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Occidental Petroleum’s OXY share price has dropped 25.2% in the trailing 12 months, wider compared with its industry’s decline of 15.7%. In the same period, the Zacks Oil & Energy sector has declined 0.9%.
OXY’s exposure to fluctuating commodity prices remains a concern. As of Dec. 31, 2024, there were no active commodity hedges in place, so if the commodity prices drop substantially, it can adversely impact Occidental’s performance.
Price Performance (One Year)
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Should you consider adding OXY stock to your portfolio only based on the softness in share prices? Let’s delve deeper and find out factors that can help investors decide whether it is a good entry point to add OXY stock to their portfolio.
Factors Acting as Tailwind for OXY Stock
Occidental’s top priority is to strengthen its balance sheet and lower capital servicing expenses. In 2024, the company achieved its near-term debt reduction target of $4.5 billion seven months ahead of schedule. Occidental intends to use its free cash flow and proceeds from non-core asset divestiture to redeem its outstanding debts to strengthen its balance sheet.
Occidental, being a low-cost operator and possessing high-quality assets in different locations across the globe, has a competitive advantage over its peers. Efficient cost management is also expected to boost the performance of the company. The systematic capital investment has allowed the company to strengthen its infrastructure. OXY, to expand its existing operations, aims to invest in the range of $7.4-$7.6 billion in 2025.
Occidental is also expanding its operation internationally. Production from the International operation is expected in the range of 226-236 thousand barrels of oil equivalent per day (Mboe/d) in 2025.
Occidental’s production volumes in 2025 are expected to remain strong thanks to strong performance from its international and domestic operations. Occidental is set to bring online 500-550 company-operated wells in the Permian region and 100-120 wells in the Rockies region in 2025, which will further boost the company's domestic onshore production.
Strategic acquisitions of prime assets continue to boost Occidental's production volumes. Acquired CrownRock assets will assist OXY in increasing production volumes, lowering well costs and accelerating returns. Production from the CrownRock asset is expected to touch 170,000 Boe per day in 2025 and lower well costs by more than 15% in 2025 from 2023 levels.
Headwinds for Occidental Stock
Fluctuations in demand and volatile global and local commodity prices affect Occidental’s results of operations. The company remains exposed to fluctuating commodity market prices, and as of Dec. 31, 2024, there were no active commodity hedges in place. If commodity prices drop substantially from their current level, it will impact OXY’s performance.