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N/AMethodology
Occidental's oil and gas earnings are extremely volatile with crude prices, making it essential to use mid-cycle price assumptions rather than current spot conditions. The Anadarko acquisition added scale but also leverage. Normalize earnings to sustainable oil price levels and assess debt-adjusted value rather than using trailing results during price spikes or crashes.
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N/AMethodology
PEG analysis is problematic for Occidental given oil price-driven earnings swings that create unsustainable growth or contraction. During oil rallies, low PEG ratios mislead as they reflect temporarily inflated earnings. Focus on production growth, breakeven costs, and debt reduction progress rather than earnings growth for this leveraged E&P operator.
Methodology
Occidental offers a dividend that management restored and aims to grow as leverage declines and cash flow improves. Dividend sustainability depends entirely on oil prices and debt reduction progress. For leveraged oil producers, deleveraging execution and free cash flow generation matter more than traditional yield metrics.