Occidental Petroleum Upgrade to Neutral

Goldman Sachs upgraded Occidental Petroleum (OXY) to Neutral from Sell, reflecting improved leverage following the OxyChem divestiture and a strategic shift toward organic FCF generation. The report highlights increased capital efficiency and a path toward redeeming preferred equity by 2029.

Key Takeaways

• 1.Goldman Sachs upgrades OXY to Neutral from Sell, citing significant progress in de-leveraging following the $9.7 billion sale of OxyChem and higher oil prices.
• 2.The company is shifting its strategic focus from aggressive resource acquisition via M&A to harvesting free cash flow (FCF) and improving organic operational efficiencies.
• 3.Management aims to reduce absolute debt to below $10 billion, likely reaching this target by 1Q27, while de-leveraging toward 0.9x net debt/EBITDA by year-end 2026.

Table of Contents

• 1. OXY has meaningfully improved the company's leverage profile relative to two years ago
• 2. We are seeing signs of improved capital efficiency
• 3. After a period of resource acquisition/investment, we see an opportunity for new management to focus on organic drivers of value
• Estimates
• Valuation & Key Risks
• Key Risks
• Disclosure Appendix

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