Occidental Petroleum

Occidental Petroleum Logo.svgOccidental Petroleum (OXY) is the second largest, North American independent oil and gas producer, in Market Value second to ConocoPhillips. It is also a top performer, third behind Continental Resources and Peyto Exploration in Excess Return to Capital . It enjoys the second largest Market Value Premium over Fair Value and seventh largest premium as a percent of Market Value. It can surely be said that Oxy has done well by its shareholders and vice versa. However, Oxy has had a turbulent history as a company known for high profile, marqee projects and a celebrity Westwood, California address. Now headquartered in Houston it is emerging as a mainstay of the North American upstream.

OXY has the majority of its assets in the Permian basin with conventional, shale and enhanced oil recovery (EOR) Operations. In addition, Oxy has a significant presence in the MENA region, principally in the UAE, Qatar and Oman. Approximately 42 percent of production and 23 percent of assets are in the region. Legacy operations in Iraq and Libya are slated for diminishing exposure. A small ~$2 Billion asset base is in Latin America (Colombia and Bolivia). Oxy is mainly an oil producer, with a long term, deep position in the Permian Basin where it operates both unconventional shale oil development in the Wolfcamp and EOR assets. It operates midstream assets in the Permian as well as proprietary CO2 pipelines for EOR. A remnant of the Hooker Chemical Company subsidiary manufactures a focused line of commodity chemicals, only a few of which are petrochemicals.

Oxy’s people dimension personifies its controversial management style. Run by the late Armand Hammer from 1957 to 1990, the company had a turbulent history and, until recently, an incoherent strategy. The company has had only three CEO’s in nearly 60 years and successions have been less than calm. The strategy is clearly focused on growing the US upstream business in core areas where Oxy has strong capabilities. The business process dimension is less clear, but appears to be functioning reasonably well.

 

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