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- The stock appears to be undervalued against 2015 earnings estimates as does every other commodity producing stock.
- The company has a pretty healthy dividend and has quite a bit more room to grow.
- My investment thesis in the name is because of the spinoff. Other than that I don't think I'd be in the name as future earnings are less than the past.
Positive Catalysts Make Oversold Occidental Petroleum Worth A Look
- OXY beat on earnings at $1.58 for Q3, which was mildly positive in this tough oil market.
- It is about to "demerge" its CRC subsidiary. This, along with a bevy of other actions, should help it rid itself of its long term debt.
- It is technically oversold; and it is near a strong technical support area. Plus oil may be about to rally??
- Its new Al Hosn development is expected to reach 60,000 Boe/d by 1H end 2015. Its Permian developments are growing production quickly.
- OXY expects to grow production by 8%-10% in 2015. Plus it expects to have a pristine balance sheet, if it wasn't already great enough.
Occidental Petroleum: Another High Quality Oil Company On Sale
- Occidental has fallen with oil prices to an attractive entry point.
- Dividends are above average and sustainable.
- Valuations are in a low historical range, the balance sheet looks strong, and management has been effective.
Update: Occidental Q3 Earnings Take A Hit, But Spinning Off California Assets
- Occidental Petroleum beat consensus on the bottom line, but missed on the bottom line.
- The spin-off confirms our bull thesis that Occidental could unlock shareholder value with spin-offs.
- We didn't expect the y/y earnings slide, but did note that the California spin-off would be the first major move in focusing the company.
Permian Oil And Infrastructure And Al Hosn Gas Are Value Levers For Occidental Petroleum
- The Permian Basin is a major focal point of domestic growth for Occidental Petroleum, one of the largest acreage holders in the Permian.
- OXY is not afraid to be opportunistic with its balance sheet if oil prices stay in lower ranges.
- The re-designed OXY is a result of the U.S. shale revolution and the knock-on effects of technological advances.
- OXY's diversified value proposition is an attractive feature of the stock.
- The production volumes have been almost flat over the last few years, which has resulted in poor performance by the company.
- The company is reducing its global operations and focusing more on the domestic sources in order to bring stability to production volumes.
- The Permian Basin will be a key growth driver for the company as it has increased its CapEx for this area.
Occidental Petroleum's Restructuring Efforts Could Disappoint
- Occidental Petroleum continues on a restructuring path into a smaller, more streamlined E&P company.
- However, slow progress, particularly in the Middle East, has disappointed investors.
- The company has been slower than its peers to exploit its unconventional assets in the Permian Basin.
- Occidental Petroleum is in the midst of extensive restructuring efforts that will place its high-potential Permian acreage in a front-and-center position going forward.
- After the restructuring, Occidental should be able to generation mid-single digit annual production growth (better than many large producers), with returns on capital employed climbing above the mid-teens.
- Occidental looks at least 10% undervalued on the basis of EV/DACF, EV/EBITDAX, discounted cash flow, and NAV, and also offers a decent dividend.
- Occidental continues to post higher production growth in the Permian Basin and is on track to deliver a long-term production target of more than 120,000 BOE/D.
- Some analysts believe that the company is too dependent on the Permian Basin and that makes it a risky investment compared to other diversified exploration and production companies.
- The company is progressing with its strategy of divesting old assets to introduce new assets and this will allow the company to improve cash flows.
- As part of its divestment strategy, Occidental recently announced its intention to partially sell its stake in the Shah natural gas field in the UAE.
- Occidental will soon split off its California assets and is looking to sell a number of others.
- Buybacks will be very significant.
- Pro forma Occidental will have considerably less geographical diversification.
Occidental Petroleum: A Smooth Operator With Slow-Moving Alpha Speeding Up
- Occidental Petroleum has sources of new growth potential from their Permian Basin strategy.
- The firm's diversification across upstream/midstream sectors and geographically across global/domestic areas offers a source of slow-moving alpha, or value over time.
- OXY's stock offers an array of opportunities through conservative growth and dividend prospects that many independent oil and gas producers lack.
- Occidental Petroleum is making big moves toward future growth.
- Permian Bain, OXY’s Al Hosn Gas Project and Bridge Tex pipeline are key drivers for this endeavor.
- Occidental is heading in the right direction with the recent asset sales and focus on other lucrative projects.
Occidental Petroleum - Strong Production And Recent Correction Improves Appeal
- Occidental Petroleum continues to transform the business, posting record domestic production.
- This is as the company has solid growth prospects, trades at a fair valuation and pays out a compelling yield.
- Being positioned between integrated oil majors and pure-play exploration companies, shares offer appeal offering the best of both worlds.
- With the spinning-off of the California business, Occidental Petroleum can focus more on its lucrative assets in the Permian Basin.
- To capitalize on the growth potential of the Permian Basin, the company has allocated 22% of its 2014 capital budget towards improving productivity in the region.
- With the allocated capital spending, the Permian Basin is set to deliver production growth of 13-16%.
- The company has achieved a reserve replacement ratio of 169%, indicating long-term production growth.
Is Occidental Petroleum A Buy For Long-Term Investors?
- This dividend achiever has paid dividends since 1975 and has managed to increase them for 12 years in a row.
- The company has managed to deliver a 13.50% average increase in annual EPS over the past decade.
- Currently, the stock is attractively valued, as it trades at a forward P/E of 13.40 and a current yield of 3%.
I Sold High-Yielding Occidental Petroleum Out Of My Dividend Portfolio
- 2015 earnings estimates are projected to be less than 2014 earnings.
- The stock is near fully valued on the 2015 earnings estimates.
- I put my proceeds into Rowan which is extremely undervalued based on 2015 earnings estimates and earnings growth potential.
Why Occidental Petroleum Stock Is A Long-Term Investment Opportunity
- OXY will continue to benefit from the rising prices of oil and natural gas.
- OXY has compelling valuation metrics and solid earnings growth prospects; its EV/EBITDA ratio is very low at 6.02.
- OXY is ranked second among all S&P 500 energy stocks yielding more than 2% according to "All-Stars: Greenblatt" powerful ranking system.
Occidental Petroleum - Transformation Progress, Spiking Oil Prices Push Shares Above A $100
- Occidental Petroleum's shares break the $100 mark on the back of spiking oil prices and positive analysts comments.
- Occidental is in a huge transformation process, aimed to deliver even more value to investors.
- The modest valuation based on 2015's pro forma earnings and commitment to create shareholder value might drive further appeal and returns.
Today, 10:45 AM
- Exxon Mobil (XOM -0.8%) and Chevron (CVX -0.4%) are lower as Raymond James downgrades both companies given their limited leverage to potential improving oil prices, while analyst Pavel Molchanov feels oil is within weeks of bottoming regardless of the OPEC decision.
- In cutting shares to Market Perform from Outperform, the firm says XOM's "ultra defensive" characteristics, including a large chemicals and refining businesses, have insulated the company from the worst of the falling oil prices, but it still expects the stock to be a middling performer.
- CVX, which is reduced to Outperform from Strong Buy, is approaching the peak of its spending while production growth should accelerate in the next two years, the firm says.
- Also, Molchanov upgrades Occidental Petroleum (OXY +0.8%) to Strong Buy from Outperform and Hess (HES +0.1%) to Outperform from Market Perform.
Mon, Nov. 17, 10:58 AM
- Occidental Petroleum's (OXY -0.7%) California spinoff is being valued at ~$3.27B based on early trading last week, less than expected, amid falling crude prices.
- When-issued shares in California Resources Corp. closed Friday at $8.45, 15%-20% less than analysts would have expected as recently as three weeks ago, according to Oppenheimer's Fadel Gheit.
- "They were initiated by fire," Gheit says. “Whatever valuation people had in mind only a few months ago or three weeks ago - it’s a completely different ball game today.”
- Barclays downgraded OXY to Underweight and lowered its price target to $82 from $92 because of the low value of California Resources in when-issued trading.
Tue, Nov. 11, 2:52 PM
- Count BofA's Doug Leggate among analysts seeing an opportunity to become contrarian bullish on the energy sector, which he says is now discounting $75 oil.
- His top picks in the sector are Occidental Petroleum (NYSE:OXY) and Hess (NYSE:HES), while Anadarko Petroleum (NYSE:APC) and Devon Energy (NYSE:DVN) justify another look; also, pure play gas names Cabot Oil & Gas (NYSE:COG), Range Resources (NYSE:RRC) and Southwestern Energy (NYSE:SWN) remain Buy rated.
- On the technical side, BofA's Stephen Suttmeier notes the sector hit capitulation levels in mid-October not seen since 2002, suggesting the worst is over and energy is poised to build a base and head higher.
- Earlier: Top energy stocks may have bottomed even if oil has not, J.P. Morgan says.
Thu, Nov. 6, 7:43 AM
- Plains All American Pipeline (NYSE:PAA) agrees to acquire Occidental Petroleum's (NYSE:OXY) 50% stake in BridgeTex Pipeline for $1.075B.
- PAA says the acquisition of the new 300K bbl/day crude oil pipeline running from the Permian Basin to the Houston Gulf coast area will strengthen its access to the Gulf coast.
- Magellan Midstream Partners (NYSE:MMP), which owns the remaining 50% interest in BridgeTex, is buying the southern leg of the pipeline system running from Houston to Texas City for $75M.
- OXY says the deals are part of its attempt to streamline its business.
Mon, Nov. 3, 9:50 AM
- Occidental Petroleum (OXY -0.9%) reportedly is in the final steps of finalizing a deal to sell 75% of its 40% stake in the Shah natural gas project in the United Arab Emirates to Abu Dhabi-owned Mubadala for ~$3B.
- When operational, Shah is expected to process 1B cf/day of sour gas into about 500M cf/day of fuel, and also may process 4.4K tons/day of natural gas liquids, 35K bbl/day of condensates and 9.2K tons/day of sulfur.
- OXY plans to continue to operate the field.
Tue, Oct. 28, 11:32 AM
- U.S. energy company CEOs remain confident they can still make money in a world of $80 crude oil prices, according to a Bloomberg report.
- The industry is used to price swings, Halliburton (NYSE:HAL) CEO David Lesar tells Bloomberg; if crude floats at $80-$100, "that’s a range that the service industry and our customers can easily live within."
- “We think there’s a lot of economic oil at $75... meaning we earn 15%, 16%, 17% returns,” Occidental (NYSE:OXY) CEO Stephen Chazen said during OXY's earnings conference call last week.
- Harold Hamm of Continental Resources (NYSE:CLR) even says prices could fall to $50/bbl before he would start worrying, and tells CNBC that his company has not yet altered any drilling schedules in response to the drop in crude prices.
- Some of the best operators can profit at low prices because they’re learning how to drill wells more efficiently and getting more production at lower costs; SM Energy (NYSE:SM) is getting 40% more production for a 10% increase in the cost of each well, and Carrizo Oil & Gas (NASDAQ:CRZO) has nearly doubled its cash flow/bbl from two years ago.
Thu, Oct. 23, 8:17 AM
- Occidental Petroleum (NYSE:OXY) is flat premarket after its Q3 earnings report shows a 24% Y/Y drop in earnings and 7% lower revenues.
- In OXY's oil and gas business, core domestic earnings fell 32% to $538M, while earnings in its international unit edged up 0.8%; sales in the midstream and marketing segment fell 18%.
- Excluding the effect of the Hugoton sale, domestic oil production increased 20K bbl/day to 755K boe; domestic oil production was 282K bbl/day, a fifth consecutive quarterly record.
- Average realized prices for oil fell by 8.9% to $94.68 in the quarter.
Thu, Oct. 23, 7:06 AM| Comment!
Wed, Oct. 22, 6:37 PM
- Occidental Petroleum (NYSE:OXY) says Q3 profit fell at the California oil producer it will spin off to shareholders next month, as crude oil prices slid and production costs increased.
- California Resources Corp., as the unit will be known when it becomes a stand-alone company, reports Q3 net income of $188M vs. $235M in the year-ago quarter.
- Oil wells in California accounted for ~20% of OXY’s worldwide output last year and 17% of the capital budget.
- OXY will report Q3 full-company results tomorrow.
Tue, Oct. 21, 3:58 PM
- Global Hunter revisits its commodity price outlook, now moving to $83 long-term oil vs. $85 previously, applying a higher discount rate to future cash flows and modeling more conservative assumptions with regards to future rig activity, which results in downward revisions for several exploration and production stocks price targets and some rating changes (Briefing.com).
- Anadarko Petroleum (NYSE:APC), Gulfport Energy (NASDAQ:GPOR) and Rex Energy (NASDAQ:REXX) are upgraded to Buy; Talisman Energy (NYSE:TLM) is raised to Speculative Buy from Neutral.
- Devon Energy (NYSE:DVN), Hess (NYSE:HES), Occidental Petroleum (NYSE:OXY) and Kosmos Energy (NYSE:KOS) are upgraded to Accumulate from Neutral.
- Cobalt Energy (NYSE:CIE) is downgraded to Speculative Buy from Buy.
Tue, Oct. 21, 8:51 AM
- Oman's state-run oil company says it is in talks with Occidental Petroleum (NYSE:OXY) to buy a minority stake in its assets in the country.
- OXY said last year that it planned to sell a minority stake in its Middle East and North African operations as part of a restructuring program to lift its valuation.
Thu, Oct. 9, 3:25 PM
- Crushed by relentless anxiety about oversupply and weakening global demand, Nymex crude oil futures closed down $1.54 at $85.76/bbl, their lowest close since Dec. 2012, while Brent crude fell below $90/bbl for the first time in more than two years.
- Including today's losses, WTI crude is down 6.2% since the start of the month and Brent has surrendered ~5%.
- In the face of surging output, a move in WTI below its 10-year average at $82 is not out of the realm of possibility, Brown Brothers Harriman says, adding that "a break of $73/barrel could send WTI toward $64, which corresponds with the 2010 low."
- Among big oil names so far today: APC -6.3%, LINE -4.6%, EPD -3.8%, DVN -3.8%, MRO -3.6%, HES -3.8%, KMI -3.7%, TOT -3.5%, STO -3.3%, RDS.A -3.1%, OXY -3%, KMP -3%, XOM -2.6%, COP -2.6%, MUR -2.6%, CVX -2.5%, BP -2.4%.
- ETFs: USO, XLE, OIL, UCO, ERX, VDE, OIH, SCO, ERY, XOP, DIG, BNO, DTO, DBO, DUG, IYE, XES, IEO, CRUD, IEZ, PXE, USL, UWTI, PXJ, FENY, DNO, DWTI, RYE, FXN, SZO, OLO, DDG, OLEM, TWTI
Wed, Oct. 8, 10:44 AM
- Any sale of Occidental Petroleum's (OXY -1.7%) ~330K acres in North Dakota's Bakken shale formation would make strategic sense for the company, which may be eager to strike a deal, Raymond James analysts say.
- "This is substantially undeveloped acreage, and Occidental has long cited it as a likely monetization candidate, so it's been puzzling why the company kept it this long," the firm says.
- OXY currently ranks only no. 18 among North Dakota oil producers, with ~17K bbl/day and trailing peers of the same size and even much-smaller rivals.
Tue, Oct. 7, 7:42 AM
- Occidental Petroleum (NYSE:OXY) is seeking to sell ~335K net drilling acres in North Dakota for as much as $3B, Bloomberg reports.
- The holdings reportedly include a part of North Dakota’s Bakken formation, an area that has been less successful for OXY because of higher costs, even though it is one of the fastest-growing oil-producing regions in the U.S.
- OXY is said to be working with investment bank Tudor Pickering Holt on a deal.
Thu, Oct. 2, 4:49 PM
- Occidental Petroleum (NYSE:OXY) +1.8% AH after its board declared a quarterly dividend of $0.72/share, increased its share repurchase authorization by 60M shares to 76M, and authorized the spinoff of its California oil and gas business.
- The spinoff of the California Resources subsidiary will be achieved through the distribution of ~80% of the outstanding shares of California Resources to holders of OXY common stock; pretax income for the California business totaled $1.5B in 2013.
Thu, Oct. 2, 4:12 PM| Comment!
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