Occidental Petroleum is a Buy in Q4 2025

Core Viewpoint - Occidental Petroleum (NYSE: OXY) is considered a buy for Q4 2025, primarily due to the affirmation of the investment thesis established by Berkshire Hathaway's stock purchases nearly four years ago, focusing on growth through operational quality, profitability, cash flow, and shareholder value [1] Financial Performance - Key takeaways from the Q3 release include a significant debt repayment, reducing net debt by 18% year-over-year and 10% quarter-over-quarter, which enhances cash flow and capital return outlook [2] - Occidental's net revenue for Q3 was $6.72 billion, down 6% year-over-year and $20 million below expectations, but adjusted earnings were 64 cents, outperforming the consensus by 3,000 basis points [4] - Free cash flow was approximately $1.5 billion, allowing for dividend payments, reinvestments, and debt reduction, with a positive outlook for dividends as the company aims to return to pre-COVID payment levels [5] Operational Highlights - The sale of OxyChem to Berkshire Hathaway will provide nearly $10 billion in cash, improving operating margins and facilitating further debt reduction, thereby enhancing shareholder value [2] - The company's equity increased by approximately 5% year-over-year in Q3, with expectations for continued growth [3] Dividend Information - As of mid-November, the dividend yield stands at 2.3%, more than double the broad market average, and accounts for less than 30% of free cash flow [6] Strategic Execution - Occidental Petroleum is effectively executing its plans to improve shareholder value, with operational quality, cash flow, and debt reduction being key drivers [7]