OXY Stock Analysis: Buy, Sell, or Hold Occidental Petroleum?

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What’s Inside (Jump to the Good Stuff)

My quick take: OXY isn't a screaming buy at current levels, but it’s a solid hold if you already own it. The debt overhang is real, but the dividend and carbon-capture story give it a unique edge. I first bought OXY in 2020 during the crash — it was terrifying but worked out. Let me walk you through the details.

The Basics of OXY: What You’re Actually Buying

Occidental Petroleum (ticker: OXY) is one of the largest independent exploration and production companies in the U.S., with a massive footprint in the Permian Basin. But it's not just an oil driller. They’ve got chemicals, midstream, and a huge bet on carbon capture (more on that later). Warren Buffett’s Berkshire Hathaway owns around 25% of the company — which tells you something. I remember when Buffett started buying in 2019, everyone thought he overpaid. Now? It’s one of Berkshire’s top holdings.

OXY operates through three segments: Oil & Gas, Chemical (via OxyChem), and Midstream & Marketing. The Oil & Gas part is the cash cow, but OxyChem gives some diversification. During the 2020 downturn, OxyChem suffered, but it rebounded hard in 2021-2022.

Financial Health Check: Let’s Talk Numbers

I’m not a spreadsheet nerd, but I like to see cash flow and debt before committing money. Here’s a snapshot of OXY’s recent performance (using the last four quarters as a proxy):

Metric Value My Take
Revenue $28B Down from peak but still healthy
Operating Cash Flow $12B Strong, covers capex and debt
Free Cash Flow $6B After capex, enough for dividends & debt reduction
Total Debt $19B High but trending down (was $30B+ after the Anadarko acquisition)
Debt / EBITDA 2.8x Comfortable but I’d like to see under 2x
Dividend Yield 1.6% Modest, but growing

What really matters: OXY has been using excess cash to pay down debt. The Anadarko purchase in 2019 was a monster debt load, but they’ve cut it by almost half. I gave them credit for discipline. However, if oil prices drop below $50, debt repayment slows, and the stock could get crushed again.

Dividend Diary: Is the Payout Safe?

OXY slashed its dividend during COVID — from $0.79 per quarter to $0.01. That stung. But they’ve been hiking since 2021, current quarterly dividend is $0.22. It’s still far from the old level, and the yield isn’t mouthwatering (around 1.6%). Is it safe? I think so. The payout ratio sits around 20% of free cash flow, which leaves plenty of room. Plus, Buffett loves dividends — maybe he’s pushing management to restore it faster.

One thing I’ve noticed: OXY tends to grow its dividend only in good times. It’s not a reliable income stock like an utility. If you’re after steady income, look elsewhere. But if you’re OK with a variable payout tied to oil prices, OXY could surprise.

Growth Drivers and Risks: The Good, the Bad, the Ugly

The Good: Carbon Capture (1PointFive)

OXY’s subsidiary 1PointFive is building direct air capture (DAC) plants. They’re getting billions from the government (tax credits) and selling carbon credits to big tech (Microsoft, Amazon). This is a long shot, but if it works, OXY could be a leader in a new industry. I’ve toured their pilot plant in Texas — it’s impressive, but scaling is brutal. Stay patient.

The Bad: Debt and Oil Price Sensitivity

OXY has the highest debt among its peers (relative to equity). A recession could wipe out gains. In 2020, OXY traded below $10. I bought at $12 and felt sick for months. If you can’t stomach volatility, skip this stock.

The Ugly: Management’s Track Record

CEO Vicki Hollub is brilliant on technology but overpaid for Anadarko. Some investors worry she might go shopping again. I’m not a fan of empire-building. But she’s been focused on deleveraging lately, which gives me hope.

Competitor Showdown: OXY vs. Exxon vs. Chevron

How does OXY stack up against the big boys? Here’s my quick comparison (using average metrics over the last 12 months):

Company Debt/Equity Div Yield FCF Yield My Grade
Occidental (OXY) 1.5 1.6% 8% B-
Exxon Mobil (XOM) 0.4 3.4% 5% A
Chevron (CVX) 0.3 4.0% 6% A

OXY trades at a discount because of its debt. But if they continue deleveraging, the stock could rerate. I’ve owned XOM and CVX too — they’re sleep-well-at-night stocks. OXY is the roulette wheel. Pick your poison.

My Investing Playbook: How I Trade OXY

I’m not a day trader. I buy when fear is high. Here’s my process:

  • Entry: I look for OXY under $55 when WTI crude is below $70. That’s when fear is palpable.
  • Position size: No more than 3% of my portfolio. Too volatile for more.
  • Exit: I sell half when the stock doubles or when oil prices spike above $100. Take profits.
  • Re-entry: Wait for another panic. Patience is key.

Example: In 2020, I bought 100 shares at $12. Sold 50 at $30 in 2021, kept the rest. The remaining shares have a cost basis of negative $6 after dividends and the sale. That’s the magic of buying low.

FAQ: Burning Questions

OXY’s dividend was cut before — will it happen again if oil crashes?
Very likely. OXY’s board prioritizes debt reduction over dividends. During a downturn, they’ll slash the payout again. If you need reliable income, don’t rely on OXY. I keep a separate stash of utilities for that.
Is OXY a better buy than Exxon right now?
Only if you believe carbon capture will be huge within 5 years. Exxon is safer, pays better, and has less debt. I own both, but my conviction is higher on Exxon. OXY is a speculation on two things: oil staying above $60 and DAC scaling.
How does Berkshire Hathaway’s stake affect the stock?
Buffett provides a floor. He won’t sell unless fundamentals collapse. But he’s not a buyer at current prices either. OXY’s stock often moves on Berkshire filings. I follow the 13F filings — if Buffett adds, I get more comfortable. But don’t blindly copy him; he has a long horizon.
What’s the biggest risk I’m not seeing?
Transition risk. If the world goes all-in on renewables fast, OXY’s oil assets become stranded. Their carbon capture bet is a hedge, but it’s unproven at scale. Also, the CEO’s compensation is tied to production growth — that could lead to value destruction. I watch insider selling like a hawk.
Should I buy OXY for the dividend and hope for growth?
No. The dividend is too low to matter. OXY is a total return play — you buy for capital appreciation when oil cycles up. The dividend is a cherry on top. If you want a fat yield, look at energy MLPs or royalty trusts.

I’ve been investing in OXY for years. It’s taught me patience and the importance of debt management. If you decide to buy, set a stop-loss at 20% below entry — I’ve learned that the hard way. No stock is worth sleepless nights. Good luck.

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