Despite recent declines in crude oil prices, Occidental has garnered positive outlooks from several Wall Street institutions, driven by its clear deleveraging path and enhanced capital efficiency strategy. Investment banks including Barclays and Goldman Sachs have recently upgraded their ratings or price targets for the stock, suggesting its value reassessment is just beginning.
On May 26, Barclays issued a research report upgrading Occidental's rating from "Equal Weight" to "Overweight" and significantly raising its price target from $59 to $72. The bank also revised its medium-term oil price forecasts, increasing its WTI crude predictions for 2027 and 2028 to $80 and $75 per barrel, respectively. Barclays analyst Betty Jiang noted that sustained global supply tightness, sluggish growth in U.S. shale oil, and supply disruptions stemming from Middle East geopolitical conflicts will provide long-term support for oil prices.
Prior to Barclays' move, Goldman Sachs analyst Neil Mehta upgraded Occidental's rating from "Sell" directly to "Neutral" on May 21, raising the price target from $57 to $64. The core rationale for this shift is not soaring oil prices, but rather a fundamental pivot in the company's strategic focus—from pursuing production growth to concentrating on cash flow generation.
A landmark event in this strategic transformation was the completion of a major transaction on January 2, 2026: Occidental sold its chemical business, OxyChem, to Berkshire Hathaway for $9.7 billion. Approximately $6.5 billion of the proceeds were immediately used to repay high-interest long-term debt, reducing the company's total principal debt to about $13.3 billion and steadily progressing toward the ultimate goal of $10 billion. Concurrently, the company's capital expenditures for 2026 are projected to be between $5.5 billion and $5.9 billion, a reduction of about 10% from 2025, while maintaining a daily production target of approximately 1.45 million barrels of oil equivalent.
Occidental's first-quarter earnings report provided strong evidence supporting this transformation. The company's adjusted earnings per share reached $1.06, significantly surpassing the market expectation of $0.59, and free cash flow surged by 52% year-over-year. Management anticipates that free cash flow in 2026 will improve by over $1.2 billion compared to the previous year.
Notably, Occidental has ceased adding new oil hedges. The company had previously hedged 100,000 barrels per day of production in February using collar options at costs between $55 and $76 per barrel, but as oil prices exceeded the upper limit, these hedges resulted in paper losses. The company has explicitly stated it will not add new hedges, meaning it will fully capture all benefits from price increases in the current high oil price environment.
Analysts believe that under its new "value over volume" strategy, Occidental is transitioning from a highly leveraged, expansion-focused oil company to a value-oriented target with ample cash flow and promising shareholder returns. As debt reduction goals are progressively met, stock buybacks may become a central focus in the next phase.