Occidental's Hidden Gem: How OxyChem Could Boost Profits

When most investors think of Occidental Petroleum Co. (NYSE: OXY), they think oil and gas—and with good reason.

Occidental is the largest driller in the Permian Basin, one of the richest energy fields in the United States. But there’s more to this story.

The company is also building major growth engines outside traditional energy, including its fast-moving direct air capture (DAC) business, 1PointFive, and its highly profitable chemical division, OxyChem, which provides steady, cash-generating support across economic cycles.

1PointFive: Occidental’s Billion-Dollar Sustainability Play

One of Occidental’s biggest growth initiatives is 1PointFive, which operates the STRATOS DAC plant, built to pull 500,000 tons of carbon from the atmosphere each year. It already has major carbon credit deals with Microsoft Corp. (NASDAQ: MSFT) and Amazon.com Inc. (NASDAQ: AMZN).

And this is just the beginning: Occidental plans to open 100 DAC plants by 2035, building a billion-dollar business that could materially diversify its revenue.

OxyChem: The Under-the-Radar Cash Machine

While DAC grabs the headlines, OxyChem keeps pumping out steady profits. The chemical division generated $270 million in Q4 2024 and $1.12 billion for the full year.

OxyChem operates 23 facilities worldwide, capturing favorable market conditions with its integrated network. In 2024, it earned 47 awards from the American Chemistry Council (ACC) for outstanding environmental and safety performance.

What Does OxyChem Actually Produce?

OxyChem plays a key role in diversifying Occidental’s revenue, producing essentials for industries across the economy:

• Chlorine: Used for water treatment, bleach, pharmaceuticals and industrial production. OxyChem is the fourth-largest chloralkali producer globally. Every $10 per ton change in chlorine prices moves cash flow by about $10 million.
• Caustic Soda: Critical for pulp, paper, textiles, and detergents. OxyChem is the second-largest merchant caustic seller worldwide. A $10 per ton price change shifts cash flow by roughly $30 million.
• PVC Resins: Found in construction, automotive, medical, and consumer products. OxyChem is the third-largest PVC supplier in the U.S., with every $0.01 per pound change affecting cash flow by about $30 million.

Other specialty chemicals include caustic potash (fertilizers), chlorinated organics (solvents and pesticides), sodium silicates (concrete treatments), and calcium chloride (de-icing products).

Big Upgrades Coming for OxyChem

OxyChem is in the middle of a major investment cycle. The Battleground plant in La Porte, Texas, is undergoing a full modernization, with upgrades set to be completed by mid-2026. The shift from diaphragm to membrane technology is expected to boost margins, lower maintenance costs, and reduce greenhouse gas emissions.

At the same time, Occidental is optimizing connectivity among its Gulf Coast facilities to further drive down operating expenses.

Here’s the investment breakdown:

• $636 million spent in 2024
• $600 million planned in 2025
• $300 million planned in 2026

Once complete, these projects are expected to add about $300 million in annualized EBITDA starting in late 2026.

Occidental Offers a Blend of Stability Now and Upside Later

Occidental Petroleum isn’t just drilling for oil anymore. With billion-dollar bets in carbon capture, a cash-generating chemical division, and major operational upgrades on the way, OXY is quietly building a diversified energy and industrial powerhouse.

For investors looking for stability now and upside later, Occidental is a name worth watching.

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The article "Occidental’s Hidden Gem: How OxyChem Could Boost Profits" first appeared on MarketBeat.