OXY Stock Outperforms Industry in Three Months: Time to Buy?

Core Viewpoint - Occidental Petroleum Corporation's shares have outperformed the Zacks Oil and Gas-Integrated-United States industry over the past three months, gaining 7.9% compared to the industry's 6% increase [1][8]. Group 1: Performance and Market Position - Occidental has outperformed its sector and the Zacks S&P 500 Composite in the last three months, surpassing other operators like Cactus and DT Midstream [2]. - The company has a strong domestic asset portfolio, particularly in the Permian Basin, which is the most prolific oil-producing region in North America, providing a reliable base of high-quality, low-cost output [6][8]. - The Permian Basin is expected to contribute between 768,000 to 784,000 barrels of oil equivalents per day in 2025 [7]. Group 2: Financial Health and Growth Prospects - Occidental's exploration efforts have expanded its oil and gas reserves, with proved reserves increasing to 4.6 billion barrels of oil equivalent at the end of 2024, up from 3.98 billion BOE at the end of 2023 [9]. - The company has reduced its debt by $7.5 billion over the last 13 months, which has lowered annual interest expenses by $410 million [11]. - International assets, including projects in Qatar, Oman, and the UAE, are expected to contribute approximately 233,000 MBoed to total production in 2025 [10]. Group 3: Operational Challenges - Occidental's operating results are subject to fluctuations in demand and commodity prices, with no active commodity hedges in place as of December 31, 2024, exposing the company to market volatility [12]. - The company's return on equity (ROE) stands at 13.78%, which is below the industry average of 14.57% [16]. - Occidental's shares are currently trading at a premium, with a trailing 12-month EV/EBITDA of 5.35X compared to the industry average of 4.6X [19]. Group 4: Summary and Outlook - The company's focus on debt reduction and the strength of its domestic and international operations are expected to support overall performance [21]. - Despite facing challenges from volatile commodity prices and lower returns compared to industry averages, holding Occidental stock is advisable due to its robust U.S. operations and increasing high-quality reserves [21].