Entering text into the input field will update the search result below

Occidental Petroleum - As Oil Approaches $40 WTI, Don't Miss Out


  • As WTI price approaches $40, we're approaching the level where Occidental Petroleum can maintain production and a 20% dividend.
  • The company has managed to drastically reduce its costs, meaning its actual breakeven is much lower. It doesn't need to roll over debt.
  • Current WTI prices aren't sustainable and there's room for a significant recovery in prices from this point.
  • I do much more than just articles at The Energy Forum: Members get access to model portfolios, regular updates, a chat room, and more. Get started today »

Occidental Petroleum (NYSE:OXY) is a near $14 billion oil company that has lost more than $50 billion of market capitalization. The company, when it originally acquired Anadarko Petroleum, said that it needed $40 WTI to support its dividend, which would be more than 20% given its current share price. Unfortunately, the collapse in oil prices below this level forced the company to cut its dividends as investors worried about its debt.

As oil prices recover significantly, more than doubling over the past 2.5 months, they have rapidly gone back near the $40 WTI threshold. Now they're within 10% of the $40 WTI threshold. At the same time, the company has cut its dividend by near 98%. That means that Occidental Petroleum is in a better financial position today than it would be at $40 WTI.

Occidental Petroleum - The Business Journals

$40 WTI

Occidental Petroleum, before the collapse in oil prices, drew $40 WTI as the line in the sand to support its expenses.

Occidental Petroleum Excess Cash Flow - Occidental Petroleum Investor Presentation

Occidental Petroleum originally highlighted this cash generation ability, which highlights the strength of the company's low-cost asset place. At $40 WTI, the company would be able to pay its 20% dividend yield, and keep production flat with $3.9 billion of capital spending. Going toward $50 WTI, the company would adopt 5% growth at $6.6 capex and $1 billion in excess cash.

Traveling all the way out towards $70 WTI the company would have 5% growth at $6.6 capital expenditures. That would come, in addition, with nearly $6 billion in excess cash after generation. Relative to the company's current market capitalization, that would mean a 20% dividend and a more than 40% cash flow yield on top of that.

More importantly, that would make the company's debt in

Create a High Yield Energy Portfolio - 2-Week Free Trial!

The Energy Forum can help you build and generate high-yield income from a portfolio of quality energy companies. Worldwide energy demand is growing quickly, and you can be a part of this exciting trend.

Image result for high yield oil

The Energy Forum provides:

  • Managed model portfolio to generate you high-yield returns.
  • Deep-dive research reports about quality investment opportunities.
  • Macroeconomic overviews of the oil market.
  • Technical buy and sell alerts.

Click Here for a 2-week free trial, with an unconditional money back guarantee and 47% off of our most popular annual plan! There's nothing to lose and everything to gain!

This article was written by

The Value Portfolio profile picture
The #1 Service for Retirement Success, Actionable Ideas + Model Portfolios!

#1 ranked author by returns: 


The Value Portfolio focuses on deep analysis of a variety of companies across a variety of sectors looking for alpha wherever it is to maximize reader returns.

Legal Disclaimer (please read before subscribing to any services):

Any related contributions to Seeking Alpha, or elsewhere on the web, are to be construed as personal opinion only and do NOT constitute investment advice. An investor should always conduct personal due diligence before initiating a position. Provided articles and comments should NEVER be construed as official business recommendations. In efforts to keep full transparency, related positions will be disclosed at the end of each article to the maximum extent practicable. The majority of trades are reported live on Twitter, but this cannot be guaranteed due to technical constraints.

My premium service is a research and opinion subscription. No personalized investment advice will ever be given. I am not registered as an investment adviser, nor do I have any plans to pursue this path. No statements should be construed as anything but opinion, and the liability of all investment decisions reside with the individual. Investors should always do their own due diligence and fact check all research prior to making any investment decisions. Any direct engagements with readers should always be viewed as hypothetical examples or simple exchanges of opinion as nothing is ever classified as “advice” in any sense of the word.

Analyst’s Disclosure: I am/we are long OXY. I wrote this article myself, and it expresses my own opinions. I am not receiving compensation for it (other than from Seeking Alpha). I have no business relationship with any company whose stock is mentioned in this article.

Seeking Alpha's Disclosure: Past performance is no guarantee of future results. No recommendation or advice is being given as to whether any investment is suitable for a particular investor. Any views or opinions expressed above may not reflect those of Seeking Alpha as a whole. Seeking Alpha is not a licensed securities dealer, broker or US investment adviser or investment bank. Our analysts are third party authors that include both professional investors and individual investors who may not be licensed or certified by any institute or regulatory body.

Recommended For You

To ensure this doesn’t happen in the future, please enable Javascript and cookies in your browser.
Is this happening to you frequently? Please report it on our feedback forum.
If you have an ad-blocker enabled you may be blocked from proceeding. Please disable your ad-blocker and refresh.