Can Occidental Petroleum (OXY) Stock Beat The Market?

Occidental’s stock performance has largely mirrored crude moves — a five‑year total return of roughly 121% versus the S&P 500’s ~87%, but one‑ and three‑year returns have lagged amid weaker WTI (down ~17.5% YTD and ~22% over three years, up ~25% over five). Management has materially strengthened the balance sheet since the Anadarko buy by selling noncore assets (including a $9.7bn OxyChem sale to Berkshire) and targeting sub‑$15bn debt after the CrownRock acquisition, which added more than 20 years of low‑cost upstream resource. With debt reduced and capital redirected to upstream development and lower‑carbon projects (direct air capture and sequestration hubs), Occidental has clear catalysts to drive future shareholder returns, though prospects remain contingent on oil prices.

Analysis

Occidental Petroleum's recent performance is closely tied to crude oil moves: five-year total return with reinvested dividends was 121.2% versus the S&P 500's 86.9%, while one-year and three-year total returns were negative (-15.6% and -26.9%) against S&P gains of 12.7% and 70.7%, respectively. These shorter-term setbacks correlate with WTI declines of ~17.5% year-to-date and >22% over three years, whereas a ~25% rise in WTI over five years supported longer-term outperformance.

Management has materially strengthened the balance sheet since the 2019 Anadarko acquisition by selling non-core assets, including the $9.7 billion OxyChem sale to Berkshire Hathaway, and is targeting debt principal below $15 billion after the CrownRock purchase in late 2023; CrownRock expanded upstream low-cost resources to more than 20 years. Berkshire's purchases beginning in early 2022 provide an endorsement that has supported the stock.

Occidental is redeploying capital into upstream development and lower-carbon projects such as a first direct air capture unit and sequestration hubs, which are potential growth catalysts but carry execution and capital-intensity risk. Near-term returns therefore remain highly contingent on oil-price direction and successful completion of asset sales, debt reduction, and CCUS project milestones, producing a moderately positive market sentiment but measurable tail risks.

Key Decisions for Investors

• Consider selectively accumulating OXY on oil-driven price weakness given the improved balance sheet and expanded low-cost upstream inventory, provided your investment horizon captures commodity recovery
• Monitor WTI price trends and company progress toward sub-$15 billion debt principal and closing of the $9.7 billion OxyChem sale as primary near-term catalysts before increasing exposure
• Size positions conservatively or use hedges (e.g., put options or correlated short instruments) because one- and three-year underperformance shows material oil-price and execution sensitivity
• Treat progress on direct air capture and sequestration hubs as optional long-term upside and wait for clear technical and commercial milestones before assigning valuation premiums
• Factor Berkshire Hathaway's stake as a governance and liquidity positive but do not rely on it as a substitute for fundamental improvement in oil prices and debt metrics