- Goldman Sachs raised Occidental’s price target from $63 to $69.
- The bank sees potential for $4bn in additional cash flow by 2030.
- Occidental has cut its principal debt to $11.8bn and is targeting further reductions.
Goldman Sachs has turned bullish on Occidental Petroleum, upgrading the oil and gas producer from Neutral to Buy and raising its price target from $63 to $69.
The call, made by Goldman analyst Neil Mehta on Thursday (1), comes as Occidental works to reduce its debt while improving the efficiency of its oil and gas operations. Goldman also pointed to the company’s potential for dividend growth and its differentiated approach to enhanced oil recovery.
The bank said Occidental’s self-help initiatives could generate $4bn in additional cash flow by 2030, giving the company more financial flexibility as it works through its debt burden. Goldman also described the stock’s valuation as attractive at current levels.
The upgrade follows a period of significant balance-sheet improvement. Occidental said in its second-quarter results that it had reduced principal debt by $1.9bn to $11.8bn, putting it closer to its $10bn debt milestone. It also generated $5.1bn in operating cash flow from continuing operations during the quarter.
Richard Jackson, who became Occidental’s chief executive in June, has put capital efficiency and deleveraging at the centre of the company’s strategy.
“Our second quarter results demonstrate the strength of Oxy's resources and the competitive advantages that position us for continued value creation,” Jackson said. He added that the company was focused on “executing from a strong balance sheet” while improving its resources and delivering cost efficiencies.
The numbers behind Goldman’s call
Occidental’s second-quarter results provide some support for the more optimistic outlook.
The company reported adjusted earnings per share of $2.40, compared with $0.26 a year earlier, while reported EPS came in at $2.75. Global production reached 1.433 million barrels of oil equivalent per day, exceeding the upper end of its guidance.
Goldman’s thesis is not simply a bet on higher oil prices. Its analysts highlighted Occidental’s advanced recovery capabilities, which the bank believes can improve the productivity of its existing resource base, alongside lower costs and continued debt reduction.
That distinction matters because Occidental has historically carried substantial debt following major acquisitions. The company has been steadily trying to change that balance-sheet profile through asset sales, cash generation and tighter capital spending.
Goldman’s $69 target represents an increase of about 9.5 per cent from its previous target of $63. Market reports said Occidental shares rose around 4 per cent following the upgrade. The stock closed at $57.84 on October 1, according to Occidental’s investor-relations data.
The wider oil market is also providing a favourable backdrop. Brent crude has remained above $100 a barrel amid continued geopolitical uncertainty, although oil prices remain vulnerable to developments in global supply and demand.
What happens next for Occidental?
The next major test comes with Occidental’s third-quarter results, due after the US market closes on November 9. The company will hold its earnings call on November 10.
Those results should offer a clearer picture of whether the company is continuing to deliver on the operational improvements that underpin Goldman’s more bullish view.
For investors, the bigger question is therefore whether Occidental can turn higher oil prices and improved production into sustained free cash flow while continuing to bring down debt.
Goldman Sachs is betting that it can. The $69 target reflects that view, but it remains an analyst forecast rather than a guaranteed outcome.
