OXY's Plan for Sustainable Growth Doesn't Rely on Higher Oil Prices

Occidental Petroleum (OXY) has been known to move in bursts, with the stock gaining more than 30% within two months on eight separate occasions since 2010. The company's current stock price is up 42.8% over the past twelve months and sits about 7% below its 52-week high.

However, management's plan for the company does not rely on a higher oil price. Instead, it focuses on reducing costs, slowing down production decline rates, and strengthening the balance sheet.

The plan involves adding more than $4 billion of annual sustainable cash flow by 2030, with roughly 85% of it expected to be delivered even at lower oil prices. This will be achieved through sustained capital reductions, primarily driven by continued capital efficiency and a lower base decline rate.

The decline rate is expected to drop from around 25% to 20% by 2030, thanks in part to the company's CO2 EOR projects in the Permian and Gulf of America waterfloods. This will result in fewer barrels that need to be replaced with new capital.