crashed. The company has been steadily reducing debt since then to shore up its financial position. However, it couldn't resist the opportunity to buy CrownRock last year. It spent $12 billion on the oil producer, $10.3 billion of which it funded with debt. Occidental has worked hard to reduce debt following that deal. It has repaid $6.8 billion since the third quarter of last year, exceeding its target of repaying $4.5 billion of debt principal within 12 months of closing the CrownRock deal well ahead of schedule. The company's next debt target is to reduce its principal balance below $15 billion. It ended the first quarter with over $25 billion of debt. Occidental plans to sell non-core assets and allocate excess free cash flow after funding capital projects and dividends to repay debt. This strategy will steadily shift value from creditors to equity holders. The company has a market cap of around $45 billion and more than $75 billion enterprise value, so a $10 billion shift in value from debt holders to equity investors could boost its value by over 20%. On top of the value shift, the debt reduction would reduce Occidental's interest expenses, boosting its earnings and free cash flow. Debt reduction is one of Occidental's many upside catalysts. I think it could be a key driver of the stock price in the coming year. 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 $653,702!* Or when Nvidia made this list on April 15, 2005... if you invested $1,000 at the time of our recommendation, you'd have $870,207!* Now, it's worth noting Stock Advisor's total average return is 988% — a market-crushing outperformance compared to 172% 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 June 9, 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. Prediction Occidental Petroleum Will Soar Over the Next 5 Years. Here's 1 Reason Why. 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
