Occidental Is Trading Above 50-Day SMA: How to Play the Stock?

Core Viewpoint - Occidental Petroleum Corporation (OXY) is experiencing a bullish trend as it trades above its 50-day simple moving average, driven by its focus on the Permian Basin and contributions from inorganic assets [1][7]. Financial Performance - Occidental recently completed the sale of its chemical business for $9.7 billion, which will aid in reducing debts and strengthening the balance sheet [1][10]. - The company plans to utilize $6.5 billion from the sale proceeds to reduce its existing principal debt balance below the targeted $15 billion level [10]. - In the past month, shares of Occidental have gained 1.5%, while the industry has rallied 0.9% [5]. Production and Operations - Production from the Permian Basin is expected to be in the range of 795-815 thousand barrels of oil equivalent per day (Mboe/d), with total production projected between 1,440-1,480 Mboe/d in the fourth quarter of 2025 [11]. - Occidental is set to bring online 545-565 company-operated wells in the Permian region, which will further increase production volumes [11]. - International assets, including projects in Qatar, Oman, and the UAE, are expected to contribute 230-236 thousand barrels of oil equivalents per day to total production in the fourth quarter of 2025 [13]. Cost Management - The company aims for a cumulative cost reduction of $500 million by 2025 and has realized $2 billion in annualized cost savings across U.S. onshore operations since 2023 [14]. Market Position - Occidental's shares are currently trading at a premium, with a trailing 12-month Enterprise Value/Earnings before Interest Tax Depreciation and Amortization (EV/EBITDA TTM) of 5.21X compared to the industry average of 4.46X [21]. - The company's return on equity (ROE) stands at 12.35%, which is lower than the industry average of 13.57% [24]. Summary - Occidental's focus on debt reduction, strong domestic and international operations, and synergies from recent acquisitions are expected to enhance overall performance, despite challenges from volatile commodity prices and declining earnings estimates [26].