We have maintained our Neutral recommendation on
Occidental Petroleum Corp
). The company currently has a Zacks Rank #3 (Hold).
Why the Reiteration?
The reiteration was primarily based on Occidental Petroleum's
strong balance sheet and liquidity position, diversified asset
base, steady capital investment programs, and cost curtailment
measures. However, over-reliance on crude oil prices movement,
delay in drilling and development activities, and risks
associated with oil exploration and production infrastructure
damages may to some extent temper these positives.
In fourth-quarter 2012, Occidental Petroleum's earnings per share
and revenues surpassed the Zacks Consensus Estimates primarily on
higher sales from all its segments and higher realized crude oil
Occidental Petroleum is an organization with higher operating
efficiencies and stable capital investment programs. In the
forthcoming quarters, we expect steady production growth from its
diversified asset-base located at different regions leading to
improved operating results.
Despite having solid catalysts, Occidental Petroleum's
over-reliance on crude oil price movement may be shrinking its
future projected growth-pattern as it is a crude oil-levered
organization with no refining capacities.
We are also cautious about hazards related to oil exploration and
production infrastructure damages and natural calamities, which
might obstruct the company's future operations.
In spite of facing several challenges, Occidental Petroleum
continues to take some cost-cutting measures, like the shutdown
of a few plants and production curtailment, which may allow the
company to improve its forthcoming performance.
Other Stocks to Consider
Other stocks from the sector that are presently performing better
Chesapeake Energy Corporation
). All the three stocks carry a Zacks Rank #2 (Buy).
CHESAPEAKE ENGY (CHK): Free Stock Analysis
OCCIDENTAL PET (OXY): Free Stock Analysis
STATOIL ASA-ADR (STO): Free Stock Analysis
YPF SA D CV ADR (YPF): Free Stock Analysis
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