Occidental Petroleum (NYSE: OXY) is a major oil and natural gas company with a market value near $40 billion. While sizable, it is much smaller than industry giants like ExxonMobil, which has a market cap around $440 billion.
Occidental is aggressively expanding through acquisitions, a strategy that began in 2019 with its purchase of Anadarko Petroleum. This deal, supported financially by Warren Buffett’s Berkshire Hathaway, significantly increased Occidental’s debt, forcing the company to cut its dividend during the COVID-19 downturn and shift focus toward debt reduction.
Since then, Occidental has improved its financial health, reducing its debt-to-equity ratio from nearly 2x post-Anadarko to about 0.7x today. The company has made additional acquisitions but with more caution. Despite raising its quarterly dividend by 9% in 2025 to $0.24 per share, the dividend remains well below pre-pandemic levels, reflecting a shift toward growth rather than steady income.
Occidental’s business remains sensitive to volatile oil and gas prices, similar to its larger peers ExxonMobil and Chevron. However, its growth-focused approach carries more risk and potential reward.
The Anadarko deal showed that execution challenges can impact investors, as seen in the stock’s steep price drop and dividend cut. In contrast, larger companies tend to offer more stable dividends with less volatility.
Warren Buffett’s investment in both Occidental and Chevron suggests a balanced strategy, combining growth potential with dividend reliability. For investors choosing between the two, Occidental presents higher risk but possibly greater long-term upside. Buyers should be aware that commodity price swings will continue to affect Occidental’s stock, and its growth strategy adds an extra layer of risk in an already volatile sector.
Analysts’ consensus price target for Occidental in 2025 hovers around $53-$54, indicating potential upside from the current price below $45. However, market sentiment remains mixed, with some bearish views due to debt levels and fluctuating revenues. Occidental’s recent quarterly earnings showed strong revenue growth and earnings per share above expectations, but free cash flow remains a concern due to high capital expenditures and debt servicing.
In summary, Occidental Petroleum is a growth-oriented energy company trading below $45, offering both opportunity and risk. Investors should weigh its volatile industry exposure, debt profile, and growth ambitions before deciding to buy.
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