If You Own Occidental Petroleum Stock, Take A Look At This Instead

Occidental Petroleum (NYSE: OXY) is simply a fashionable lipid stock. That's owed successful portion due to the fact that Warren Buffett's company, Berkshire Hathaway, owns a sizable stake. The conglomerate owns astir 265 cardinal shares (27% of its outstanding shares) worthy $10.5 cardinal (its seventh-largest presumption astatine 3.4% of its concern portfolio).

While Occidental Petroleum is simply a large company, I deliberation investors should instrumentality a person look astatine ConocoPhillips (NYSE: COP). Here's why.

Occidental Petroleum is simply a starring planetary vigor company. It produces lipid and state successful the U.S., the Middle East, and North Africa. It besides has midstream and selling assets, a chemicals concern (OxyChem), and a lower-carbon vigor platform. The institution has importantly expanded its operations successful caller years by making a mates of notable acquisitions (Anadarko Petroleum successful 2019 and CrownRock successful 2024). These deals person saddled it with a important magnitude of debt, which Occidental has been repaying with escaped currency travel and the merchantability of non-core assets. That indebtedness has weighed connected its equilibrium expanse and quality to turn shareholder worth successful caller years.

The oil company precocious made a large determination to repay indebtedness by agreeing to merchantability OxyChem to Berkshire Hathaway for $9.7 cardinal successful cash. The woody volition alteration Occidental to execute its people of reducing its main indebtedness equilibrium beneath $15 billion. That volition escaped the institution up to absorption connected creating shareholder worth by processing the ample inventory of drilling locations it has built up implicit the years.

While Occidental Petroleum believes the merchantability of OxyChem volition enactment the institution successful a stronger presumption to turn shareholder worth successful the future, it doesn't person a steadfast enactment plan. ConocoPhillips, connected the different hand, has a precise visible maturation strategy.

The institution has besides invested heavy to grow its operations successful caller years done a bid of acquisitions, including Concho Resources successful 2020 and Marathon Oil past year. However, it funded astir of its acquisitions with equity alternatively of debt. As a result, it has a fortress equilibrium sheet.

That has fixed it the fiscal flexibility to put heavy successful increasing its operations. ConocoPhillips is investing $3.4 cardinal crossed 3 liquified earthy gas (LNG) projects successful the U.S. and Qatar and $8.5 cardinal to $9 cardinal connected the Willow lipid task successful Alaska. The institution estimates that these investments volition present an incremental $6 cardinal of yearly escaped currency travel by 2029 erstwhile Willow is online (assuming lipid averages $60 a barrel, which is adjacent the existent terms point). That's a meaningful summation for a institution that produced $6.1 cardinal of escaped currency travel done the 3rd 4th of this year. This increasing currency travel volition alteration the institution to present dividend maturation wrong the apical 25% of companies successful the S&P 500, portion besides repurchasing shares each year.