Prediction: Occidental Petroleum Stock Is a Buy Before May 6

Occidental Petroleum is expected to report Q1 adjusted EPS of $0.70, and the article argues the company could beat that estimate as higher oil and gas prices from the Iran conflict boost results. The completed $9.7 billion sale of OxyChem to Berkshire Hathaway adds cash for debt reduction and supports the company’s free-cash-flow outlook, including more than $1.2 billion of projected efficiency gains in 2026. The piece is bullish on OXY ahead of its May 6 earnings call, though it notes the stock may already reflect strong expectations.

Analysis

OXY’s setup is less about a single earnings beat and more about a balance-sheet inflection that can change how the market underwrites the equity. The divestiture proceeds effectively convert a cyclical commodity bet into a capital-allocation story: if management prioritizes debt paydown, the equity’s multiple can expand even if oil prices merely hold rather than rise further. That makes the stock unusually sensitive to capital return signals and leverage targets on the call, not just EPS versus consensus.

The second-order winner is Berkshire, which now holds a large embedded option on OXY’s deleveraging and buyback capacity. A cleaner balance sheet can force short-covering in a stock where positioning has likely become crowded into the “higher-for-longer oil” narrative. By contrast, competitors with weaker downstream hedges or less cash flexibility could underperform if OXY’s call validates that the industry can monetize high prices while shrinking net debt.

The main risk is that the market has moved from evaluating fundamentals to paying for geopolitical optionality, which is fragile. If the Middle East premium fades before the print, the stock can de-rate even on decent results because the “surprise” becomes a non-event. Conversely, a fresh escalation would likely lift the entire energy complex, but that would dilute OXY’s relative alpha and turn this into a beta trade rather than a company-specific catalyst.

The contrarian angle is that consensus may be underestimating how much of the upside has already been pulled forward by the rally in crude and the stock’s year-to-date rerating. In that case, the right trade is not a naked long into the print, but a defined-risk structure that monetizes volatility if management confirms debt-reduction discipline and guides to stronger free cash flow conversion. Over months, the thesis depends on whether OXY proves it can turn one-time asset sales into sustained per-share value creation rather than merely offset commodity volatility.

Key Decisions for Investors

• Initiate a small pre-earnings long OXY position only if size is capped for a 1-2 day catalyst trade; target a 3-5% upside move on a clean beat with deleveraging guidance, but cut quickly if the call lacks balance-sheet specificity.
• Prefer OXY May/June call spreads over outright equity into the print to capture upside from an earnings surprise while limiting downside if the market has already priced in strong oil and conflict premium.
• If already long energy beta, pair long OXY / short a higher-leverage E&P peer for the next 2-4 weeks to express the cleaner balance-sheet narrative and reduce commodity-direction risk.
• After the call, add on any post-earnings weakness only if management confirms accelerated debt reduction and buyback timing; that creates a 3-6 month re-rating opportunity, not just a one-day trade.
• If crude retraces sharply before May 6, avoid chasing the stock and instead wait for a volatility reset; the better risk/reward becomes post-event when expectations are de-risked.