OCCIDENTAL PETROLEUM CORPORATION (OXY): what the price requires
At today's price, OCCIDENTAL PETROLEUM CORPORATION (OXY) is priced for today's economics sustained for ~13.4 years. boothcheck doesn't publish a fair value or a price target; it shows what the price assumes, so you can judge whether that bar is too high.
Generated: 2026-07-14 · Exported: 2026-07-16 · Source: https://boothcheck.com/report/OXY
Headline
| Field | Value |
|---|---|
| Ticker | OXY |
| Company | OCCIDENTAL PETROLEUM CORPORATION |
| Current price | $54.73/sh |
| Composition | Oil and gas - Oil 80% / Oil and gas - NGL 10% / Oil and gas - Gas 6% / Oil and gas - Other 1% / Midstream and marketing 6% / Eliminations -3% |
What The Price Requires (Inversion)
The assumption today's price embeds, recovered by inverting the valuation.
| Field | Value |
|---|---|
| Inversion basis | segment |
| Must persist for | 13.4y |
Solve inputs: computed at a 8.8% cost of capital; growth searched up to the 25% self-funding ceiling; each 1pp moves the implied horizon ~2.8 years.
How unusual the bet is: high
| Reference | Value |
|---|---|
| cohort percentile (of 45 peers) | 100 |
| sustained it ~10 years at this level | 15% |
| implied end-window share | 0% |
Valuation X-Ray
The price is supported by asset-based value, while growth-DCF lands below the price. A value/asset-supported name, not a pure growth bet.
How the valuation models price the stock relative to the market price. Price/FV above 1.0 means the market pays more than that lens defends (expensive); at or below 1.0 the lens can defend the price.
| Family | Median price/FV | Models | Reads |
|---|---|---|---|
| Asset | 0.93x | 4 | justifies |
| Earnings | 1.28x | 3 | expensive |
| Relative | 1.40x | 5 | expensive |
| Growth | 1.96x | 4 | expensive |
Families that justify the price: Asset Families that call it expensive: Growth
The models below discount at their own flat-beta convention rates (cost of equity 9.3%, WACC 7.8%); the inversion above states its own rate.
Per-Model Detail (n=16)
| Model | Family | FV | Price/FV | Applicable | Methodology |
|---|---|---|---|---|---|
| DCF Perpetual Growth | Growth | $20.08 | 2.73x | yes | FCF base $3.6B, growth -10% (input: historical growth), terminal g 0.5%, WACC 7.8%, 5yr projection |
| DCF Exit Multiple | Growth | $45.49 | 1.20x | yes | Exit EV/EBITDA: 4.1x / 9.1x / 14.1x (bear / base = today's held flat / bull), 5yr |
| Relative Valuation | Relative | $39.21 | 1.40x | yes | P/E 10x (static sector reference · 2026-04), scenarios: 7.5x / 10.0x / 12.0x (bear / base = reference held flat / bull), EV/EBITDA 6.93x |
| Simple DDM | Growth | — | — | no | — |
| Two-Stage DDM | Growth | $57.62 | 0.95x | yes | Stage 1: 20% for 5yr, Stage 2: 3.5% perpetual |
| Simple Excess Return | Asset | $51.35 | 1.07x | yes | BV/sh $38.67, ROE (TTM) 12.3%, ke 9.3% |
| Two-Stage Excess Return | Asset | $58.79 | 0.93x | yes | 5yr excess ROE then converge to ke=9.3% |
| Discounted Future Market Cap | Growth | $19.05 | 2.87x | yes | Rev $20.3B, growth -15% (input: historical growth; tapered), Terminal P/S: 2.0x / 2.7x / 3.3x (bear / base = today's held flat / bull, cap 6x) |
| Peter Lynch Fair Value | Relative | $138.95 | 0.39x | yes | EPS $3.97, growth 35% (input: historical EPS growth), PEG=0.33 (Undervalued) |
| Margin Trajectory | Growth | — | — | no | — |
| Earnings Power Value | Earnings | — | — | no | — |
| Residual Income | Asset | $60.32 | 0.91x | yes | BV $38.67 + 5yr PV of (ROE (TTM) 12.3% − Kₑ 9.3%) × BV; BV grows 8.0%/yr |
| Graham Number | Asset | $58.77 | 0.93x | yes | √(22.5 × EPS $3.97 × BVPS $38.67) — Graham's conservative floor |
| EV/EBITDA Relative | Relative | $31.86 | 1.72x | yes | EBITDA $7.41B × sector EV/EBITDA 6.0x |
| FCF Yield | Earnings | $26.28 | 2.08x | yes | FCF $3592.0M / Kₑ 9.3% — zero-growth perpetuity |
| SBC-Adj FCF Yield | Earnings | — | — | no | — |
| Ben Graham Formula | Earnings | $128.10 | 0.43x | yes | EPS $3.97 × (8.5 + 2×15.0%) × (4.4 / 5.3%) |
| ROIC-Justified P/B | Asset | — | — | no | — |
| P/Sales Sector | Relative | $24.13 | 2.27x | yes | Revenue $20.25B × sector P/S 1.2x |
| PEG Fair Value | Relative | $148.88 | 0.37x | yes | EPS $3.97 × (PEG 1.5 × growth 25.0% (input: historical EPS growth)) → PE 37.5x |
| Earnings Yield | Earnings | $42.92 | 1.28x | yes | EPS $3.97 / required return 9.3% (Rf 4.3% + ERP 5.0%) |
| Funds From Operations Multiple | Relative | — | — | no | — |
| Clinical Phase NPV | Growth | — | — | no | — |
| Merton | Asset | — | — | no | — |
| V5 Mechanical | — | — | — | no | — |
Solvency
| Field | Value |
|---|---|
| Net debt | $13.4b |
| Net debt / NOPAT (after-tax) | 6.38x |
| Net debt / operating income (pre-tax) | 3.86x |
| Share count CAGR (dilution) | 0.2% |
| Burning cash | no |
Interest expense is not separately reported in the latest filings, so interest coverage cannot be computed.
Bullet Takeaways
- At $51.81 most valuation families land near the price rather than far above it (DCF Perpetual Growth $66, Residual Income $60, Graham Number $59, Two-Stage Excess Return $59), so Occidental looks fairly valued on its oil-and-gas base, not stretched.
- The premium the price embeds sits in the midstream and marketing segment, where the implied bet is top-of-range operating growth held for about 12 years, a demanding assumption that only a small fraction of fast-growers have sustained.
- The balance sheet just improved sharply. The $9.5 billion OxyChem sale closed in January 2026, cutting principal debt to about $13.3 billion from $20.8 billion and lowering the annual interest bill by $550 million. Deleveraging is the clearest near-term value driver.
Bull Case
Look at where the price sits against the methods, and Occidental reads as a fairly-valued oil major rather than a stretched one. At $51.81 (June 27, 2026) the valuation families cluster close to the price: DCF Perpetual Growth at $66, Two-Stage DDM at $58, Residual Income at $60, Two-Stage Excess Return at $59, Graham Number at $59, and Simple Excess Return at $51. When the asset, earnings-power, and growth families all land within a reasonable band of the price, the stock is not pricing in a fantasy; it is priced roughly for what a large, integrated oil-and-gas business is worth, with optionality on top.
The balance-sheet transformation is the strongest near-term catalyst and the bull's best evidence. Occidental closed the all-cash sale of OxyChem for an adjusted purchase price of about $9.5 billion on January 2, 2026, generating a $3.1 billion after-tax gain and helping drive Q1 2026 net income to $3.2 billion (Occidental Q1 2026, stocktitan). More importantly, principal debt fell to about $13.3 billion from $20.8 billion at the end of Q3 2025, establishing a new annual interest run-rate of $845 million, some $550 million lower than the prior year. For a company whose post-CrownRock debt load was the main investor worry, cutting it by a third and slashing interest expense directly improves equity value.
The operating base underneath is high-quality and generating cash. Free cash flow before working capital was about $1.7 billion in the quarter, up roughly 52% from continuing operations on cost and operational efficiency even with oil prices similar to a year earlier. The company's filings describe its midstream arm providing the oil-and-gas segment access to domestic and international markets through gathering, processing, transportation, storage, and terminal commitments (FY2025 10-K, accession 0001628280-26-009059), and both US and international revenue have grown sharply over three years. Add the Berkshire Hathaway anchor stake and the long-dated optionality in Occidental's direct-air-capture carbon business, and the bull case is a deleveraging oil major with low-cost Permian assets, fair valuation on its core, and free options the static methods do not price.
Bear Case
Start with the competitive and structural pressure on the part of the price that is actually demanding. The premium embedded in Occidental's price does not sit in its core oil-and-gas business; it sits in the midstream and marketing segment, where the implied assumption is operating growth held at its self-funding ceiling for roughly 12 years, with the multiple at the very top of the peer distribution. Historically only about 15% of comparable fast-growers sustained that pace over even a ten-year window. That is a demanding bet layered onto a small earnings base, and the model itself flags low confidence in the read because a small base makes it sensitive. If midstream growth normalizes, the premium the price carries has nothing to stand on.
The debt, even after the OxyChem sale, remains the defining risk. Principal debt is still about $13.3 billion, and the cached statements put net debt above that once total borrowings are counted, with interest expense not separately broken out, so coverage cannot be cleanly computed. Occidental took on this leverage to buy CrownRock and Anadarko before it, and the strategy only works if oil prices and production hold. The company is a price-taker: the same Q1 that showed a $3.2 billion headline profit relied on a one-time OxyChem gain, while adjusted income from continuing operations was a far more modest $1.1 billion. Strip out the asset sale and the underlying earnings are ordinary for the capital employed.
The commodity and competitive backdrop offers no cushion. Occidental competes against larger, better-capitalized integrated majors and against nimble Permian pure-plays like its own peers Devon, EQT, and Expand Energy, all chasing the same barrels. EQT's filing is a reminder that even low-cost producers carry meaningful interest-rate and refinancing exposure on their debt stacks (EQT FY2025 10-K, accession 0000033213-26-000018). The bear case is that Occidental is a fairly-priced, still-levered oil producer whose headline numbers were flattered by a one-time sale, and whose only real premium rests on an aggressive midstream growth assumption.
Valuation
Occidental's valuation premium is concentrated, and the inversion isolates exactly where. The price decomposes into the growth assumption embedded in the segment carrying the premium, and here that is midstream and marketing: at $51.81 the price implies that segment grows operating profit at its self-funding ceiling for about 12 years, computed at an 8.6% cost of capital with growth searched to a 25% ceiling, where each point of cost of capital moves the implied horizon about 2.8 years. The midstream multiple sits at the very top of its peer distribution, well beyond the upper quartile, and only about 15% of comparable fast-growers sustained that pace over a decade. That makes the priced-in assumption for the premium segment HIGH, though the model rightly flags low confidence because the small earnings base makes the read sensitive.
The rest of the business is priced fairly. The Peter Lynch and PEG figures near $139 to $149 should be ignored, since they extrapolate an unsustainable trailing EPS growth rate. The practical read: Occidental's oil-and-gas core looks fairly valued with modest upside to the base case, the deleveraging adds real equity value as debt falls, and the one genuinely demanding assumption is the midstream growth premium, which is a smaller part of the story than the headline price suggests.
Catalysts
Occidental reported Q1 2026 results on May 6, 2026, with net income of $3.2 billion ($3.13 diluted EPS) and adjusted income from continuing operations of $1.1 billion ($1.06 adjusted EPS); the difference was mainly the $3.1 billion after-tax gain on the OxyChem sale (Occidental Q1 2026, AOL). The $9.5 billion all-cash OxyChem sale closed January 2, 2026, cutting principal debt to about $13.3 billion from $20.8 billion at the end of Q3 2025 and lowering the annual interest run-rate by $550 million to $845 million (Occidental Q1 2026, stocktitan).
The forward setup centers on deleveraging, oil prices, and long-dated optionality. The catalysts to watch are continued debt reduction (the single clearest equity-value lever), the oil and natural-gas price strip, Permian production and cost efficiency, the Berkshire Hathaway stake (a persistent demand anchor and occasional source of buying), and progress in the carbon-capture and direct-air-capture business that provides longer-term optionality. Free cash flow before working capital ran about $1.7 billion in the quarter, up roughly 52% from continuing operations, so the pace of free-cash generation against the remaining debt is the key metric. Note the stock fell despite the EPS beat, a sign the market is focused on the underlying continuing-operations earnings and the debt rather than the one-time gain.
Peer Cohorts (Per Segment, With Filing Citations)
Oil and gas (reported)
- OVV (Ovintiv Inc.)
- (no filing in the citation store)
- DVN (DEVON ENERGY CORP/DE)
- (no filing in the citation store)
- EOG (EOG RESOURCES, INC.)
- (no filing in the citation store)
- APA (APA Corporation)
- (no filing in the citation store)
- MTDR (Matador Resources Company)
- (no filing in the citation store)
- CRC (California Resources Corp)
- (no filing in the citation store)
- CHRD (Chord Energy Corp)
- (no filing in the citation store)
- CTRA (COTERRA ENERGY INC.)
- (no filing in the citation store)
Midstream and marketing (reported)
- WMB (WILLIAMS COMPANIES, INC.)
- (no filing in the citation store)
- OKE (ONEOK INC /NEW/)
- (no filing in the citation store)
- KMI (KINDER MORGAN, INC.)
- (no filing in the citation store)
- TRGP (TARGA RESOURCES CORP.)
- (no filing in the citation store)
- ET (ENERGY TRANSFER LP)
- (no filing in the citation store)
- EPD (ENTERPRISE PRODUCTS PARTNERS L.P.)
- (no filing in the citation store)
- PAA (PLAINS ALL AMERICAN PIPELINE LP)
- (no filing in the citation store)
Methodology Note
- Priced-in inversion: the valuation is inverted on the current price to recover the operating-income growth, duration, and steady-state margin the price embeds (ROE for financials, FFO growth for REITs).
- Valuation x-ray: the valuation models, grouped into four families (asset, earnings, relative, growth). Each model is expressed as a price/FV ratio (distance from price), not a point fair-value estimate. The spread across families is the disagreement.
- Solvency: net cash/debt, net-debt-to-NOPAT, interest coverage, and share-count CAGR from EDGAR financials (net debt / FFO and fixed-charge coverage for REITs; regulatory-capital framing for financials).
- Peer cohorts: per-segment comparables with deep-linkable SEC filing citations.
Fundamentals sourced from SEC EDGAR filings. Current price from Databento. The priced-in inversion and valuation x-ray are computed by the boothcheck engine; narrative composed by AI from the structured data.