With oil prices in another correction to start September, things are seemingly going from bad to worse. Air travel is recovering to a decent degree, especially outside of the U.S. With more and more emerging markets reopening their airports by the week, look for jet fuel use to pick up in a big way in coming months. The Anadarko acquisition was a particularly unfortunate decision.
OXY Stock Damped by Debt, Demand. As savvy investors know, a company’s stock may deserve to be cheap, and price alone does not make it a good investment. Financial Information For example, the yield on that preferred stock is 8%. Until the novel coronavirus hit, the newly merged company was producing roughly $6 billion a quarter in revenues, or $24 billion annually. If you’re still neutral or bearish on oil prices, there are safer plays. Replication or redistribution of EDGAR Online, Inc.
Nasdaq OXY stock is flirting again with single digits. News Releases. 2020 InvestorPlace Media, LLC. The short-term relief, however, is dwarfed by the long-term ramifications of selling cheap and not having these assets for future development. It looks like your browser does not have JavaScript enabled. On Aug. 10, Occidental announced a second-quarter loss of $8.4 billion or $9.12 per share.
All rights reserved. However, sentiment has gone too far in that direction, at least for now. It’s 52-week high was $47.58, though the trip has been mostly down hill.
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However, keep in mind that prices are now dropping to $35 per barrel, whereas back in March, prices were in the $20s and even crashed below zero at one point. But, as the saying goes, Occidental lives to fight another day. 1125 N. Charles St, Baltimore, MD 21201.
The good years will camouflage poor decisions and even bad luck. Copyright ©
But the bad news is that’s about the only thing that will do it. Occidental just sold off Rocky Mountains assets for more than $1 billion and is back on pace to hit is asset divestiture targets for 2020. But as supply starts to fade and demand comes back, it tips the balance back in favor of the bulls over the next year or two. Customer service representatives are available. OXY Stock Verdict.
In fact, it’s been a pretty crummy year for an investor who held on during this time. 1125 N. Charles St, Baltimore, MD 21201. That said, with oil prices very depressed and the global economy being held back by the stubborn novel coronavirus, energy companies will keep appearing for bargain consideration.
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However, everything changed. Occidental is facing a dual scenario of negativity by way of a suffocating debt burden and weakening demand for oil. On the date of publication, Larry Sullivan did not have (either directly or indirectly) any positions in any of the securities mentioned in this article.
Every three months, Occidental must pay Berskhire $200 million. The company’s target was to raise $2 billion. The current browser does not support Web pages that contain the IFRAME element.
That’s pretty incredible for two reasons. There’s a lot working against it, including the coronavirus pandemic and its devastating effects on not just the oil industry but the global economy. 2020 InvestorPlace Media, LLC. The Anadarko acquisition was a particularly unfortunate decision. All rights reserved. Ian Bezek has written more than 1,000 articles for InvestorPlace.com and Seeking Alpha. But the pressures that accompany the bad times are brutal. Financial Market Data powered by FinancialContent Services, Inc. All rights reserved. The stock has fallen about 75% percent in 10 months.
That looks increasingly likely. With glimpses of doom on the horizon, Occidental laumnched a massive sale of assets to bolster its shaky balance sheet. Article printed from InvestorPlace Media, https://investorplace.com/2020/10/oxy-stock-wrong-value-play/. 2020 Proxy Statement Supplement. While Occidental’s balance sheet is still quite bad, sentiment has gotten overly negative. To use this Web Part, you must use a browser that supports this element, such as Internet Explorer 7.0 or later. or for any actions taken in reliance thereon. Occidental still has multiples of that coming due over the next two years. OXY stock currently is trading around $10.
Until late last year, OXY stock was viewed as a powerful income generator. Copyright © 2020 InvestorPlace Media, LLC. Article printed from InvestorPlace Media, https://investorplace.com/2020/09/occidental-petroleum-oxy-stock-is-finally-cheap-enough/. Gasoline demand is starting to come back. content is expressly prohibited without the prior written consent of EDGAR Online,
You see, Occidental’s market capitalization recently slipped below $10 billion. 1125 N. Charles St, Baltimore, MD 21201.
Now the combined equity value of the companies is less than one-fifth that figure. But it’s not an existential crisis at this level either. The bright light will burn through the veil and show a company’s true condition and quality of management’s decisions.
Needless to say, any sort of unexpected improvement can really turn the tide when you can buy a company at a $10 billion market capitalization and it does several multiples of that in annual revenues even when oil prices are at a trough. Several of the company’s peers are in a much better condition to ride out this storm. The Covid-19 demand slump is starting to clear up. These problems haven’t magically fixed themselves this summer. This difference is not in favor of holders of common stock. OXY stock currently is trading around $10. This is the case with OXY stock. On Aug. 10, Occidental announced a second-quarter loss of $8.4 billion or $9.12 per share.
With OXY stock back near its lowest point since the year 2001, risk and reward are more properly aligned now. CEO Vicki Hollub has done a poor job running the company. All this sets up the potential for a sizzling rally in coming months. The result is buyers of Occidental’s common stock are helping Occidental make its quarterly payments to Buffett.
That’s understandable. And the recent price drop has put Occidental at oversold levels. All rights reserved.
An oil price range in the $30s and $40s is different. Some them are better positioned for today’s circumstances than others. . As my colleague Thomas Niel recently wrote in InvestorPlace, Occidental sold $10 billion in preferred stock to Warren Buffett’s Berkshire Hathaway (BRK.A, BRK.B) holding company. Can it get any worse than this for Occidental Petroleum (NYSE:OXY)? The company is expected to …
Thus, it appears the company will meet its $2 billion target (if the deals close as expected in the fourth quarter). Yes, oil prices have declined again over the past few weeks, and traders are nervous. The company took on a large amount of debt to make the purchase, which (surprise, surprise) has become quite a burden. That being said, it appears the company has sufficient avenues to raise capital that it will be able to roll over its debt. Throw in the pandemic, and not only did Occidental have to nearly eliminate the dividend, things got so bad that analysts started talking about potential bankruptcy. This is a cost that could prove to be too much. Please turn on JavaScript and try again. Oil has always been a boom-and-bust business.
This would ease the pressure on Occidental’s finances. As Its Prospects Dim, Occidental Stock Is the Wrong Oil-Industry Value Play, Occidental sold $10 billion in preferred stock, 7 Unhealthy Biotech Stocks To Sell Before They Sicken Your Portfolio, Louis Navellier and the InvestorPlace Research Staff, 5 Value Stocks To Buy Now Beating The S&P 500 In 2020, Trump vs. Biden: Stocks to Buy No Matter Who Wins the White House, 7 Monster Growth Stocks With Double-Digit Upside, 7 Dividend Stocks To Buy For Big Returns In Your Bank Account, The Top 10 Tech Stocks to Buy Before the 2020 Election, 4 Top Stock Trades for Monday: TWLO, SNAP, SPAQ, GILD. Hindsight, though, isn’t being kind.
Drilling activity has rolled over as much as 75% since the March crash, and analysts expect U.S. oil production to slide sharply as a result. 2020 Proxy Statement
Owners and executives need to have a certain risk-taking temperament to withstand this commodity’s volatility. It’s not great, and Occidental isn’t going to be meaningfully profitable at current levels. Inc. EDGAR Online, Inc. shall not be liable for any errors or delays in the content,
1125 N. Charles St, Baltimore, MD 21201. Prior to the oil-price collapse, Occidental acquired Anadarko Petroleum. I’m confident that Occidental’s executives were convinced that taking on that debt and buying Anadarko was the right move.
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