WES - Fueling Growth: Occidental Petroleum's Journey Towards Energy Sector Leadership
2024-04-03 09:16:38 ET
Summary
- Occidental Petroleum is poised for significant growth in sustainable energy ventures with support from influential stakeholders and favorable governmental backing.
- The company has made notable financial improvements, including a substantial reduction in debt levels and a commitment to enhancing shareholder value.
- Occidental's carbon capture initiatives and commitment to environmental, social, and governance principles position it for favorable market valuation and potential investor interest.
Executive Summary
Occidental Petroleum ( OXY ) is a large oil and gas exploration and production company with recent investments towards reducing carbon emissions and has the backing of a large shareholder in the form of the “Oracle from Omaha”, Warren Buffett, the largest equity owner in the world, BlackRock and even the US government is supportive of the green energy initiatives. The earnings have improved in the last few years and the debt levels have come down significantly since the Anadarko acquisition in 2019 and the company has even started to reduce the “Buffett” preferred and started buying back shares. The company is looking to expand and with the latest acquisition of CrownRock, the company would be the second largest producer in the Permian Basin. The valuation is low, and the cash flow yield is high, despite a pullback in the commodity price in 2023. The company is situated well in an environment with oil around $80/barrel and the target is set to $90/share.
Background and Ownership
Occidental Petroleum Corporation is a US based oil and gas producer with 1.2mm barrels per day produced in 2023 predominantly in the Permian basin, that’s around 10% of total US production, with around 4bln proved reserves barrels of oil. It’s also a manufacturer of petrochemicals in the US, Canada, and Chile....
Fueling Growth: Occidental Petroleum's Journey Towards Energy Sector Leadership