The coronavirus crisis and Anadarko’s acquisition have been weighing on Occidental Petroleum’s stock (NYSE: OXY) since the beginning of the year. With the stock down by a staggering 76%, is it the right time to take a closer look? The company’s cash position deteriorated through the first and second quarters as the declining benchmark prices dragged down operating margins. Occidental ended the June quarter with $1 billion of cash, but its short-term debt stood much higher at $2.4 billion. While long-term equity returns depend on the company’s strategy to manage its huge debt pile of $36 billion, Trefis believes that the ongoing asset sales are likely to provide an uptick to the stock and boost investor sentiments.

In order to address near-term debt maturities, the company has entered into purchase and sale agreements to divest Wyoming, Colorado, and Utah assets for $1.3 billion and its Colombia assets for $825 million. As the transactions are expected to close during the fourth quarter, the company will achieve its $2 billion asset divestiture target for 2020.

Occidental Petroleum’s revenues increased by 60% from $13.2 billion in 2017 to $21.2 billion in 2019, primarily driven by Anadarko’s acquisition and augmented by increased production & stable benchmark prices.

While the company has seen steady revenue growth over recent years, its P/S multiple has declined. The increased debt load and macroeconomic weakness have been key factors behind the falling stock price as interest expenses zoomed from $0.4 billion in 2018 to $1.06 billion in 2019 – taking the net income margin to negative territory. With a series of asset sales on the cards,



a close up of a sign: A magnifying glass zooms in on the Occidental Petroleum (OXY) website.


© Source: Pavel Kapysh / Shutterstock.com
A magnifying glass zooms in on the Occidental Petroleum (OXY) website.

Occidental Petroleum (NYSE:OXY) stock is down 16% in the past month and even over 75% in the year-to-date. OXY stock is wavering at 70% of its estimated $14.05 common stock tangible book value per share (TBVPS).




a close up of a screen: A magnifying glass zooms in on the Occidental Petroleum (OXY) website.


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A magnifying glass zooms in on the Occidental Petroleum (OXY) website.

Click to Enlarge

It’s likely that OXY stock will drift further down if oil does not rebound and if its TBVPS deteriorates. But in the near to long term, I believe that OXY stock will move higher as economic mobility increases.

In addition, as Covid-19 vaccines start to slow down the spread of the pandemic in 2021, the price of oil should rise. This will slowly push up OXY stock

Essentially, then, now is a good time to accumulate the stock, especially while it is selling below its TBVPS. I wrote about the calculation for TBVPS for OXY stock in my article last month and I wanted to update this analysis.

Estimating TBVPS Going Forward

Analysts expect the company to have another losing quarter in Q3. In Q2 Occidental lost $1.78 per share and its TBVPS fell from $23.93 per share to $14.79.

You can see the trend in the chart on the right. Note that TBVPS has been falling for the past several quarters. This tends to follow the company’s negative earnings per share in the past two quarters.




chart: 10-2-20 - OXY stock - History of TBVPS and EPS


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10-2-20 – OXY stock – History of TBVPS and EPS

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Source: Mark R. Hake, CFA

You can also see that analysts expect the company to lose money for the next four to six quarters. Therefore, the TBVPS should continue to fall. This chart

LAKE CHARLES, La., Oct. 2, 2020 /PRNewswire/ — Breaux Petroleum Products and CITGO have announced a partnership that has supplied frontline workers with a truckload of Mystik Bar & Chain Lubricant and Mystik JT-4 Lawn & Garden 2 Cycle Engine Oil as part of their continued effort to support relief and recovery efforts from the impact of Hurricane Laura.

CITGO Logo (PRNewsfoto/CITGO Corporation)
CITGO Logo (PRNewsfoto/CITGO Corporation)

Breaux Petroleum is partnering with CITGO to aid massive, ongoing clean-up efforts in the wake of the category 4 storm, which came ashore August 27th. Breaux Petroleum will distribute the lubricant and oil donations to local fire departments in Lake Charles, Westlake and Sulphur, and other non-profit relief organizations including the Cajun Navy, a volunteer operation of private boat owners who participate in rescue and recovery efforts in the area. Surplus lubricants and oil are reserved for equipment like chainsaws, trimmers, and blowers that local utility and tree service companies use to clean up debris and speed up the recovery process.

“Our goal is to provide emergency responders with the products they need to work toward relief and recovery from Hurricane Laura,” said Blake Breaux, executive vice president of Breaux Petroleum Products. “We are grateful for this partnership with CITGO that will enable us to distribute supplies at no charge and to help our community get back on its feet more quickly.”

About Breaux Petroleum Products

Founded in 1922 in Lockport, Louisiana, Breaux Petroleum Products is an established distributor of quality fuels and lubricants for the energy, automotive, marine, industrial and agricultural sectors. In addition to quality products, Breaux Petroleum offers a wide variety of services including delivery, oil analysis, lubrication optimization and management, filtration, varnish mitigation, hurricane preparedness and more. Breaux Petroleum has supplied essential workers with fuel after past

HOUSTON (Reuters) – Marathon Petroleum Corp, the top U.S. oil refiner, is cutting 12% of its workforce amid continued declines in fuel consumption due to the COVID-19 pandemic, it said on Wednesday.

FILE PHOTO: A Marathon Petroleum banner covers an Andeavor sign outside the El Paso refinery Texas, U.S., October 1, 2018. REUTERS/Julio-Cesar Chavez

Refiners and oil producers have been dismissing staff, slashing spending and reducing production to cope with weak prices and a global glut of fuel. U.S. gasoline futures are down 26% from a year ago and oil is trading down a third from where it began the year.

Marathon will incur an up to $175 million charge to third quarter earnings for the 2,050 job cuts, it reported to the U.S. Securities and Exchange Commission. About 20% of the charge will be recouped from its publicly traded pipeline unit, the company said.

The Findlay, Ohio, firm disclosed the workforce cuts after Reuters on Tuesday reported employees across the company had been notified of impending layoffs.

The cuts includes staff at its Martinez, California, and Gallup, New Mexico refineries, which in July were designated to close. The shutdowns and job cuts will lower overall costs beginning next year, Marathon said in a statement.

Employees of its retail gasoline business are not included in the 12% reduction. Marathon in August agreed to sell its Speedway unit to Japan’s Seven & i Holdings Co Ltd, a deal expected to close next year.

Red ink and job cuts are expected across the oil industry as results start rolling out next month. U.S. refiners typically gear up for winter heating oil demand after summer driving season ends. This year, heating oil and gasoline consumption are both depressed.

“The pandemic has resulted in near-record lows on diesel margins, the go-to product for refineries

By Erwin Seba

HOUSTON, Sept 30 (Reuters)Marathon Petroleum Corp’s MPC.N oil-refining unit is cutting at least 6% of its staff, according to people familiar with the matter, demonstrating the depth of declining fuel demand during the pandemic.

Refiners and oil producers have been cutting staff, slashing spending and reducing production to cope with weak prices and a global glut of fuel. U.S. gasoline futures are down 26% from a year ago and oil futures are trading down a third from where they began the year.

A total of 1,255 salaried and hourly employees at nine of Marathon’s 16 refineries were notified of job losses, the people said. It could not immediately be learned whether jobs at other Marathon refineries or pipeline operations also were affected.

The largest U.S. refiner by volume, Marathon on Tuesday said it was evaluating roles throughout the company but gave no details. A spokesman on Wednesday declined further comment.

“The pandemic has resulted in near-record lows on diesel margins, the go-to product for refineries as we enter into the winter heating season,” said Andrew Lipow, president of consultancy Lipow Oil Associates.

“The glut in refining capacity has forced these downstream companies into layoffs,” he said.

Marathon is cutting back operations not tied to its retail gasoline business, the people familiar with the matter said. The company’s Speedway retail unit, is being sold to 7-Eleven Inc., an arm of Japan’s Seven & i Holdings Co Ltd 3382.T.

There have been 405 salaried employees at seven Marathon refineries dismissed so far this week and another 1,250 hourly and salaried employees will lose their jobs in Gallup, New Mexico and Martinez, California. The latter refineries, which Marathon announced it would shut down in August,are set to close Thursday.

Marathon is cutting 100 jobs