We came across a bullish thesis on Occidental Petroleum Corporation (OXY) on Substack by Magnus Ofstad. In this article, we will summarize the bulls’ thesis on OXY. Occidental Petroleum Corporation (OXY)'s share was trading at $43.04 as of May 16th. OXY’s trailing and forward P/E were 17.43 and 18.87 respectively according to Yahoo Finance.
Aerial view of oil and gas drilling rigs in sun-kissed desert.
Occidental Petroleum (OXY) is down nearly 13% year-to-date and remains unloved by investors despite trading at a compelling valuation of under 12x earnings and holding a spot among Berkshire Hathaway’s largest equity positions. OXY is a leading operator in the Permian Basin, which offers some of the lowest-cost, longest-life production assets in the U.S., allowing the company to stay cash flow positive even with oil prices in the low $30s. This operational efficiency is supported by a diversified business model that includes chemical and midstream segments, providing stability beyond upstream oil production. OXY is also positioning itself as a leader in carbon capture, with its flagship Stratos project—a large-scale Direct Air Capture (DAC) facility in Texas—set to begin initial operations in Q3 2025 and reach full-scale commercial functionality by year-end 2025.
However, investor enthusiasm for such green initiatives has cooled recently, and broader concerns about OXY’s large debt burden and inconsistent production performance have weighed on sentiment. While the company has world-class assets and long-term strategic potential, execution missteps have made the stock difficult to own. Nonetheless, with Berkshire Hathaway maintaining a nearly 30% ownership stake and continued belief in OXY’s value, a turnaround in operational delivery could spark a positive rerating. The stock’s current price reflects considerable skepticism, but if OXY can regain investor confidence by meeting production and financial targets more reliably, the upside could be substantial.
Occidental Petroleum Corporation (OXY) is not on our list of the 30 Most Popular Stocks Among Hedge Funds. As per our database, 68 hedge fund portfolios held OXY at the end of the fourth quarter which was 71 in the previous quarter. While we acknowledge the risk and potential of OXY as an investment, our conviction lies in the belief that some AI stocks hold greater promise for delivering higher returns, and doing so within a shorter timeframe. If you are looking for an AI stock that is more promising than OXY but that trades at less than 5 times its earnings, check out our report about the cheapest AI stock.
