OXY Stock: Buying Opportunity Or Cautionary Tale?

Why Is OXY in Focus Now?

The sale of OxyChem has thrust Occidental back into the spotlight. Beyond trimming its balance sheet, OXY is actively advancing its 1PointFive direct air capture projects, expanding Permian Basin drilling through a partnership with Ecopetrol, and aiming for more than $1 billion in additional free cash flow by 2026. Occidental’s combination of conventional oil operations and low-carbon initiatives keeps it squarely in focus as a key player in the evolving energy sector.

Oil Price Backdrop

The broader macro picture isn’t helping. Brent crude recently fell below $65 per barrel, reflecting growing expectations of a supply surplus through late 2025 and into 2026—driven by slowing global demand and rising U.S. output. Oil prices are well off the year’s $82 peak, though still above the $60 levels seen in May. Meanwhile, OPEC+ has cautiously begun raising production, increasing targets by 137,000 barrels per day in November—mirroring October’s modest rise.

In total, OPEC+ has lifted output goals by over 2.7 million barrels per day this year, roughly 2.5% of global demand—a clear sign the group is reclaiming market share from U.S. shale after years of restraint.

How OXY Performs in Numbers?

Occidental Petroleum (OXY) has seen its revenue shrink over the past three years at an annual rate of -6.8%, with the recent quarterly revenue falling 6% to $6.4 billion. Despite the top-line pressure, the company remains reasonably profitable, generating $5.5 billion in operating income over the last 12 months (20% margin), a cash flow margin of 44.7%, and $2.4 billion in net income (8.8% margin). On the balance sheet, OXY carries $24 billion in debt against a $44 billion market cap, reflecting a debt-to-equity ratio of 53%. Its $2.3 billion in cash is modest relative to $84 billion in total assets, highlighting a leveraged but liquid position.

Occidental’s valuation is mixed. Its P/E of 26x is slightly above the S&P 500 average of 24x, making it modestly expensive on earnings. Yet on cash flow and sales, it’s cheap: P/FCF of 9.3 versus 21.1 for the S&P 500, and a lower price-to-sales ratio. Overall, OXY is undervalued on cash flow and sales but slightly pricey on earnings, warranting cautious consideration.

Downturn Resilience

Occidental has historically bounced back from market shocks, though the ride can be volatile. During the 2022 inflation spike, the stock fell 33% but recovered in just two months. In the 2020 COVID crash, it plunged 81% before fully rebounding by March 2022. Even during the 2008 financial crisis, OXY dropped 58% and only recovered by late 2010. The takeaway: the company recovers, but swings can be steep.

Bottom Line

Occidental is a high-quality energy operator with strong Permian assets and solid cash flow generation, yet the combination of falling oil prices, high leverage, and uneven revenue performance keeps it firmly in the high-risk category.

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