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Analyst Blog

On May 20, 2013, the shares of Occidental Petroleum Corporation (OXY - Analyst Report) climbed to its 52-week high of $93.74 primarily driven by robust performance in the first quarter of 2013. The company’s performance is based on strong results by its domestic operations and rise in domestic natural gas prices. Its marketing and trading operations also contributed significantly in the first-quarter.

Occidental Petroleum also implemented several cost-cutting measures, including reduction of domestic wells to manage higher international operating expenses from its planned maintenance turnarounds in Qatar.

The company is an organization with higher operating efficiencies and stable capital investment programs. In the forthcoming quarters, we expect steady production growth from its diversified asset-base located at different regions, which would lead to improved operating results.

During the first three months of 2013, Occidental Petroleum’s cash from operations were $2.7 billion. Strong financial position allows the company to follow steady growth strategy.

Occidental Petroleum’s projects are not only limited in the U.S., the company also continues to strengthen its footprint in the Middle East as well as North Africa through acquisitions and joint ventures. We believe steady progress at the Al Hosn gas project in Abu Dhabi and development at the Russian Creek will likely boost the company’s future performance.

Going forward, we expect incremental dividend payments to make the stock more attractive for the investors.

Occidental Petroleum currently has a Zacks Rank #3 (Hold). Apart from the company, other stocks in the sector that are worth considering include EPL Oil & Gas, Inc. and Sandridge Mississippian Trust II (SDR) with a Zacks Rank #1 (Strong Buy) and Braskem S.A. (BAK - Snapshot Report) with a Zacks Rank #2 (Buy).

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