We have maintained our Neutral recommendation on
Occidental Petroleum Corporation
). The company currently has a Zacks Rank #3 (Hold).
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Why the Reiteration?
The reiteration is primarily based on risks associated with oil
exploration and production infrastructure damages,
over-dependence on crude oil price movement, and strict
regulations. However, we consider Occidental Petroleum's strong
financial position and diversified asset base, steady capital
investment program and cost curtailment measures to be the
catalysts for forthcoming growth.
In first-quarter 2013, Occidental Petroleum's earnings per share
and revenues surpassed the Zacks Consensus Estimates primarily
based on strong performances from its domestic operations and a
rise in domestic natural gas prices. In addition, the company's
marketing and trading operations also added considerably.
Occidental Petroleum is an organization with higher operating
efficiencies and steady capital investment programs. The
company's strong financial position allows it to expand its
operations outside the U.S. We believe steady production growth
from its diversified asset-base located at diverse areas along
with scheduled progress at the Al Hosn gas project in Abu Dhabi
and development at the Russian Creek will likely enhance the
company's future performance.
In addition, Occidental Petroleum also executed numerous
cost-curbing initiatives, including reduction of domestic wells
to handle higher international operating expenses from its
planned maintenance turnarounds in Qatar.
Despite possessing solid growth drivers, Occidental Petroleum's
over-reliance on crude oil price movement may be shrinking its
future profitability as it is a crude oil-levered organization
with no refining capacities.
Other Stocks to Consider
Other stocks from the sector that are presently performing better
EPL Oil & Gas, Inc.
Sandridge Mississippian Trust II
) with a Zacks Rank #1 (Strong Buy), and
) with a Zacks Rank #2 (Buy).