Can Acquisitions Create Long-Term Value for Occidental Petroleum?

Occidental Petroleum Corporation OXY is well-positioned as a leading U.S. oil and gas producer with a diversified portfolio and operational footprint focused on high-return basins, particularly the Permian. In addition to returns from organic assets, Occidental’s long-term growth lies in its strategic acquisitions. 

Occidental’s acquisition of Anadarko Petroleum in 2019 significantly expanded its scale and asset depth in the Permian Basin, one of the world’s most prolific oil-producing regions. This transformative deal enhanced Occidental’s production capabilities, bolstered its reserve base and delivered synergies through infrastructure integration and cost rationalization.

Occidental followed it up with the acquisition of CrownRock L.P. in 2024, which added high-margin production and low-breakeven inventory to the oil and gas portfolio in the Permian Basin.

The company has made focused investments in carbon management and low-carbon ventures, reflecting its ambition to lead in the energy transition. Occidental, being a low-cost operator and possessing high-quality assets in different locations across the globe, has a competitive advantage over its peers.

Occidental’s combination of high-quality upstream assets, strategic acquisitions and decarbonization leadership strengthens its investment appeal. As the company continues to deleverage and optimize the portfolio, it stands to unlock further value, supported by strong free cash flow and a commitment to disciplined growth.

How Acquisitions Drive Performance in Oil and Gas Companies?

Oil and gas companies gain from acquisitions by expanding their asset bases, enhancing operational efficiency and achieving cost synergies. These strategic transactions increase scale, diversify resource exposure and strengthen cash flow consistency, supporting improved performance and returns even amid volatile commodity price cycles.

Oil and gas companies like Devon Energy DVN and Chevron CVX have enhanced their portfolios through key acquisitions. DVN's acquisitions of Validus Energy and Grayson Mill expand assets in the Eagle Ford and Williston Basins. Chevron’s acquisition of PDC Energy added cost-efficient assets in the DJ and Permian Basins, enhancing capital productivity.

OXY Stock’s Earnings Surprise History

The stable performance of the company allowed its earnings to beat estimates in each of the trailing four quarters, with the average surprise being 24.34%.

Occidental’s ROE Is Lower Than the Industry

Occidental’s return on equity ("ROE") is lower than the industry average in the trailing 12 months. ROE of OXY was 16.6% compared with the industry average of 16.89%.

OXY’s Price Performance

Occidental’s shares have gained 25% in the last three months compared with the Zacks Oil and Gas-Integrated-United States industry’s rise of 16%.

OXY’s Zacks Rank

Occidental currently has a Zacks Rank #3 (Hold). You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.

 

Want the latest recommendations from Zacks Investment Research? Today, you can download 7 Best Stocks for the Next 30 Days. Click to get this free report

This article originally published on Zacks Investment Research (zacks.com).

Zacks Investment Research