Occidental Petroleum (OXY): Assessing Valuation Following Debt Reduction and Permian Growth Momentum

Occidental Petroleum (OXY) is back in the spotlight after its substantial $7.5 billion debt reduction effort, combined with plans to sell more non-core assets in 2025. Investors following the stock will also note the company's expanding footprint in the Permian Basin and steady growth in its international operations. This finance-focused pivot, designed to reinforce operational resilience and boost long-term reserves, has renewed interest in Occidental’s strategy, especially as energy markets remain sensitive to shifts in commodity prices and balance sheet strength.

In the bigger picture, Occidental Petroleum has seen its stock outperform both sector peers and the S&P 500 over the past 3 months, while remaining below historical highs. Year to date, the stock is down 8%, but its 10% gain in the past quarter suggests some positive momentum is building as the company demonstrates greater financial discipline. Recent gains have come even as the overall sector faced pressure from volatile oil prices. This highlights how management’s actions are reshaping how investors perceive risk and growth prospects at the company.

After this year’s uneven ride, investors face a key question: Is Occidental cheap enough to warrant a fresh look, or is the market already pricing in all the progress and potential for future growth?

Most Popular Narrative: 16.7% Undervalued

According to the narrative by Dzitkowskik, Occidental Petroleum is currently trading at a 16.7% discount to its estimated fair value. The narrative points to the company’s ongoing transformation, with a strong focus on future growth drivers and operational improvements.

“OXY is a pioneer in CCS, investing heavily in Direct Air Capture (DAC) technology and related infrastructure (for example, the STRATOS facility in West Texas). They aim to make CCS a substantial part of their business. OXY believes CCS could be a multi-trillion-dollar global industry. Their early leadership positions them to capture a meaningful share of this market if it develops as they anticipate.”

Think Occidental is all about oil? Think again. This narrative hints at bold expectations for margins, high-tech growth, and an ambitious roadmap that could redefine the company’s financial future. Which key assumptions really power this low discount rate? See what’s behind the scenes of this undervalued call.

Result: Fair Value of $55.05 (UNDERVALUED)

Have a read of the narrative in full and understand what's behind the forecasts. However, unexpected swings in oil prices or setbacks in scaling carbon capture technology could quickly challenge even the most optimistic outlook for Occidental. Find out about the key risks to this Occidental Petroleum narrative.

Another View: Market Multiples Tell a Different Story

While detailed fair value models paint Occidental as undervalued, looking at its valuation through conventional price comparisons with the wider industry shows the stock may be trading at a premium. Which view deserves more trust?

See what the numbers say about this price — find out in our valuation breakdown.

Simply Wall St performs a discounted cash flow (DCF) on every stock in the world every day (check out Occidental Petroleum for example). We show the entire calculation in full. You can track the result in your watchlist or portfolio and be alerted when this changes, or use our stock screener to discover undervalued stocks based on their cash flows. If you save a screener we even alert you when new companies match - so you never miss a potential opportunity.

Build Your Own Occidental Petroleum Narrative

If you see things differently or want to dig into the numbers yourself, you can easily craft your own perspective in just a few minutes. do it your way.

A great starting point for your Occidental Petroleum research is our analysis highlighting 2 key rewards and 4 important warning signs that could impact your investment decision.

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This article by Simply Wall St is general in nature. We provide commentary based on historical data and analyst forecasts only using an unbiased methodology and our articles are not intended to be financial advice. It does not constitute a recommendation to buy or sell any stock, and does not take account of your objectives, or your financial situation. We aim to bring you long-term focused analysis driven by fundamental data. Note that our analysis may not factor in the latest price-sensitive company announcements or qualitative material. Simply Wall St has no position in any stocks mentioned.

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