ࡱ> \^[%` R6bjbjٕ _6  $ m MMM$ "hs$d  @M /' :0 /2. = 0m ($`j$004$dtMhJ<;MMM  MMMm    $ .d   .     whitman investment company To Inquire. To Achieve. To Learn. Security Update Report Occidental Petroleum Prepared by Joyana Peterson Sent via list serve on April 14, 2008 Recent Company Development Occidental Petroleum Corporation (OXY) is an international oil and gas exploration and production company with operations in the United States, Middle East/North Africa and Latin America regions. Oxy is the fourth largest U.S. oil and gas company, based on equity market capitalization. On April 8, 2008 at the Howeard Weil Energy Conference, Steven I. Chazen discussed the current affairs of OXY. OXY has signed a 30-year agreement for major redevelopment projects in Libya. The plan is expected to gross $5 B over 5years by increasing production from the current rate of 100 mb/d to 300mb/d. 4 wells are also panned for exploration for 2008. OXY has also implemented a cost reduction program with projected combined savings of $200 mm in 2008 and a longer-term annualized run-rate of $300 mm. Improvements are made in their procurement function. The focus of the programs is on the mature areas of the company and not the areas of growth. Industry Information Competitors of OXY include Apache, Chesapeake Energy, XTO Energy, EOG Resources, and Newfield Exploration. OXY is the largest company in independent oil and gas and is outperforming its industry as you can see below.  The industry is predicted by the International Energy Agency to slow down in the coming months. As the global economy slows, the demand for oil will fall, but will keep prices high because of uncertainty over supply. They also comment, "During the first quarter, rising international demand driven by the Eastern Hemisphere and Latin American markets is expected to be offset by some weakness in North America, resulting in the large-cap equipment companies showing flat sequential earnings." Security Information Ticker Symbol: OXY Exchange: NYSE 52-Week Range: 49.75- 80.83 10-Day Average Trading Volume: 4,845,030 Beta: 0.94 Financial Information Earnings per Share: 6.44 Price/Earnings: 12.15 Price/Sales: 3.38 Dividend Rate: 1.00 Dividend Yield: 1.30% Company Analysis Quarterly Earnings Growth: 56.10% Quarterly Revenue Growth: 36.60% Profit Margin: 28.75% Return on Equity: 24.14% Return on Assets: 13.94% Peer Analysis The P/E ratio of OXY is lower than its competitors at 10.9 with XTO Energy at 17.1, EOG resources at19.3. However, the dividend yield for OXY is higher at 1.29% compared to XTO Energy at 0.76% and EOG Resources at 0.38%. Analyst Information Analysts recommend buying or holding the stock, but none of the analysts recommend selling it. Many analysts have upgraded their opinions to outperform or market perform regarding OXY in the past four months. Evaluation We paid $96.01 per share of OXY and it was last traded at 78.17. The International Energy Agency, as I noted earlier, commented that though the demand for oil is falling, prices will remain high. Analysts recommend a strong buy because prices are low, but they do not recommend selling at this low price. This implies that they have hope that prices will rise in the future. Also, -892.00a weaker dollar makes oil cheaper to investors overseas as the price of oil last week rose to $111.76 a barrel. Motion I motion to hold all shares of OXY for the time being. 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