Occidental Petroleum Corporation(OXY.US) received a rare "double upgrade" from Fugro, with the stock price soaring nearly 6% to a year-and-a-half high.

Occidental Petroleum Corporation (OXY.US) saw its stock price rise by 5.9% on Thursday, reaching its highest level since August 2024. Prior to this, Wells Fargo & Company upgraded the stock from "Underweight" directly to "Overweight", raising its target price from $47 to $69. Piper Sandler also upgraded its rating from "Neutral" to "Overweight", with a target price increase from $54 to $66. Wells Fargo & Company analyst Sam Margolin made a rare "double upgrade" on Occidental Petroleum Corporation. He stated that the stock is highly sensitive to oil prices and is leading in its industry, which is "both an opportunity and a risk". However, the stronger production rates in the Permian Basin and the improvement in capital efficiency currently support a more constructive investment outlook. Margolin pointed out that the previous "Sell" equivalent rating was mainly due to the capital return constraints brought by preferred shares - unless the $4 per share capital return clause is triggered, these preferred shares cannot be redeemed until 2029. Although this constraint still exists unless oil prices stay above $100 per barrel, the "step change in capital efficiency reflected in the fourth quarter earnings report of 2025 provide support for future regular dividend increases and buyback opportunities." Occidental Petroleum Corporation has adjusted its Permian Basin spending plan from $3.9 billion to $3.1 billion while maintaining production growth. This is due to multiple factors, including strong base production rates and enhanced oil recovery technology's inhibitory effect on base production decline. Margolin believes that the company's production in 2026 is expected to slightly exceed guidance and will resume an accelerated growth trend in 2027, with capital expenditures rising to $3.5 billion. Piper Sandler analyst Mark Liol views Occidental Petroleum Corporation as one of the best operators in the Delaware Basin. He noted that despite a slight decline in performance in the fiscal year 2025, the company's operational performance in the basin continues to lead its peers. He specifically mentioned that the company's guidance for fiscal year 2026 has significantly improved in terms of capital efficiency compared to the earlier soft guidance, achieving similar production levels with approximately $800 million less in capital expenditure. Liol wrote in the report that despite strong performance year to date, the valuation of Occidental Petroleum Corporation is essentially in line with large peers based on estimated EBITDA and free cash flow/enterprise value yield for fiscal year 2026, and shows one of the strongest oil price upside elasticities among the peers.