Occidental Petroleum Corporation (OXY): Our Calculation of Intrinsic Value

As part of our ongoing series, each week we typically conduct a DCF on one of the companies in our screens. This week, we’re analyzing a U.S.-based energy giant that’s been in the spotlight for its strategic investments and Buffett-backed appeal — Occidental Petroleum Corporation (OXY).

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Profile

Occidental Petroleum Corporation (OXY) is an integrated oil and gas company with operations spanning upstream exploration and production, midstream logistics, and chemical manufacturing. With a strong presence in the Permian Basin, OXY is known for its focus on carbon management and sustainability initiatives. Despite cyclical commodity prices, Occidental’s disciplined capital strategy and deleveraging efforts have attracted significant attention from long-term value investors.

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DCF Analysis

Inputs

• Discount Rate: 10%
• Terminal Growth Rate: 3%
• WACC: 10%

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Forecasted Free Cash Flows (FCFs) in billions

Year	FCF (billions)	PV (billions)
2025	5.0	4.55
2026	5.5	4.55
2027	6.0	4.51
2028	6.5	4.39
2029	7.0	4.34

Total Present Value of FCFs = 22.34 billion

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Terminal Value Calculation

Using the perpetuity growth model:

Terminal Value = (7.0 × 1.03) / (0.10 – 0.03)
= 7.21 / 0.07
= 103.00 billion

Present Value of Terminal Value = 103.00 / (1.10)^5 = 63.90 billion

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Enterprise Value Calculation

Enterprise Value = 22.34 + 63.90 = 86.24 billion

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Net Debt Calculation

Net Debt = 27.10 – 2.13 = 24.97 billion

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Equity Value Calculation

Equity Value = 86.24 – 24.97 = 61.27 billion

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Per-Share DCF Value

Shares Outstanding = 984.13 million
Per-Share DCF Value = 61.27 / 0.98413 = $62.27

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Conclusion

• DCF Value: $62.27
• Current Price: $43.93
• Margin of Safety: +41.8%

Based on this DCF valuation, Occidental Petroleum appears undervalued. The calculated intrinsic value of $62.27 per share offers a margin of safety of nearly 42% compared to the current market price of $43.93.