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Occidental (OXY) Gains From Permian Basin Focus & Investments
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Occidental Petroleum’s (OXY - Free Report) strategic investment to strengthen infrastructure, focus on Permian region, divestiture of non-core assets, reduction of outstanding debts and contribution from international operation are going to drive its performance in the long run.
However, this Zacks Rank #3 (Hold) stock have to cope with stiff competition, stringent regulations and commodity price fluctuation.
Tailwinds
Occidental has been investing consistently to strengthen its infrastructure and expand operations. The company invested $6.3 billion in 2023 and expected to follow it up with investment in the range of $6.4-$6.6 billion to further strengthen its operations.
OXY’s acquisition of Anadarko Petroleum has expanded its operations in Permian Basin and is accretive to free cash flow. Its decision to acquire CrownRock L.P. will further expand its operation in Permian Basin. The company is also utilizing its organic assets in the best possible manner to further expand business.
Permian basin assets remain a consistent contributor to OXY’s overall production. From Permian Basin, production is expected in the range of 569-599 Mboe/d for 2024. Management projects total production in the range of 1,220-1,280 Mboe/d in 2024. The company can quickly reduce production activity in this low-price environment and has the flexibility to ramp up production during appropriate opportunities.
It recently completed its large-scale asset divestiture program and utilized the net proceeds from asset sales and free cash flow to repay near and medium-term debt maturities. It is working consistently to strengthen the balance sheet and has been successful in extending near-term $7-billion debt maturity beyond 2025. Management is continuing with its debt reduction initiatives and has plan to reduce existing debt of $3.7 billion having maturities in 2024-2026.
Headwinds
OXY’s businesses operate in a highly competitive environment, which could adversely impact its profitability and growth. It faces intense competition from other oil and gas companies, which include state-owned foreign oil companies, major integrated oil companies and independent producers of oil and natural gas.
Fluctuations in demand and prices of commodities may affect Occidental’s results of operations. The company's practice is to remain exposed to market prices of commodities. If the price of commodities continues to remain soft, it will fail to realize full benefits from the improvement in production volumes from domestic and international assets. As of Dec 31, 2023, there were no active commodity hedges in place for Occidental.
Price Performance
Occidental’s shares have gained 4% in the past six months compared with its industry’s growth of 3%.
Image Source: Zacks Investment Research
Stocks to Consider
Some better-ranked stocks worth considering in the same sector are Marathon Petroleum (MPC - Free Report) , Enterprise Products (EPD - Free Report) and Talen Energy Corporation . While MPC is currently sporting a Zacks Rank #1 (Strong Buy), EPD and TLNE have a Zacks Rank of 2 (Buy) each. You can see the complete list of today’s Zacks #1 Rank stocks here.
The Zacks Consensus Estimate for MPC’s 2024 earnings per share (EPS) indicates an increase of 23.7% in the past 60 days. It reported average earnings surprise of 24.9% in the last four quarters.
The Zacks Consensus Estimate for EPD’s 2024 EPS indicates an increase of 2.7% in the past 60 days. It reported average earnings surprise of 1.02% in the last four quarters.
The Zacks Consensus Estimate for TLNE’s 2024 EPS indicates an increase of 11.8% in the past 60 days. It reported average earnings surprise of 152.7% in the last two quarters.
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Occidental (OXY) Gains From Permian Basin Focus & Investments
Occidental Petroleum’s (OXY - Free Report) strategic investment to strengthen infrastructure, focus on Permian region, divestiture of non-core assets, reduction of outstanding debts and contribution from international operation are going to drive its performance in the long run.
However, this Zacks Rank #3 (Hold) stock have to cope with stiff competition, stringent regulations and commodity price fluctuation.
Tailwinds
Occidental has been investing consistently to strengthen its infrastructure and expand operations. The company invested $6.3 billion in 2023 and expected to follow it up with investment in the range of $6.4-$6.6 billion to further strengthen its operations.
OXY’s acquisition of Anadarko Petroleum has expanded its operations in Permian Basin and is accretive to free cash flow. Its decision to acquire CrownRock L.P. will further expand its operation in Permian Basin. The company is also utilizing its organic assets in the best possible manner to further expand business.
Permian basin assets remain a consistent contributor to OXY’s overall production. From Permian Basin, production is expected in the range of 569-599 Mboe/d for 2024. Management projects total production in the range of 1,220-1,280 Mboe/d in 2024. The company can quickly reduce production activity in this low-price environment and has the flexibility to ramp up production during appropriate opportunities.
It recently completed its large-scale asset divestiture program and utilized the net proceeds from asset sales and free cash flow to repay near and medium-term debt maturities. It is working consistently to strengthen the balance sheet and has been successful in extending near-term $7-billion debt maturity beyond 2025. Management is continuing with its debt reduction initiatives and has plan to reduce existing debt of $3.7 billion having maturities in 2024-2026.
Headwinds
OXY’s businesses operate in a highly competitive environment, which could adversely impact its profitability and growth. It faces intense competition from other oil and gas companies, which include state-owned foreign oil companies, major integrated oil companies and independent producers of oil and natural gas.
Fluctuations in demand and prices of commodities may affect Occidental’s results of operations. The company's practice is to remain exposed to market prices of commodities. If the price of commodities continues to remain soft, it will fail to realize full benefits from the improvement in production volumes from domestic and international assets. As of Dec 31, 2023, there were no active commodity hedges in place for Occidental.
Price Performance
Occidental’s shares have gained 4% in the past six months compared with its industry’s growth of 3%.
Image Source: Zacks Investment Research
Stocks to Consider
Some better-ranked stocks worth considering in the same sector are Marathon Petroleum (MPC - Free Report) , Enterprise Products (EPD - Free Report) and Talen Energy Corporation . While MPC is currently sporting a Zacks Rank #1 (Strong Buy), EPD and TLNE have a Zacks Rank of 2 (Buy) each. You can see the complete list of today’s Zacks #1 Rank stocks here.
The Zacks Consensus Estimate for MPC’s 2024 earnings per share (EPS) indicates an increase of 23.7% in the past 60 days. It reported average earnings surprise of 24.9% in the last four quarters.
The Zacks Consensus Estimate for EPD’s 2024 EPS indicates an increase of 2.7% in the past 60 days. It reported average earnings surprise of 1.02% in the last four quarters.
The Zacks Consensus Estimate for TLNE’s 2024 EPS indicates an increase of 11.8% in the past 60 days. It reported average earnings surprise of 152.7% in the last two quarters.