Energy Stocks: Oxy vs ET - A Tale of Two Businesses

The recent geopolitical conflict in the Middle East has highlighted the world's reliance on oil and natural gas, making energy exposure essential for a diversified portfolio. Both Occidental Petroleum (NYSE: OXY) and Energy Transfer (NYSE: ET) offer energy exposure, but their businesses differ significantly.

Occidental Petroleum is an upstream energy company that produces oil and natural gas, with operations in the Middle East and Africa, as well as most of its production and sales based in the US. This means it stands to benefit from high prices resulting from the conflict, although its financial results are also volatile due to commodity price fluctuations.

Energy Transfer, on the other hand, is a midstream master limited partnership (MLP) that owns energy infrastructure assets across North America. It charges fees to energy companies for using its assets to move oil and natural gas, making volume rather than commodity prices key to its success.

While demand tends to be strong through the entire energy cycle, Energy Transfer is a slow-growing business with a lofty 6.5% yield that may not interest aggressive investors but could be suitable for more conservative types focused on maximizing income.