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Occidental Is Trading Above 50-Day SMA: How to Play the Stock?
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Key Takeaways
OXY is trading above its 50-day SMA, boosted by Permian output and chemical unit sale.
OXY plans to cut $6.5B in debt, while new Permian wells and global assets lift future production.
OXY's cost savings initiatives aim for a cumulative cost reduction of $500 million in 2025.
Occidental Petroleum Corporation (OXY - Free Report) is trading above its 50-day simple moving average (“SMA”), signaling a bullish trend. The company is gaining from its focus on the Permian Basin and contributions from inorganic assets.
Occidental recently completed the sale of the chemical business for $9.7 billion, which will assist it in reducing debts and strengthening the balance sheet.
OXY’s 50 Days SMA
Image Source: Zacks Investment Research
Occidental has no exposure to Venezuela and does not import crude from the country. Yet, recent geopolitical developments there have lifted U.S. oil stocks broadly, with Occidental’s shares also posting gains. Chevron Corporation (CVX - Free Report) has operations in Venezuela. Its shares benefited from the expectation that the U.S. government would play a significant role in Venezuela’s oil industry.
In the past month, shares of Occidental have gained 1.5%, while industry has rallied 0.9% in the same time period.
Price Performance (One Month)
Image Source: Zacks Investment Research
Let’s take a closer look at the key factors that can help investors determine whether now is a favorable entry point to add Occidental stock to their portfolio.
Occidental has completed the sale of its chemical business, OxyChem, to Berkshire Hathaway for $9.7 billion in cash. The sales proceeds will assist Occidental in further reducing the debt burden. Occidental intends to utilize $6.5 billion from the sale proceeds to reduce its existing principal debt balance below the targeted $15 billion level. Post Chemical business divestiture, Occidental will now focus on operating its high-return oil and gas assets to generate long-term value, while advancing innovation across the businesses.
Permian Resources assets remain a consistent contributor to the firm’s overall production. Production from the Permian is expected in the range of 795-815 Mboe/d and the company expects total production in the band of 1,440-1,480 Mboe/d in fourth-quarter 2025. Occidental is set to bring online 545-565 company-operated wells in the Permian region, which is set to increase production volumes further from this region.
The company continues to benefit from its strategic acquisitions, which have significantly boosted production volumes and top-line performance. Occidental’s acquisition of CrownRock L.P. in 2024 added high-margin production and low-breakeven inventory to its oil and gas portfolio in the Permian Basin.
OXY’s international assets play an important role in driving its growth and resilience. International assets, such as Qatar’s Dolphin gas project, Oman’s Mukhaizna oilfields and the UAE’s Al Hosn Gas, contribute significantly to production and cash flow. Occidental expects its international operation to contribute in the range of 230-236 thousand barrels of oil equivalents per day in fourth-quarter 2025 to total production.
The company’s efficient cost management is also going to boost the performance. Occidental, through the cost management initiatives, aims for a $500 million cumulative cost reduction in 2025 and since 2023, it has realized $2 billion in annualized cost savings across the U.S. onshore operations, which will enhance the cash flow and boost margins.
Headwinds for Occidental Stock
Occidental’s operating results are influenced by shifts in demand and the volatility of both global and local commodity prices. As of Dec. 31, 2024, the company had no active commodity hedges in place, leaving it fully exposed to market fluctuations. A significant decline in commodity prices from current levels could adversely affect OXY’s financial performance.
Occidental’s Earnings Estimates are Going Down
The Zacks Consensus Estimate for Occidental’s 2025 and 2026 earnings per share indicates a year-over-year decline of 34.97% and 46.56%, respectively.
Image Source: Zacks Investment Research
The same for Chevron’s 2025 and 2026 earnings per share implies a year-over-year decline of 26.97% and 4.14%, respectively.
OXY Stock’s Earnings Surprise History
The stable performance of the company allowed it to surpass earnings estimates in each of the last four reported quarters, the average earnings surprise being 27.8%.
Image Source: Zacks Investment Research
Devon Energy (DVN - Free Report) is another operator in the same space having focus on domestic oil and gas basins. The company’s earnings surpassed estimates in three of the last four quarters and missed in one quarter, resulting in an average surprise of 6.08%.
OXY’s Shares Are Trading at a Premium
Occidental’s shares are currently expensive on a relative basis, with its current trailing 12-month Enterprise Value/Earnings before Interest Tax Depreciation and Amortization (EV/EBITDA TTM) being 5.21X compared with its industry average of 4.46X.
Image Source: Zacks Investment Research
Occidental’s ROE Lower Than the Industry
Return on equity (“ROE”) is a key indicator of a company’s financial performance. It reflects how effectively a corporation uses shareholders' equity to generate profits and is widely regarded as a measure of profitability and operational efficiency.
Occidental’s ROE is lower than the industry average in the trailing 12 months. ROE of OXY was 12.35% compared with the industry average of 13.57%.
Image Source: Zacks Investment Research
Summing Up
Occidental’s emphasis on reducing debt, supported by the strength of its domestic and international operations and the synergies from recent acquisitions, is likely to bolster overall performance.
The company continues to face challenges from volatile commodity prices, returns that lag industry averages and declining earnings estimates.
Image: Bigstock
Occidental Is Trading Above 50-Day SMA: How to Play the Stock?
Key Takeaways
Occidental Petroleum Corporation (OXY - Free Report) is trading above its 50-day simple moving average (“SMA”), signaling a bullish trend. The company is gaining from its focus on the Permian Basin and contributions from inorganic assets.
Occidental recently completed the sale of the chemical business for $9.7 billion, which will assist it in reducing debts and strengthening the balance sheet.
OXY’s 50 Days SMA
Image Source: Zacks Investment Research
Occidental has no exposure to Venezuela and does not import crude from the country. Yet, recent geopolitical developments there have lifted U.S. oil stocks broadly, with Occidental’s shares also posting gains. Chevron Corporation (CVX - Free Report) has operations in Venezuela. Its shares benefited from the expectation that the U.S. government would play a significant role in Venezuela’s oil industry.
In the past month, shares of Occidental have gained 1.5%, while industry has rallied 0.9% in the same time period.
Price Performance (One Month)
Image Source: Zacks Investment Research
Let’s take a closer look at the key factors that can help investors determine whether now is a favorable entry point to add Occidental stock to their portfolio.
Multiple Drivers Behind Occidental Stock’s Performance
Occidental has completed the sale of its chemical business, OxyChem, to Berkshire Hathaway for $9.7 billion in cash. The sales proceeds will assist Occidental in further reducing the debt burden. Occidental intends to utilize $6.5 billion from the sale proceeds to reduce its existing principal debt balance below the targeted $15 billion level. Post Chemical business divestiture, Occidental will now focus on operating its high-return oil and gas assets to generate long-term value, while advancing innovation across the businesses.
Permian Resources assets remain a consistent contributor to the firm’s overall production. Production from the Permian is expected in the range of 795-815 Mboe/d and the company expects total production in the band of 1,440-1,480 Mboe/d in fourth-quarter 2025. Occidental is set to bring online 545-565 company-operated wells in the Permian region, which is set to increase production volumes further from this region.
The company continues to benefit from its strategic acquisitions, which have significantly boosted production volumes and top-line performance. Occidental’s acquisition of CrownRock L.P. in 2024 added high-margin production and low-breakeven inventory to its oil and gas portfolio in the Permian Basin.
OXY’s international assets play an important role in driving its growth and resilience. International assets, such as Qatar’s Dolphin gas project, Oman’s Mukhaizna oilfields and the UAE’s Al Hosn Gas, contribute significantly to production and cash flow. Occidental expects its international operation to contribute in the range of 230-236 thousand barrels of oil equivalents per day in fourth-quarter 2025 to total production.
The company’s efficient cost management is also going to boost the performance. Occidental, through the cost management initiatives, aims for a $500 million cumulative cost reduction in 2025 and since 2023, it has realized $2 billion in annualized cost savings across the U.S. onshore operations, which will enhance the cash flow and boost margins.
Headwinds for Occidental Stock
Occidental’s operating results are influenced by shifts in demand and the volatility of both global and local commodity prices. As of Dec. 31, 2024, the company had no active commodity hedges in place, leaving it fully exposed to market fluctuations. A significant decline in commodity prices from current levels could adversely affect OXY’s financial performance.
Occidental’s Earnings Estimates are Going Down
The Zacks Consensus Estimate for Occidental’s 2025 and 2026 earnings per share indicates a year-over-year decline of 34.97% and 46.56%, respectively.
Image Source: Zacks Investment Research
The same for Chevron’s 2025 and 2026 earnings per share implies a year-over-year decline of 26.97% and 4.14%, respectively.
OXY Stock’s Earnings Surprise History
The stable performance of the company allowed it to surpass earnings estimates in each of the last four reported quarters, the average earnings surprise being 27.8%.
Image Source: Zacks Investment Research
Devon Energy (DVN - Free Report) is another operator in the same space having focus on domestic oil and gas basins. The company’s earnings surpassed estimates in three of the last four quarters and missed in one quarter, resulting in an average surprise of 6.08%.
OXY’s Shares Are Trading at a Premium
Occidental’s shares are currently expensive on a relative basis, with its current trailing 12-month Enterprise Value/Earnings before Interest Tax Depreciation and Amortization (EV/EBITDA TTM) being 5.21X compared with its industry average of 4.46X.
Image Source: Zacks Investment Research
Occidental’s ROE Lower Than the Industry
Return on equity (“ROE”) is a key indicator of a company’s financial performance. It reflects how effectively a corporation uses shareholders' equity to generate profits and is widely regarded as a measure of profitability and operational efficiency.
Occidental’s ROE is lower than the industry average in the trailing 12 months. ROE of OXY was 12.35% compared with the industry average of 13.57%.
Image Source: Zacks Investment Research
Summing Up
Occidental’s emphasis on reducing debt, supported by the strength of its domestic and international operations and the synergies from recent acquisitions, is likely to bolster overall performance.
The company continues to face challenges from volatile commodity prices, returns that lag industry averages and declining earnings estimates.
Despite these challenges, holding this Zacks Rank #3 (Hold) stock remains advisable due to its robust U.S. operations and significant presence in the resource-rich Permian Basin. You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.