Buy-recommended Occidental Petroleum (OXY) offers 41% appreciation potential to estimated net present value of $120 a share, unchanged since August 2005. New projections include the operations of Vintage Petroleum, presuming the near $4 billion deal is approved by selling shareholders at a meeting scheduled for January 26.
Our correlation of cash flow multiple and reserve life for 30 sector companies indicates net present value about $3 a share higher than our official estimate. Fourth quarter earnings are expected to be reported around January 30, and management will present to analysts at the end of February. OXY may be an attractive takeover target. Patient investors may see appreciation for oil producers during the rest of the decade, subject to political and economic risk.
Originally Published: 01/05/06
Kurt Wulff's McDep Associates offers realtime, independent research services for investors in the energy and utilities sectors. For more information, go to www.mcdep.com or email Mr. Wulff at firstname.lastname@example.org.