Occidental Petroleum Corp. (OXY Stock)

Occidental Petroleum Corp. (NYSE: OXY) saw 7.25% growth post earnings, plus Berkshire Hathway is increasing stakes in the company. Warren Buffet is buying OXY stocks hand over fist. Dismissing the idea of acquiring Occidental, his company wishes to improve its position by up to 50%.

Occidental Petroleum Corp – Why Warren Buffet is Interested?

Occidental’s exposure to increasing oil prices is one of the main factors that interested Buffet, but it is not the only reason. Two other factors potentially affecting its long-term value should also be considered. 

Even though the Texas-based company does not have a refining business, but is heavily exposed to chemicals business with OxyChem. The chemical company ranks among top-3 global producers in every product category they produce. The chemical company yielded around $2.5 Billion of earnings before EBITDA. 

It was making OxyChem a noticeable contributor to Occidental’s financial results. Its pre-tax income in Q1 2023 was $472 Million, while it was $1.6 Billion for the oil and gas giant. 

The company has plans to invest $800 Million in the coming three years to modernize, enhance and expand its plants. With this step, they plan to increase volumes and cash flow and try to reduce operating costs and greenhouse gas emissions. 

In 2018, Occidental launched Oxy Low Carbon Ventures (OCLV) to leverage the company’s expertise in using carbon dioxide to produce oil through enhanced recovery. It’s part of the Carbon Capture Sequestration and Utilization (CCSU) sector, a supposedly $3 to $5 Trillion global industry.

Hence, Oil & Gas are not the only catalysts for its growth; the company’s heavy exposure to chemicals and a business to build a low-carbon platform has the potential to fuel the growth. 

Occidental Petroleum Corp. (NYSE- OXY) – Price Analysis and Candle Exploration

At press time, OXY stock was trading at $59.13 after gaining 1.51%; previous close and open were at $58.25 and $59.06, respectively. The 52-week change is with a slight drop of 9.61%. With an average volume of 12.82 Million shares, the market cap stands strong at $52.729 Billion. Analysts gave a 2.38 rating for HOLD, placing the price target at $71.72 with a 20.00% upside. 

Comparing Q1 2022 and 2023, revenue dropped 13.07% to $7.26 Billion, while revenue per share is currently at $39.55. Operating expenses increased by 7.21% to $2.68 Billion, while Net income dropped by 75.10% to $1.26 Billion. Gross profit was reported to be $24.57 Billion. 

The last earnings were reported on May 9, 2023, where revenue was estimated to be $7.225 Billion, estimated to be $7.46 Billion. This brings the surprise to minus $235.318 Million, with a drop of 3.15%. 

The TTM price-to-equity (P/E) ratio is 6.68, and the essential EPS is $9.48. Also, the price-to-sales   (P/S) ratio is 1.62; it is considered a good sign if this number is below 2. 

A downward-sloping trend line, a stagnant EMA, and a weak RSI of 40.90 do not provide positive signals for the OXY share price. The demand zone is strong support, and as long as the price is above $54.47, the chances of a bounce back are firm.  

If the price breaks the trend line and immediate resistance with confidence, it could go into or beyond the supply zone. Also, the price could consolidate below $61.33 for some time before deciding further course.  

Disclaimer:

The views and opinions stated by the author, or any people named in this article, are for informational purposes only and do not establish financial, investment, or other advice. Investing in or trading crypto assets comes with a risk of financial loss.

Nancy J. Allen is a crypto enthusiast and believes that cryptocurrencies inspire people to be their own banks and step aside from traditional monetary exchange systems. She is also intrigued by blockchain technology and its functioning.

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