Occidental Overvalued Despite Better-Than-Expected 1Q Results and Higher Crude Prices
After incorporating Occidental Petroleum's first-quarter operating and financial results, we have raised our fair value estimate to $78 per share from $71. The increase primarily reflects shorter cycle times for the Permian Resources segment, resulting in about 60 completions per quarter in 2018 (we previously modeled 40-50 completions per quarter with the same rig count projection). We also anticipate higher crude prices now for 2018-19, based on the recent uptick in demand and the rising proba...Occidental Petroleum has three reporting segments: oil and gas, which explores for, develops and produces oil and condensate, natural gas liquids (NGL) and natural gas; chemical, which mainly manufactures and markets basic chemicals (chlorine, caustic soda, chlorinated organics, potassium chemicals, ethylene dichloride, chlorinated isocyanurates, sodium silicates and calcium chloride) and vinyls (vinyl chloride monomer, polyvinyl chloride and ethylene); and marketing and midstream, which purchases, markets, gathers, processes, transports and stores oil, condensate, NGL, natural gas, carbon dioxide and power.
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