Occidental Petroleum (NYSE: OXY) is one of the largest oil and gas (O&G) producers in the US that also operates chemical and renewable energy subsidiaries. The company has often been surrounded by concerns about management inefficiencies linked to its diverse operations. However, a shift in core competencies a decade ago led management to acquire significant exposure to the Permian Basin for a discounted price. OXY offloaded low-margin assets at home and abroad during the acquisition of Permian Basin assets, which is the highest quality O&G patch in the US.
To understand the value of having assets in the Permian Basin, it is important to note how US oil production fell to 5,000 mbopd from a peak of 10,000 mbopd in the early 70s as reliance grew on conventional wells since the tech required for oil drilling in unconventional deposits like Permian’s deep oil reserves wasn’t yet feasible. The widespread use of vertical wells for oil…
