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Can Occidental Continue to Grow on the Back of the Permian Basin?
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Key Takeaways
Occidental expects the Permian Basin to generate more than 56% of its total output in 2026.
A $3.1 billion Permian investment supports plans to drill 460 to 510 wells by year-end.
Enhanced oil recovery is expected to produce more than 100,000 barrels of oil equivalent per day.
Occidental Petroleum Corporation (OXY - Free Report) is a leading operator in the Permian Basin, a key driver of its U.S. oil and gas production. The CrownRock L.P. acquisition has expanded its operations in the region, which is expected to generate more than 56% of the company's total output in 2026.
Occidental plans to invest $3.1 billion in the Permian throughout 2026 to upgrade and expand operations. The company aims to drill 460 to 510 wells by year-end. Occidental controls 1.4 million acres in unconventional areas and 1.4 million acres in conventional zones in the Permian Basin, underscoring its strong regional presence.
Operational efficiency remains a key focus for Occidental. The company projects to drill many wells in the Permian Basin region this year and a 7% expected drop in average well costs in 2026 compared with 2025 will be beneficial. These improvements stem from enhanced well designs, consistent scheduling and technology upgrades that streamline development.
Courtesy of its operational efficiency and usage of new technology, Occidental will be able to generate more oil from the reserve. Through the Enhanced Oil Recovery technique, the company is expected to produce more than 100,000 barrels of oil equivalent per day, boosting its overall production volumes.
With nearly a decade of high-return inventory in the Permian Basin, Occidental is well positioned for sustained growth. Ongoing technological advancements are improving drilling efficiency, increasing production, minimizing environmental impact and unlocking additional resources, driving long-term value creation.
Permian Basin Reserves Support Long-Term Value Creation
The Permian Basin's abundant, low-cost reserves offer oil and gas producers long-term production visibility, robust margins and strong cash flow generation. Its vast resource base and operational efficiencies continue to drive sustainable earnings growth and shareholder value.
Devon Energy's (DVN - Free Report) high-quality Permian Basin assets enable low-cost production, strong cash flow generation and long-term reserve growth. Efficient operations, disciplined capital spending and cash flow support Devon Energy's sustainable earnings growth.
Diamondback Energy's (FANG - Free Report) premium Permian Basin acreage drives low-cost, high-margin production and long-term growth. Backed by operational efficiency, disciplined capital investments and strategic expansion, Diamondback Energy is well-positioned to benefit from the basin's long-term growth potential.
The Zacks Rundown on OXY
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 is 9.65% compared with the industry average of 10.94%.
Image Source: Zacks Investment Research
The Zacks Consensus Estimate for Occidental’s 2026 and 2027 earnings per share indicates an increase of 10.12% and 4.53%, respectively, in the past 60 days.
Image Source: Zacks Investment Research
Occidental’s shares have gained 25.6% in the past six months compared with the Zacks Oil and Gas-Integrated-United States industry’s rise of 16.3%.
View the Zacks #1 Rank List
Image: Bigstock
Can Occidental Continue to Grow on the Back of the Permian Basin?
Key Takeaways
Occidental Petroleum Corporation (OXY - Free Report) is a leading operator in the Permian Basin, a key driver of its U.S. oil and gas production. The CrownRock L.P. acquisition has expanded its operations in the region, which is expected to generate more than 56% of the company's total output in 2026.
Occidental plans to invest $3.1 billion in the Permian throughout 2026 to upgrade and expand operations. The company aims to drill 460 to 510 wells by year-end. Occidental controls 1.4 million acres in unconventional areas and 1.4 million acres in conventional zones in the Permian Basin, underscoring its strong regional presence.
Operational efficiency remains a key focus for Occidental. The company projects to drill many wells in the Permian Basin region this year and a 7% expected drop in average well costs in 2026 compared with 2025 will be beneficial. These improvements stem from enhanced well designs, consistent scheduling and technology upgrades that streamline development.
Courtesy of its operational efficiency and usage of new technology, Occidental will be able to generate more oil from the reserve. Through the Enhanced Oil Recovery technique, the company is expected to produce more than 100,000 barrels of oil equivalent per day, boosting its overall production volumes.
With nearly a decade of high-return inventory in the Permian Basin, Occidental is well positioned for sustained growth. Ongoing technological advancements are improving drilling efficiency, increasing production, minimizing environmental impact and unlocking additional resources, driving long-term value creation.
Permian Basin Reserves Support Long-Term Value Creation
The Permian Basin's abundant, low-cost reserves offer oil and gas producers long-term production visibility, robust margins and strong cash flow generation. Its vast resource base and operational efficiencies continue to drive sustainable earnings growth and shareholder value.
Devon Energy's (DVN - Free Report) high-quality Permian Basin assets enable low-cost production, strong cash flow generation and long-term reserve growth. Efficient operations, disciplined capital spending and cash flow support Devon Energy's sustainable earnings growth.
Diamondback Energy's (FANG - Free Report) premium Permian Basin acreage drives low-cost, high-margin production and long-term growth. Backed by operational efficiency, disciplined capital investments and strategic expansion, Diamondback Energy is well-positioned to benefit from the basin's long-term growth potential.
The Zacks Rundown on OXY
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 is 9.65% compared with the industry average of 10.94%.
Image Source: Zacks Investment Research
The Zacks Consensus Estimate for Occidental’s 2026 and 2027 earnings per share indicates an increase of 10.12% and 4.53%, respectively, in the past 60 days.
Image Source: Zacks Investment Research
Occidental’s shares have gained 25.6% in the past six months compared with the Zacks Oil and Gas-Integrated-United States industry’s rise of 16.3%.
Image Source: Zacks Investment Research
OXY’s Zacks Rank
Occidental currently has a Zacks Rank #3 (Hold). You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.