We use cookies to understand how you use our site and to improve your experience.
This includes personalizing content and advertising.
By pressing "Accept All" or closing out of this banner, you consent to the use of all cookies and similar technologies and the sharing of information they collect with third parties.
You can reject marketing cookies by pressing "Deny Optional," but we still use essential, performance, and functional cookies.
In addition, whether you "Accept All," Deny Optional," click the X or otherwise continue to use the site, you accept our Privacy Policy and Terms of Service, revised from time to time.
You are being directed to ZacksTrade, a division of LBMZ Securities and licensed broker-dealer. ZacksTrade and Zacks.com are separate companies. The web link between the two companies is not a solicitation or offer to invest in a particular security or type of security. ZacksTrade does not endorse or adopt any particular investment strategy, any analyst opinion/rating/report or any approach to evaluating individual securities.
If you wish to go to ZacksTrade, click OK. If you do not, click Cancel.
DVN vs. OXY: Which Permian Basin Stock Has Better Growth Potential?
Read MoreHide Full Article
Key Takeaways
DVN shows higher ROE, cheaper valuation, and a hedging strategy versus Occidental.
OXY invests more heavily, focuses on debt reduction and avoids production hedges.
DVN holds a U.S.-centric portfolio while OXY faces broader global exposure risks.
The companies operating in the Zacks Oil-Energy sector continue to be a key driver of the global economy, delivering vital energy for transportation, manufacturing, electricity generation and various other sectors. Its operations encompass exploration, production, refining, transportation and the marketing of petroleum products. Although renewable energy adoption is gaining pace, oil and gas remain essential due to their superior energy density and established infrastructure. Devon Energy Corporation (DVN - Free Report) and Occidental Petroleum Corporation (OXY - Free Report) are leading U.S. producers with strong positions in the Permian Basin, and rewarding shareholders through dividends and stock buybacks.
Devon Energy, a leading independent oil and natural gas exploration and production company in the United States, leverages its diversified multi-basin portfolio, including the prolific Permian Basin. Organic assets and strategic acquisitions combine to drive growth and enhance production volumes. The firm remains focused on cost discipline, improving margins by divesting higher-cost assets while advancing new, more efficient, lower-cost projects.
Occidental Petroleum is a global oil and gas company with integrated operations across upstream exploration and production, midstream infrastructure and chemical manufacturing through its OxyChem unit. The company continues to deliver robust hydrocarbon output while channeling proceeds from non-core asset sales and excess cash flow toward debt reduction and balance sheet improvement. Its strategic emphasis on Permian Basin resources remains a key driver, with core development areas in the region consistently delivering strong results.
The performance of the Zacks oil and energy sector is shaped by geopolitical developments, regulatory changes, shifting market demand, and technological progress. This sector is strategically important as it meets the energy requirements of most of the major industries. Amid such a backdrop, let’s delve deep and closely look at the fundamentals of these stocks.
DVN & OXY’s Earnings Growth Prospects
The Zacks Consensus Estimate for DVN’s 2025 earnings indicates a year-over-year decline of 15.98%, while 2026 estimates suggest year-over-year growth of 4.05%. Long-term (three to five years) earnings growth per share is pegged at 4.26%.
Image Source: Zacks Investment Research
The Zacks Consensus Estimate for OXY’s 2025 earnings suggests a year-over-year decline of 34.68%, while 2026 estimates indicate year-over-year growth of 1.68%.
Image Source: Zacks Investment Research
Debt to Capital
The oil and gas industry is capital-intensive, and companies need to borrow funds in addition to cash generated from international operations to successfully run their operations. Excessive debt in the balance sheet increases interest expenses and impacts margins.
Devon Energy’s debt to capital currently stands at 35.44% compared with Occidental’s debt to capital of 39.22%. Occidental Petroleum is working to reduce its debt level, but it still utilizes more debt to run its operation compared with Devon.
Return on Equity (ROE)
ROE measures how efficiently a company is utilizing its shareholders’ funds to generate profits. DVN’s current ROE is 18.59% compared with OXY’s ROE of 13.78%. ROE of Devon is higher than their sector’s ROE of 15.07%.
Image Source: Zacks Investment Research
Valuation
Devon Energy currently appears to be cheaper compared with Occidental Petroleum on trailing 12-month Enterprise Value/Earnings before Interest Tax Depreciation and Amortization (EV/EBITDA).
DVN is currently trading at 3.82X, while OXY is trading at 5.55X
Image Source: Zacks Investment Research
DVN & OXY Dividend Yield
Both oil and gas companies generate ample free cash flow and increase the value of their shareholders through dividend payments.
Devon Energy’s current dividend yield is 2.71%, and the company has raised its dividend nine times in the past five years. Occidental Petroleum raised its dividend four times in the past five years, and the current dividend yield is 2.03%. The dividend yields of both companies are better than the Zacks S&P 500 Composite’s average of 1.5%.
Hedging of Production
To safeguard itself against fluctuating oil, NGL and natural gas prices, Devon Energy has hedged 2025 production volumes.
Occidental Petroleum’s practice is to remain exposed to market prices of commodities, so if the commodity prices drop substantially from their current level, it will definitely impact OXY’s performance. As of Dec. 31, 2024, there were no active commodity hedges in place.
Capital Expenditure Plans
Oil and Gas operations are capital-intensive, and a large investment is required for proper maintenance and expansion of operations. The recent decline in interest rate by 25 basis points, lowering the benchmark interest rate to a range of 4-4.25% will be beneficial for capital-intensive oil and energy stocks.
Devon Energy invested $3.64 billion in 2024 and aims to invest in the range of $3.6-$3.8 billion in 2025. The company has been making strategic investments to upgrade and expand assets.
Occidental Petroleum, being a low-cost operator, invested more than $7 billion to strengthen and expand its existing operations and aims to invest in the range of $7.1-$7.3 billion in 2025.
Both companies are making strategic investments in their service regions to further strengthen their operation.
Price Performance
In the past three months, shares of Devon Energy have gained 2.1% compared with Occidental Petroleum’s rally of 3.8%.
Devon Energy holds an advantage due to its strategic focus on multi-basin domestic assets. This U.S.-centric approach helps Devon avoid many of the geopolitical and regulatory risks that Occidental Petroleum must navigate due to its broader international exposure.
Devon’s systematic hedges, cheaper valuation, and better ROE make it a better choice compared with OXY. Based on the above discussion, at present Devon Energy has a marginal edge over Occidental Petroleum.
See More Zacks Research for These Tickers
Normally $25 each - click below to receive one report FREE:
Image: Bigstock
DVN vs. OXY: Which Permian Basin Stock Has Better Growth Potential?
Key Takeaways
The companies operating in the Zacks Oil-Energy sector continue to be a key driver of the global economy, delivering vital energy for transportation, manufacturing, electricity generation and various other sectors. Its operations encompass exploration, production, refining, transportation and the marketing of petroleum products. Although renewable energy adoption is gaining pace, oil and gas remain essential due to their superior energy density and established infrastructure. Devon Energy Corporation (DVN - Free Report) and Occidental Petroleum Corporation (OXY - Free Report) are leading U.S. producers with strong positions in the Permian Basin, and rewarding shareholders through dividends and stock buybacks.
Devon Energy, a leading independent oil and natural gas exploration and production company in the United States, leverages its diversified multi-basin portfolio, including the prolific Permian Basin. Organic assets and strategic acquisitions combine to drive growth and enhance production volumes. The firm remains focused on cost discipline, improving margins by divesting higher-cost assets while advancing new, more efficient, lower-cost projects.
Occidental Petroleum is a global oil and gas company with integrated operations across upstream exploration and production, midstream infrastructure and chemical manufacturing through its OxyChem unit. The company continues to deliver robust hydrocarbon output while channeling proceeds from non-core asset sales and excess cash flow toward debt reduction and balance sheet improvement. Its strategic emphasis on Permian Basin resources remains a key driver, with core development areas in the region consistently delivering strong results.
The performance of the Zacks oil and energy sector is shaped by geopolitical developments, regulatory changes, shifting market demand, and technological progress. This sector is strategically important as it meets the energy requirements of most of the major industries. Amid such a backdrop, let’s delve deep and closely look at the fundamentals of these stocks.
DVN & OXY’s Earnings Growth Prospects
The Zacks Consensus Estimate for DVN’s 2025 earnings indicates a year-over-year decline of 15.98%, while 2026 estimates suggest year-over-year growth of 4.05%. Long-term (three to five years) earnings growth per share is pegged at 4.26%.
Image Source: Zacks Investment Research
The Zacks Consensus Estimate for OXY’s 2025 earnings suggests a year-over-year decline of 34.68%, while 2026 estimates indicate year-over-year growth of 1.68%.
Image Source: Zacks Investment Research
Debt to Capital
The oil and gas industry is capital-intensive, and companies need to borrow funds in addition to cash generated from international operations to successfully run their operations. Excessive debt in the balance sheet increases interest expenses and impacts margins.
Devon Energy’s debt to capital currently stands at 35.44% compared with Occidental’s debt to capital of 39.22%. Occidental Petroleum is working to reduce its debt level, but it still utilizes more debt to run its operation compared with Devon.
Return on Equity (ROE)
ROE measures how efficiently a company is utilizing its shareholders’ funds to generate profits. DVN’s current ROE is 18.59% compared with OXY’s ROE of 13.78%. ROE of Devon is higher than their sector’s ROE of 15.07%.
Image Source: Zacks Investment Research
Valuation
Devon Energy currently appears to be cheaper compared with Occidental Petroleum on trailing 12-month Enterprise Value/Earnings before Interest Tax Depreciation and Amortization (EV/EBITDA).
DVN is currently trading at 3.82X, while OXY is trading at 5.55X
Image Source: Zacks Investment Research
DVN & OXY Dividend Yield
Both oil and gas companies generate ample free cash flow and increase the value of their shareholders through dividend payments.
Devon Energy’s current dividend yield is 2.71%, and the company has raised its dividend nine times in the past five years. Occidental Petroleum raised its dividend four times in the past five years, and the current dividend yield is 2.03%. The dividend yields of both companies are better than the Zacks S&P 500 Composite’s average of 1.5%.
Hedging of Production
To safeguard itself against fluctuating oil, NGL and natural gas prices, Devon Energy has hedged 2025 production volumes.
Occidental Petroleum’s practice is to remain exposed to market prices of commodities, so if the commodity prices drop substantially from their current level, it will definitely impact OXY’s performance. As of Dec. 31, 2024, there were no active commodity hedges in place.
Capital Expenditure Plans
Oil and Gas operations are capital-intensive, and a large investment is required for proper maintenance and expansion of operations. The recent decline in interest rate by 25 basis points, lowering the benchmark interest rate to a range of 4-4.25% will be beneficial for capital-intensive oil and energy stocks.
Devon Energy invested $3.64 billion in 2024 and aims to invest in the range of $3.6-$3.8 billion in 2025. The company has been making strategic investments to upgrade and expand assets.
Occidental Petroleum, being a low-cost operator, invested more than $7 billion to strengthen and expand its existing operations and aims to invest in the range of $7.1-$7.3 billion in 2025.
Both companies are making strategic investments in their service regions to further strengthen their operation.
Price Performance
In the past three months, shares of Devon Energy have gained 2.1% compared with Occidental Petroleum’s rally of 3.8%.
Price Performance (three months)
Image Source: Zacks Investment Research
Wrapping Up
Devon Energy and Occidental Petroleum currently carry a Zacks Rank of 3 (Hold) each and are strong operators in the oil and gas space. You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.
Devon Energy holds an advantage due to its strategic focus on multi-basin domestic assets. This U.S.-centric approach helps Devon avoid many of the geopolitical and regulatory risks that Occidental Petroleum must navigate due to its broader international exposure.
Devon’s systematic hedges, cheaper valuation, and better ROE make it a better choice compared with OXY. Based on the above discussion, at present Devon Energy has a marginal edge over Occidental Petroleum.