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Occidental Petroleum Corp OXY

Morningstar Rating
$63.41 +0.55 (0.88%)
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Company Report

Oxy Earnings: CrownRock Transaction Should Still Close, but Not Until the Third Quarter of 2024

Following our review of no-moat Occidental Petroleum’s first-quarter results, we reduced our fair value estimate by 7% to $53 per share. Our lower fair value estimate reflects lower West Texas Intermediate oil strip prices, down to the high 70s from the mid-80s. We originally expected management to close the CrownRock acquisition by the end of the first quarter, as it said on its December 2023 special call that it hoped to. However, it now appears that the CrownRock transaction will close sometime in the third quarter of 2024 as both Occidental and CrownRock work with the US Federal Trade Commission. Production results came in quite a bit lower than we originally expected, which in turn hurt our valuation because the transaction hasn’t closed yet. We point out, however, that Occidental’s 2024 production guidance excludes the impacts from the CrownRock acquisition, and we still model a 100% probability that the deal will close.

Price vs Fair Value

OXY is trading at a 433% premium.
Price
$63.41
Fair Value
$95.00
Uncertainty
Very High
1-Star Price
$45.38
5-Star Price
$87.40
Economic Moat
Sbzkb
Capital Allocation
Lnwyjdmt

Bulls Say, Bears Say

Bulls

Oxy has a dominant position in the Permian Basin, which is the cheapest source of production in the US and is expected to be a major growth engine in the next few years.

Bears

Though Oxy’s Permian wells exhibit very high initial production rates, they also decline very quickly.

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News

Trading Information

Previous Close Price
$62.86
Day Range
$62.6763.55
52-Week Range
$55.1271.19
Bid/Ask
$63.60 / $63.65
Market Cap
$56.22 Bil
Volume/Avg
9,670 / 7.5 Mil

Key Statistics

Price/Earnings (Normalized)
19.43
Price/Sales
2.22
Dividend Yield (Trailing)
1.21%
Dividend Yield (Forward)
1.40%
Total Yield
2.75%

Company Profile

Occidental Petroleum is an independent exploration and production company with operations in the United States, Latin America, and the Middle East. At the end of 2023, the company reported net proved reserves of nearly 4 billion barrels of oil equivalent. Net production averaged 1,234 thousand barrels of oil equivalent per day in 2023 at a ratio of roughly 50% oil and natural gas liquids and 50% natural gas.
Sector
Energy
Industry
Oil & Gas E&P
Stock Style Box
Large Value
Total Number of Employees
12,570

Competitors

Valuation

Metric
OXY
DVN
MRO
Price/Earnings (Normalized)
19.439.129.36
Price/Book Value
2.472.561.34
Price/Sales
2.222.092.44
Price/Cash Flow
5.484.773.80
Price/Earnings
OXY
DVN
MRO

Financial Strength

Metric
OXY
DVN
MRO
Quick Ratio
0.520.830.33
Current Ratio
0.951.070.40
Interest Coverage
6.6113.386.55
Quick Ratio
OXY
DVN
MRO

Profitability

Metric
OXY
DVN
MRO
Return on Assets (Normalized)
4.28%14.30%7.49%
Return on Equity (Normalized)
14.61%29.77%13.20%
Return on Invested Capital (Normalized)
7.35%20.25%10.33%
Return on Assets
OXY
DVN
MRO
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