On Jun 13, we have issued an updated research report on
Occidental Petroleum Corporation
). A disciplined investment in exploration and production program
backed by a stable financial position and geographically
diversified operations are expected to boost the oil and gas
company's future performance. However, volatile commodity prices
and strict regulations are our major causes of concern.
Occidental Petroleum, a Zacks Rank #3 (Hold) stock, reported mixed
results in first-quarter 2014. In the quarter, the company's
earnings per share surpassed the Zacks Consensus Estimate while
revenues missed the same. On a year-over-year basis, both top as
well as bottom line improved primarily on the back of higher sales
from the company's Oil and Gas and Chemical segments.
Occidental Petroleum is an organization, operating in the U.S and
several other international territories. The company follows an
active exploration initiative to expand its reserve base. In the
first quarter, Occidental Petroleum invested $2.27 billion and
plans to spend $10.2 billion in 2014. The company expects its
steady operations in the Permian Basin, the Al Hosn gas project in
the United Arab Emirates, BridgeTex Pipeline and new Johnsonville
chlor-alkali plants to play an important role to boost its future
Occidental Petroleum is currently streamlining its operations. The
company has already sold its Hugoton Field assets and a part of its
investment in the General Partner of
Plains All American Pipeline, L.P.
). Occidental Petroleum will also spin-off its Californian oil and
natural gas assets. These initiatives will enable the company to
proficiently manage its operations.
Occidental Petroleum maintained a stable financial position
primarily on the heels of strong cash generation capacity. As of
Mar 31, 2014, the company had cash and cash equivalents of $2.3
billion. In the fist three months of 2014, Occidental Petroleum's
cash flow from operating activities was approximately $2.7 billion.
Apart from investment in growth projects, Occidental Petroleum
continues to pursue several initiatives including effective share
repurchase program and regular dividend payment to improve
shareholders' wealth. During first-quarter 2014, the company
repurchased 10.5 million shares of its common stock. Moreover, the
company distributed around $514 million during the first quarter as
On the flip side, Occidental Petroleum's performance primarily
depends on the commodity price movements. The prices of the
company's prime products like oil and natural gas are often
volatile. An economic slowdown can impact demand for commodities,
thereby reducing commodity prices. This will likely impact
Occidental Petroleum's results.
Key Picks from the Sector
Some better-ranked stocks in the sector include
Athlon Energy Inc.
), each carries a Zacks Rank #1 (Strong Buy).
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
PLAINS ALL AMER (PAA): Free Stock Analysis
OCCIDENTAL PET (OXY): Free Stock Analysis
ENCANA CORP (ECA): Free Stock Analysis Report
ATHLON ENERGY (ATHL): Free Stock Analysis
To read this article on Zacks.com click here.