BY MARK SEBASTIAN
September 9, 2024
On April 21st OXY topped out at over 71 dollars a share….it has been a move almost straight down since. The stock now sits at 54.63….below the ‘Buffett Buy Prce’ of 56 dollars a share.
Its not like the earnings have been bad….in August OXY beat by .26 a share on earnings…in May it beat by .18….
It is at year lows after reporting a .40 increase in earnings year over year….When it reported a year ago the stock was 61.47….almost 7 dollars more than where this is trading right now.
The PE now stands at an extremely reasonable 14.29, the Book value is only 19 bucks below where the stock is trading, the Div yield is 1.6% nothing special…but hey…its a div.
On an annual basis the Revenue is about half the value of the company and gross margins are over 60%.
I thought maybe debt was an issue…
Nope it has been slowly falling
AHHH
It’s this:
Oil and OXY are tied at the hip and Oil is in the toilet….
Can oil go lower? Yes…but WTI (crude oil) below 70 has been a pretty big line in the sand and the US has been buying oil for the SPR (strategic petroleum reserve) when WTI has gotten this cheap.
I like it….I say long term…it’s a buy…short term…that’s what the Queen of the Candles is for….
Can I just say $OXY … OUCH!
This stock has just been pounded relentlessly.
It is now violating the $56 support level (the blue line) that has held since June 2022.
I do have support just below here at $53.39.
And below that it is all the way down at $47.60.
The amazing thing is the Relative Strength Index just moved below 30 on Thursday, which is oversold territory.
My last piece of bad news for $OXY is the candlestick formation of the last three days:
Three consecutive bearish red candles tells us the downtrend is intact.
We get a close below $53.39 puts will be in order.
If not, watch for that change in trend candle and buy with both hands.
OXY Vol making a move up, OXY is not
It is hard to talk about OXY without talking about oil prices. Oil prices are in freefall lately on supply gluts post-Russian invasion. Everyone got the religion of pumping oil and that is how prices went back down. The US Oil Trust (Ticker: USO) implied volatility (IV) is moving to 6 month highs as oil prices move to lows. For now, it has the look and volatility of a falling knife.
USO 6 month chart with 90 day realized vol in purple, 30/60 day implied vols in red/yellow
PTLO is one of the few grown restaurant chains trading at just revenue. CMG trades at 7x revenues. Just plan for PTLO to be a steady mover with steady growth and I think a 10% gain in the stock price is an easy reach for 2024.
OXY 6 month chart with 90 day realized vol in purple, 30/60 day implied vols in red/yellow
I would look for 1 x 2 put spreads below the market here, or diagonal put spread to just place a trade. Generally oil trends are long because supply issues, tight or loose, cannot be turned on a dime. I think owning options close to the money and selling away from the money would be best given the slide and generally more expensive premiums.
Occidental Petroleum (OXY) set a goal of reducing $4.5 billion in debt. As of Q3’24, the company has achieved a $3.8 billion reduction in principal debt for the year.
OXY has also been divesting non-core assets, including the sale of its Delaware Basin holdings to Permian Resources, raising $818 million, and the sale of Western Midstream Partners holdings for $700 million.
The threats to the company come from the regulatory side, particularly related to environmental and carbon management policies.
OXY is mitigating those risks through Oxy Low Carbon Ventures (OLCV), which is a key strategy to address climate change and reduce carbon emissions.
OLCV develops and deploys technologies that help manage and reduce carbon emissions, with an emphasis on carbon capture, utilization and storage, which involves capturing CO2 from industrial processes and storing it deep underground to prevent its release into the atmosphere. OLCV injects CO2 underground to boost oil extraction while simultaneously sequestering CO2.
OLCV also uses Direct Air Capture technology to pull CO2 directly from the atmosphere through a partnership with Carbon Engineering, a leader in DAC technology.
The company also focuses on ways to reuse CO2 in products, from fuels to chemicals, to create a circular carbon economy, where carbon emissions are recycled and reused instead of being released.
OLCV aligns with Biden Administration initiatives and is part of OXY’s broader ambition to achieve net-zero emissions and operational efficiency.
Don’t tick off the man in D.C.!
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