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Occidental: Carving a Niche in Oil and Gas

By Dan Weil   |   Wednesday, 18 May 2011 03:05 PM

Occidental Petroleum (OXY) has built up a strong position for itself in the oil and gas exploration and production business. It’s the fourth-largest U.S. oil company overall and the biggest onshore oil producer in the continental United States.

It traditionally has bought proven properties that it could develop further through its enhanced oil-recovery techniques. It started with that strategy in the United States and is now pursuing it abroad as well, with great effectiveness. 

Occidental is an industry leader in enhanced recovery methods. In California, the company has bought enough oil properties to become the state’s largest landholder. 

It is heavily involved with the rapidly growing business of oil shale. Meanwhile, investments in Latin America and the Middle East should prove profitable. With all these strengths, Occidental’s stock represents an investment to consider. 

Occidental registered a 46 percent jump in profit during the first quarter, to $1.55 billion from $1.06 billion a year earlier. Revenue climbed 24 percent to $5.73 billion. A 4.1 percent increase in production helped fuel the gains. Higher oil prices buoyed results as well. 

Solid development

Standard & Poor’s analyst Michael Kay has a positive outlook on Occidental’s future. “With an oil focus and no refining, a solid pipeline of development projects, and a strong balance sheet, we expect OXY to benefit from our long-term forecast for higher oil prices,” he writes. 

“Oil and gas operations are the core of OXY's business, driven by strong prospects in long-lived reserves in California, with virtually no royalties, and the Permian Basin, with potential contributions from international developments in Bahrain, Oman, Libya, Argentina, and Iraq.” 

Occidental will derive strength from a 7 percent annual increase in U.S. oil and gas production between 2010 and 2014 and a 13 percent annual rise in international production during that period, Kay says.

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Occidental Petroleum (OXY) has built up a strong position for itself in the oil and gas exploration and production business. It s the fourth-largest U.S. oil company overall and the biggest onshore oil producer in the continental United States.It traditionally has bought...
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