Can OXY's Integrated Portfolio Continue to Create Long-Term Value?

Occidental Petroleum Corporation OXY stands out in the oil and gas industry due to its strategically integrated portfolio, which enhances operational efficiency, boosts long-term growth and provides a strong foundation for sustained growth in shareholder value. The company combines upstream oil and gas production with midstream infrastructure and chemical manufacturing (via OxyChem), creating a synergistic business model that cushions against market volatility and generates stable cash flows across cycles.

Occidental’s upstream strength lies in the leadership position in the Permian Basin, where it holds vast, low-cost acreage. This segment delivers consistent production growth while benefiting from scale, technology-driven efficiencies and proximity to owned midstream assets. The integration of midstream operations allows Occidental to optimize transportation costs, control bottlenecks and capture value throughout the supply chain, supporting robust margins even during price downturns.

OxyChem provides a valuable hedge through its production of essential basic chemicals and PVC, contributing to reliable earnings diversification. This segment has remained resilient amid fluctuating commodity prices, helping to stabilize the company’s overall performance, and is a significant cash generator.

With a disciplined capital allocation strategy, ongoing debt reduction and a balanced portfolio spanning oil, gas, chemicals and infrastructure, Occidental is well-positioned to deliver sustainable shareholder returns. This integrated model enhances resilience, supports consistent cash generation and solidifies its long-term investment appeal.

Here's How Oil & Gas Companies Gain From Integrated Assets

Oil and gas companies benefit from integrated assets by streamlining operations across exploration, production, transportation and refining. This vertical integration enhances cost efficiency, improves supply-chain control, mitigates market volatility and ensures stable cash flows across fluctuating commodity cycles.

ExxonMobil XOM and Chevron CVX exemplify the strength of an integrated business model, combining upstream, midstream and downstream operations. This structure allows them to offset commodity price volatility, optimize margins and maintain stable cash flows. Their scale, global presence and operational synergies support long-term capital returns, making them resilient investments in a cyclical industry driven by energy demand and supply dynamics.

OXY Stock’s Earnings Surprise History

The stable performance of the company allowed its earnings to beat estimates in the trailing four quarters, the average surprise being 24.3%.

OXY’s Shares Are Trading at a Premium

Occidental’s shares are currently expensive on a relative basis, with its current trailing 12-month Enterprise Value/Earnings before Interest Tax Depreciation and Amortization (EV/EBITDA TTM) being 5.27X compared with the industry average of 4.91X.

OXY Stock’s Price Performance

Occidental’s shares have risen 19.2% in the past three months compared with the Zacks Oil and Gas- Integrated- United States industry’s growth of 12.4%.

OXY’s Zacks Rank

Occidental currently has a Zacks Rank #4 (Sell).

You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.

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

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