Can OXY Stock Gain From Low-Cost Operations and High-quality Assets?

Occidental Petroleum Corporation OXY stands out in the energy sector with a competitive advantage rooted in its low-cost operations and high-quality asset base. The company has strategically positioned itself to deliver consistent performance across commodity cycles by maintaining operational efficiency and cost discipline. This resilience allows Occidental to sustain profitability even during periods of market volatility.

The core strength lies in the company’s high-margin assets across the Permian Basin, where it is one of the largest producers. Its scale, infrastructure ownership and technological expertise enable efficient extraction and development of hydrocarbons, translating into superior returns. The integrated value chain enhances operational flexibility and ensures stronger cash generation compared with peers with less diversified portfolios.

Occidental also benefits from a strong global portfolio, including assets in the Middle East and Latin America, which provide geographic diversification and stable long-term production. The company views the expertise in carbon dioxide separation, transportation, utilization, recycling and storage through enhanced oil recovery as a key differentiator, giving it a competitive edge over peers as the global economy shifts toward lower-carbon solutions.

Occidental’s combination of low-cost operations and top-tier assets supports both shareholder value creation and strategic growth. By leveraging these strengths, the company is well-positioned to balance traditional oil and gas production with investments in carbon management and low-carbon technologies, ensuring relevance in an evolving energy landscape.

Competitive Edge From Efficient Operations and Strong Assets

Oil and gas firms that maintain low-cost operations and own high-quality assets achieve greater resilience through market fluctuations, securing consistent cash flow and profitability. Strong asset bases improve production efficiency, while cost discipline enhances margins, supporting long-term growth, stronger competitiveness and lasting value for shareholders.

Companies like ExxonMobil XOM and Chevron CVX exemplify how low-cost operations and high-quality assets strengthen performance in the oil and gas sector. ExxonMobil’s integrated portfolio and efficient upstream operations ensure reliable cash flow, while Chevron’s premium Permian assets and disciplined cost structure drive profitability, enabling both companies to withstand price volatility and sustain long-term growth.

OXY’s Price Performance

Occidental’s shares have gained 11.9% in the past three months compared with the Zacks Oil and Gas-Integrated-United States industry’s rise of 7.9%.

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 13.78% compared with the industry average of 14.6%.

OXY Stock’s Earnings Surprise History

Due to the stable performance, the company’s earnings beat estimates in each of the trailing four quarters, the average surprise being 25.72%.

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.

 

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

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