OXY Stock: Occidental Petroleum Explores Sale of Western Midstream Partners

By Patricia Miller

Published:

In this article

  • Loading...
  • Want to see what you should be buying? Check out our top picks.

Occidental (OXY stock) explores the sale of Western Midstream, a US pipeline operator, to alleviate debt and capitalize on industry consolidation.

Illustrative Editorial of Occidental Petroleum website homepage. Occidental Petroleum logo visible on display screen.
An OXY sale of Western Midstream Partners may have ripple effects on other companies in the energy or pipeline sector.

What You Need To Know

Occidental Petroleum (NYSE: OXY) is considering selling Western Midstream Partners, a US natural gas-focused pipeline operator with a market value of around $20 billion. This move would help Occidental reduce its $18.5 billion debt, which was accumulated through acquisitions. Occidental owns 49% of Western Midstream and controls the company's operations through owning its general partner.

JPMorgan Chase is advising Occidental on how to maximize the value of its ownership. Western Midstream is expected to attract interest from major peers such as Enterprise Products Partners, Williams Companies, and Kinder Morgan, as well as private equity firms and infrastructure funds. However, no deal is guaranteed at this stage.

Western Midstream has an extensive network of pipelines and facilities primarily in the Permian and Denver-Julesburg basins. The pipeline sector has seen increased deal activity as companies seek to optimize costs and gain access to oil and gas producing regions.

Sign up for Investing Intel Newsletter

Why This Is Important for Retail Investors

  1. Investment Opportunity: The potential sale of Western Midstream Partners creates an opportunity for retail investors to assess and potentially invest in a prominent US natural gas-focused pipeline operator. This investment could provide a chance for retail investors to diversify their portfolios and participate in the energy sector.

  2. Debt Reduction Impact: The sale of Western Midstream Partners could significantly impact Occidental Petroleum's debt reduction efforts. As retail investors may be interested in OXY stock, understanding how this divestment could improve the company's financial position is crucial.

  3. Industry Trends: Retail investors interested in oil and gas should monitor the pipeline sector's deal activity. The increased interest in consolidations and acquisitions in the industry highlights potential growth opportunities and can lead to better-informed investment decisions.

  4. Market Impact: Any significant developments within the energy sector, such as the potential sale of Western Midstream Partners, can have a broader impact on the market. Retail investors should stay informed about such events to assess potential changes in market dynamics and adjust their investment strategies accordingly.

  5. Potential Ripple Effects: The sale of Western Midstream Partners may have ripple effects on other companies in the energy or pipeline sector. This event could potentially entail shifts in market share, competitive dynamics, and investment opportunities that retail investors should consider when evaluating their investment positions.

How Can You Use This Information?

Here are some of the investing ideas that can be explored using this information:

Value Investing

Value investing searches for undervalued companies that trade for less than their intrinsic values, with the expectation that they will eventually be recognized by the market.

Retail investors can analyze the potential sale of Western Midstream Partners to identify undervalued opportunities within the energy sector and capitalize on potential market discrepancies.

Dividend Investing

Dividend investing targets companies that regularly distribute a portion of their earnings to shareholders as dividends.

The sale of Western Midstream Partners may impact dividend payments, making it important for income-focused investors to assess the potential impact on dividend yield and sustainability.

Event-Driven Strategy

An event-driven strategy capitalizes on stock mispricing that may occur before or after a corporate event, such as a merger or acquisition.

This development could be relevant for investors following an event-driven strategy, as the potential sale of Western Midstream Partners can create opportunities for arbitrage or special situation investments.

Sector Rotation

Sector Rotation is the practice of shifting investment capital from one industry sector to another to take advantage of the economic cycle.

The potential sale of Western Midstream Partners can prompt investors following a sector rotation strategy to reevaluate their holdings within the pipeline sector and consider reallocation based on emerging trends and opportunities.

Diversification

Diversification spreads investments across various assets to reduce risk and volatility in a portfolio.

Retail investors with existing investments in the energy sector can assess the potential sale of Western Midstream Partners to determine if diversification is needed within their portfolios or if adjustments in sector exposure are warranted.

Read What Others Are Saying

Reuters: Occidental explores $20 bln-plus sale of Western Midstream, sources say

Sign up for Investing Intel Newsletter

What you should read next:

Popular ETFs

Some investors prefer to invest in stocks via an exchange-traded fund for ease and reduced risk. Some popular ETFs include the following:

  • Large-Caps: Vanguard Mega Cap ETF (MGC)

  • Mid-Caps: Vanguard Mid-Cap ETF (VO)

  • Small-Caps: Vanguard Small-Cap ETF (VB)

  • Growth: iShares Core S&P U.S. Growth ETF (IUSG)

  • Value: iShares Core S&P US Value ETF (IUSV)

  • Emerging Markets: Vanguard FTSE Emerging Markets ETF (VWO)

  • Developed Markets: Vanguard FTSE Developed Markets ETF (VEA)

  • Commodities: iShares S&P GSCI Commodity Indexed Trust (GSG)

  • Energy: Energy Select Sector SPDR Fund (XLE)

  • Clean Energy: Invesco Winderhill Clean Energy ETF (PBW)

Explore more on these topics:

Share:

IMPORTANT NOTICE AND DISCLAIMER

This article does not provide any financial advice and is not a recommendation to deal in any securities or product. Investments may fall in value and an investor may lose some or all of their investment. Past performance is not an indicator of future performance.

Patricia Miller does not hold any position in the stock(s) and/or financial instrument(s) mentioned in the above article.

Patricia Miller has not been paid to produce this piece by the company or companies mentioned above.

Digitonic Ltd, the owner of ValueTheMarkets.com, does not hold a position or positions in the stock(s) and/or financial instrument(s) mentioned in the above article.

Digitonic Ltd, the owner of ValueTheMarkets.com, has not been paid for the production of this piece by the company or companies mentioned above.

Sign up for Investing Intel Newsletter