Occidental Petroleum’s refusal to die has an almost stubborn quality. The scene of OXY closing Friday at $57.12, up about 37% on the year, with brokerage analysts quietly revising their targets upward as if the previous few years had never happened, would have been difficult for anyone who watched the stock crater during the pandemic, dragged down by debt and an oil market that briefly went negative.
The atmosphere in the oil offices is different now than it was in 2024 when you stroll through Houston’s energy corridor on a weekday afternoon. less protective. The men wearing pressed shirts who are leaving for lunch exude the easy confidence of those whose stock price has been cooperating. It’s a tiny, nearly unreal thing, but markets are made up of little things.
A portion of the story is revealed by the numbers. Despite revenue coming in at $5.11 billion, Occidental exceeded earnings expectations in the fourth quarter with EPS of $0.31 compared to the $0.18 consensus. Strong profitability combined with a weaker top line is the kind of mismatch that typically makes investors uneasy. It didn’t this time. The stock continued to move. Wall Street seems to have chosen to overlook Occidental’s flaws, at least for the time being.
There is a name for some of that forgiveness. Approximately 5% of Berkshire’s equity portfolio is currently held by Warren Buffett, who started buying shares in 2022 and kept doing so until last year. It’s difficult to ignore how frequently Buffett’s name comes up when discussing OXY. Nobody can quite agree on whether his interest is driving the rally or just confirming it.
The geopolitical context is beneficial. Due to the ongoing tension between Washington and Tehran as well as the tensions surrounding the Strait of Hormuz, West Texas Intermediate has been trading close to $90 per barrel. Compared to diversified majors, Occidental benefits more directly from these prices due to its significant upstream exposure in the Permian Basin. The business is now making actual money using the same operating profile that penalized it during the collapse of crude.
The Anadarko deal, however, continues to linger. You’ve essentially purchased a generational test of corporate endurance when you pay $55 billion in 2019 and watch the pandemic arrive months later. Vicki Hollub has spent years uncovering the company, and she pushed that acquisition through despite significant internal skepticism. There is less money on the balance sheet. Production records continue to be established. The thesis is gradually beginning to make sense.
The opinions of analysts are still genuinely divided. While Scotiabank moved to $57 and remained cautious, Stephens raised its target to $74 with an overweight rating. UBS has a neutral position and is in the middle at $67. In other words, the easy money may already have been made, as the consensus target of $61.83 indicates a slight increase from current levels.
The cycle might still be ongoing. It’s also possible that OXY shareholders learn the same lesson energy investors have been taught time and time again: sentiment changes before fundamentals do, and that oil’s current premium fades more quickly than anyone anticipates. As you watch this play out, you get the impression that Occidental has been counted out so many times that no one would be surprised by another return. The question worth pondering is whether the upcoming chapter will reward perseverance or penalize complacency.
