Hi! In this video I did an intrinsic value analysis for Occidental Petroleum, which is one of the biggest oil companies in the US. Occidental Petroleum is up 10% over the last year while the stock market has increased 30% over the last year. This company is competing in the energy industry, and they have recently reported earnings results for the third and fourth quarter of FY2023. I used a discounted cash flow valuation model in Microsoft Excel to try and figure out what the intrinsic value of Occidental Petroleum would be based on the financial ratios of their business. I also looked into the income statement, the balance sheet, and the cash flow statement to get a sense of how much debt they currently have as well as if they'll grow their profits in the future and also to identify what a good buying price would be for Occidental Petroleum from a value investing perspective.

Occidental Petroleum Q3 and Q4 Earnings Results
https://occidentalpetroleum.gcs-web.c...

https://occidentalpetroleum.gcs-web.c...

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Business Model

Occidental Petroleum makes money by extracting and selling natural gas and oil from underground or underwater fields in the United States, the Middle East, and in North Africa.

They also make money by manufacturing chemicals used not only in the energy industry, but in a variety of other industries like healthcare, automobile, and housing.

Fees from the transportation, storage, and marketing of oil and natural gas are another source of profit, ensuring that once these products have been extracted, that they reach the market efficiently and effectively.

All of Occidental Petroleum’s sources of revenue and profit are directly influenced by market factors like supply and demand, geopolitical tensions like global wars in Europe and the middle east, and economic factors like inflation and interest rate changes.

Financial Results

Q3
Revenue of $7 billion down 22% from $9 billion year over year
Net income of $1.4 billion down 50% from $2.8 billion year over year

Q4
Revenue of $7 billion down 12% from $8 billion year over year
Net income of $1.2 billion down 40% from $2 billion year over year

Full Year
Revenue of $28 billion down 22% from $36 billion year over year
Net income of $4 billion down 65% from $13 billion year over year