OXY - Embedded Expectations Analysis - 2020 07 08
Occidental Petroleum Corporation (OXY:USA) currently trades at a discount to UAFRS-based (Uniform) assets, with a 0.9x Uniform P/B. At these levels, the market has expectations for profitability to remain muted, and management may be concerned about their debt position, asset divestitures, and cost reduction effortsSpecifically, management may lack confidence in their ability to modify their production processes, mitigate pricing pressures, and divest assets in Algeria and Ghana. In addition, they may be concerned about their debt position, declines in their Enhanced Oil Recovery business, and the impact of travel restrictions on their industry. Furthermore, they may be exaggerating their anticipated cost savings without original assets. Additionally, management may be overstating the value of their products amidst storage restrictions, opportunities for their Low Carbon Ventures projects, and the progress of their automated directional drilling activities
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.
In 2009, just as the dust was settling from the last major equity and credit market crises, we launched a boutique research firm with the intention of breaking Wall Street’s biases and broken incentives:
- GAAP and IFRS have failed to provide rules for reliable financial statement reporting
- Stock analyst recommendations are not grounded in disciplined financial analysis
- Credit agencies have been set up to grossly fail in their responsibilities to investors and the public markets
- Utter lack of willingness of major research firms to employ the the most advanced forensic analysis available
We sought to provide investors and company analysts with a source of information that changed all that.
Many years later, our business model remains because little has changed on Wall Street.
- Corporate credit ratings remain years behind the fundamental underpinnings of company performance
- Stock analysts continue to make recommendations with deeply inherent biases
- Research firms have failed to break down the walls between credit, equity, and macroeconomic research
- The governing accounting bodies have created more leeway for mis-estimates and mis-classifications as financials have become unwieldy and overwhelming
The integrity of Valens Research is founded in our disciplined processes and analytics. No “star” analysts. No corporate advisory relationships. No-nonsense opinions and recommendations.
Unfortunately, this report is not available for the investor type or country you selected.
Browse all ResearchPool reportsReport is subscription only.
Thank you, your report is ready.
Thank you, your report is ready.