Summary
- Occidental Petroleum's recent asset sale was at a great price despite arguments to the contrary.
- Additionally, the company can comfortably manage the debt wall that it has due, not even counting its massive asset sales.
- Occidental can comfortably reward its shareholders going forward, with its debt-based enterprise value, and we recommend investing now.
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Occidental Petroleum (NYSE:OXY) is a large, pure-play E&P company, with a market capitalization of more than $12 billion. A recent article came out on Seeking Alpha discussing how the company's land sale fell flat, and the company's valuation versus the debt it has due. However, as we'll see throughout this article, the company still has immense potential and ability to handle the debt walls.
Land Sales
Occidental Petroleum sold 4.5 million mineral acres and 1 million surface acres to Orion Land Finance for $1.33 billion.
Occidental Petroleum Press Release
The company's core DJ Basin assets aren't included in this, and the company remains behind on its divestiture targets, but that doesn't change the facts around the deal. The company has several hundred million dollars in closing costs, meaning it will receive roughly $1 billion in net proceeds and lose ~$55 million in annual FCF.
