OXY: Bearish Signal Flashing for Occidental Petroleum?

Occidental is an international energy company. Its core business involves oil and gas production, primarily in the United States, the Middle East, and North Africa. Occidental is a leading producer in the Permian and DJ basins, and offshore Gulf of America, and the largest independent oil producer in Oman. Its midstream and marketing segment provides flow assurance for its oil and gas segment. 'OxyChem', its chemical subsidiary, manufactures basic chemicals and vinyls, including chlorine, caustic soda, EDC, VCM, and PVC. Occidental differentiates itself through its expertise in CO2 separation, transportation, use, recycling, and storage in EOR, and by advancing low-carbon initiatives through 'Oxy Low Carbon Ventures' ('OLCV'), including direct air capture ('DAC') technology, lithium development and near-zero emissions power.

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OXY's technical outlook is decidedly bearish. The stock price has experienced a significant downtrend over the past 90 days, falling from approximately $47.79 on September 2nd to $40.095 as of November 4th. The price is trading below its 21-day EMA of 42.29 and its 50-day SMA of 44.70, signaling continued short- to medium-term weakness. The MACD indicates bearish momentum, with the MACD line at -1.08 trending alongside the signal line at -1.08. The RSI of 38.29 suggests the stock is approaching oversold conditions, but there is no immediate indication of a reversal. The ADX at 25.16, coupled with a falling ADXR at 24.46, indicates a strong downtrend. The Stochastic oscillator is at 25.98, suggesting the price is not yet oversold. The recent price action confirms the bearish trend, with consistent lower highs and lower lows. Given these factors, the outlook for OXY over the next 1-3 months is bearish, with potential for further declines.

Occidental's MD&A presents a mixed financial picture. `Net sales` increased to $13.2 billion for the six months ended June 30, 2025, compared to $12.8 billion for the same period in 2024. This growth was 'primarily due to higher oil volumes due to a full six months of production from the CrownRock assets and higher domestic natural gas and NGL prices, partially offset by lower oil prices' in the oil and gas segment. However, net income attributable to common stockholders decreased by 38% to $1.054 billion. The oil and gas segment earnings also decreased from $2.9 billion to $2.6 billion. Regarding liquidity, `Net cash provided by operating activities` was $5.1 billion for the six months ended June 30, 2025, compared to $4.4 billion for the same period in 2024. This increase was 'primarily due to higher sales volumes, including volumes from the CrownRock Acquisition in the oil and gas segment and lower use of working capital in the midstream and marketing segment due to timing of crude oil shipments, offset primarily by lower commodity prices in the oil and gas segment and higher use of working capital due to timing of federal tax payments and other current payables'. Management acknowledges that Occidental's 'financial condition, cash flows and levels of expenditures are highly dependent on oil prices' and other factors, suggesting potential volatility. They are also focused on 'deleveraging until principal debt is below $15 billion'.

Occidental's Q2 2025 earnings call strikes a moderately bullish tone, driven by strong operational performance and progress in debt reduction. Vicki Hollub highlighted 'another quarter of strong performance, delivering $2.6 billion of operating cash flow,' and exceeding the midpoint of production guidance at 1.4 million BOE per day. The company has repaid $7.5 billion of debt since the CrownRock acquisition, 'well ahead of target,' reducing annual interest expense by approximately $410 million. Furthermore, the company has announced nearly $4 billion in divestitures since January 2024. While there was a reduction in offshore second half production guidance, the company is maintaining total company production guidance for the year due to stronger performance in U.S. onshore assets and increased production in Oman. Sunil Mathew mentioned the company expects a potential $700 million to $800 million reduction in cash taxes due to the 'One Big Beautiful Bill,' with roughly 35% expected in 2025 and the remainder in 2026. The Midstream & Marketing segment also performed exceptionally well, leading to raised full-year guidance by $85 million. Despite weaker-than-anticipated pricing for OxyChem, the overall outlook remains strong, supported by operational efficiencies and a commitment to strengthening the balance sheet.

OXY's financial performance presents a mixed picture. Revenue has fluctuated, starting at $5.975B in Q1 2024, peaking at $7.173B in Q3 2024, and settling at $6.414B in Q2 2025. Gross profit ratio has varied significantly from 0.32 in Q1 2024 to 0.83 in Q3 2023 and then dropping to 0 in Q2 2025. The operating cash flow has remained strong, registering $2.96B in the most recent quarter (Q2 2025), indicating the company's ability to generate cash from its operations. Total debt has decreased substantially from $20.836B in Q1 2024 to $832M in Q2 2025, signaling a significant deleveraging of the company's balance sheet. Net income also presents a volatile picture, with a low of -$127M in Q4 2024 but recovering to $984M in Q2 2025. While the decrease in debt and positive operating cash flow are encouraging, the inconsistent profitability and revenue trends warrant cautious optimism.

The company presents a moderately bullish investment profile based on its key metrics and financial ratios. Revenue has shown positive growth, indicating a healthy demand for its products or services. The gross margin has remained relatively stable, suggesting efficient cost management. The Return on Equity (ROE) indicates a solid return for shareholders. The Price-to-Earnings (P/E) ratio suggests the company is appropriately valued by the market. The debt-to-equity ratio has seen a decrease, showcasing the company's improved financial leverage. The current ratio signifies the company's strong ability to meet its short-term obligations. Overall, the company demonstrates a stable and growing business model with a healthy balance sheet, making it a moderately attractive investment for the next 6-12 months.