Should Record Permian Production and Debt Reduction Shift the Outlook for Occidental Petroleum (OXY) Investors?

• Occidental Petroleum recently exceeded its third quarter expectations, posting record Permian production, reducing lease operating expenses to their lowest level since 2021, and repaying US$1.3 billion of debt, with a plan to lower total debt below US$15 billion after an OxyChem sale.
• The company also increased capital returns to shareholders through dividends and buybacks, and is anticipated to raise its dividend next quarter, reflecting greater financial flexibility and ongoing commitment to shareholder returns.
• We'll examine how record production and disciplined cost reductions strengthen Occidental Petroleum's investment narrative and future earnings outlook.

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Occidental Petroleum Investment Narrative Recap

To be a shareholder in Occidental Petroleum today, you need to believe that the company’s ability to deliver strong oil and gas production while maintaining disciplined capital allocation will outweigh industry risks such as commodity price volatility. The recent quarterly results reinforced production momentum and cost discipline, but these developments may not meaningfully reduce Occidental’s sensitivity to oil prices in the near term, which remains the most important catalyst and risk for investors right now.

One relevant highlight from recent announcements is Occidental’s plan to reduce total debt below US$15 billion following the sale of its OxyChem business. This move directly addresses the company’s elevated leverage and aims to bolster balance sheet flexibility, a key catalyst for offsetting oil price headwinds and supporting further shareholder returns.

But despite strengthened operations, investors should not overlook the ongoing risk tied to potential oil demand declines and...

Read the full narrative on Occidental Petroleum (it's free!)

Occidental Petroleum is projected to reach $29.0 billion in revenue and $3.7 billion in earnings by 2028. This reflects a 2.2% annual revenue growth rate and a $2.0 billion increase in earnings from the current $1.7 billion.

Uncover how Occidental Petroleum's forecasts yield a $50.21 fair value, a 21% upside to its current price.

Exploring Other Perspectives

Twenty-six members of the Simply Wall St Community estimate fair values for Occidental between US$31.19 and US$69.65 per share. While cash flow resilience is a key catalyst, wide differences in expectations underline how much opinions can vary, explore several viewpoints to make a more informed judgment.

Explore 26 other fair value estimates on Occidental Petroleum - why the stock might be worth 25% less than the current price!

Build Your Own Occidental Petroleum Narrative

Disagree with existing narratives? Create your own in under 3 minutes - extraordinary investment returns rarely come from following the herd.

• A great starting point for your Occidental Petroleum research is our analysis highlighting 2 key rewards and 4 important warning signs that could impact your investment decision.
• Our free Occidental Petroleum research report provides a comprehensive fundamental analysis summarized in a single visual - the Snowflake - making it easy to evaluate Occidental Petroleum's overall financial health at a glance.

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This article by Simply Wall St is general in nature. We provide commentary based on historical data and analyst forecasts only using an unbiased methodology and our articles are not intended to be financial advice. It does not constitute a recommendation to buy or sell any stock, and does not take account of your objectives, or your financial situation. We aim to bring you long-term focused analysis driven by fundamental data. Note that our analysis may not factor in the latest price-sensitive company announcements or qualitative material. Simply Wall St has no position in any stocks mentioned.

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