Seeking Alpha

Kurt Wulff


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Buy-recommended Occidental Petroleum (OXY) offers unlevered appreciation potential of 17% to estimated net present value [NPV] of $100 a share, revised up today from $86. First quarter results released today exceeded our expectations from three months ago for oil and gas price, cash flow and earnings. Projected volumes along with current futures prices promise a continuing high level of unlevered cash flow (Ebitda).

Favorable operating trends at Oxy support the increase in NPV to bring it more in line with that supported by projected cash flow capitalized at unlevered multiples (PV/Ebitda) related to reserve life (Adjusted R/P). Latest oil reserves are concentrated 78% in the U.S..

Oxy’s timely purchase of oil properties in California and West Texas in the last decade has produced a gusher of value for investors. At the same time, to control the risk of unexpected negative surprise, investors can limit the size of an OXY position. We carry the stock at an unlevered full weight of 3.2% in the illustrative McDep Energy Portfolio of 27 buy recommendations.

Originally published on April 24, 2008.

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This article has 6 comments:

  •  
    Does this author ever put numbers in his articles? In other words, what is the projected cash flow? for OXY capitalized at what rate? etc, etc.

    Also, what is the reserve life in years for oxy?
    2008 May 28 01:13 PM | Link | Reply
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    •  • Website: http://www.jablet.net
    All I know is that OXY has been making me lots of cash...
    2008 May 28 04:44 PM | Link | Reply
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    Heads up for jjason: The brief articles posted at SA by this author are merely summary capsules of information that have been extracted from his informative weekly bulletins available in pdf format at his web site. Go to mcdep.com (as tagged above for the "author's website") where you can find an amazing collection of research going back for many years. Any particular energy stock he mentions for SA publication, has a complete report available for free and it generally has been analyzed several times a year.
    2008 May 28 05:47 PM | Link | Reply
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    Thanks bullpasture. I'll take a look.
    2008 May 29 12:30 PM | Link | Reply
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    I own OXY in a Mutual Fund.How do I profit from that??
    2008 May 31 10:32 PM | Link | Reply
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    Oxy is a good bullish deal for future, For sure I recommend it, nice & stable P/E, and stop blaming speculators of everything.
    2008 Jun 20 08:42 PM | Link | Reply