Out Fox The $treet

  Occidental Petroleum reported weak Q2'23 numbers with a big EPS miss. OXY stock has been propped up by Warren Buffett aggressively buying shares over the last year at elevated prices. Occidental Petroleum trades at over 20x normalized EPS targets and should be avoided. After the close,  Occidental Petroleum Corporation  ( NYSE: OXY ) reported disappointing  Q2 2023 results . As long predicted, analysts weren't accurately predicting the return to lower earnings based on historical energy prices. My  investment thesis  remains  Bearish on OXY stock, still trading over $60 due to the Warren Buffett put. Read the full article on Seeking Alpha.  Disclosure: No position mentioned. Please review the disclaimer page for more details . 

 Update - May 8, 2023 Berkshire not buying control of Oxy  confirms why the stock is capped here.  -Berkshire Hathaway (NYSE:BRK.B) (NYSE:BRK.A) won't buy control of Occidental Petroleum (NYSE:OXY), Chairman and CEO Warren Buffett said during Berkshire's annual meeting in Omaha on Saturday. -"We wouldn't know what to do with it," he said, adding that he's confident in OXY's management. -"We may or may not own more" of the stock in the future, he said. -In March, Berkshire Hathaway (BRK.B) added almost 3.7M more shares to its holdings, bringing its stake in the petroleum producer to ~23.6%. Original article posted on March 19 OXY has fallen below $60 again leading to Berkshire Hathaway purchasing more shares. Energy prices have fallen to levels consistent with Q3'21 levels when the company earned far close to a $3 to $4 EPS stream. The stock isn't priced for lower earnings leaving OXY trading at ~20x '23 EPS targets. After multiple war...

Exxon Mobil continues to boost net debt levels in order to pay massive dividends. The energy giant continues to cut investing in the future in order to pay an 8.3% yield while watching the stock collapse. The stock isn't investable until the company cuts the dividend at least 50% similar to BP. After another quarter of massive amounts of cash exiting the balance sheet in favor of debt,  Exxon Mobil  ( XOM ) investors should want the energy giant to consider cutting the dividend. The biggest issue is that the company can't afford to correctly invest in the future with the massive dividend overhang. My  negative investment thesis  continues to project the stock having less value due to $15 billion in annual payouts causing irrational asset sales and volatile capital spending decisions that hurt investors. Read the full article on Seeking Alpha.  Disclosure: No position mentioned. Please read the disclaimer page for more details. 

More evidence continues to show that the strikes on Saudi oil facilities actually came from Iranian missles, not Yemen drones. Not even sure, if it matters, because the whole world knows that Iran was involved.  Dion Nissenbaum ✔ @DionNissenbaum US looking to declassify satellite imagery to bolster contentions that Iran was origin of weekend attack on Saudi oil industry as mounting evidence points to cruise missiles fired from Iran or Iraq, not Houthi drones launched from Yemen: https://www. wsj.com/articles/iran- rejects-u-s-accusations-over-saudi-oil-facility-attacks-11568544181?mod=hp_lead_pos1  … w/ @ summer_said Iran Rejects U.S. Accusations Over Saudi Oil-Facility Attacks Iran denied American accusations that it was behind Saturday’s strikes on Saudi oil facilities, as the kingdom rushed to contain the fallout from attacks that could disrupt global petroleum supplies. wsj.com 437 8:35 AM - Sep 15, ...

ConocoPhillips reported a large Q1 loss, but the market was impressed with the earnings beat.  The independent E&P is still struggling towards reaching cash flow neutral as the debt load soars.  The company lacks a credible plan for lower oil prices with a focus on flat production and keeping a dividend.  My  last article  remained neutral on  ConocoPhillips (NYSE: COP )  from a prior bearish stance throughout 2015, as the independent oil exploration firm has cut cash outlays to the point that a future cash crunch wasn't likely. Since the original neutral call in early February, oil prices and hence the stock have rallied, providing big returns for those willing to take the risk. Read the full article at Seeking Alpha.  Disclosure: No position mentioned. Please review the disclaimer page for more details. 

Chevron affirmed production goals and updated capital spending targets for 2017 and 2018. The company missed an opportunity to set production targets reflective of the current market reality. The plan to cover dividends in 2017 from cash flows remains in doubt. With  Analyst Day  today,  Chevron (NYSE: CVX )  had another opportunity to take a step forward by making production cuts or at least making contingent plans for reducing production. The energy markets are over supplied with product and Goldman Sachs is  warning  that the recent rally has no merits. Chevron though isn't heeding this warning. Read the full article at Seeking Alpha.  Disclosure: No position mentioned. Please review the disclaimer page for more details. 

Occidental continues to hold up well due to a strong balance sheet. The company still needs to work on improving cash flows to ensure the dividend can survive the current oil price slump. The stock has more downside risk with cash flows in the current negative position. With the cutting of the dividend by ConocoPhillips (NYSE: COP ) , all of the major oil companies are under extra scrutiny now. Dividends that were previously unquestioned will now need cash flows to justify paying them going forward. Read the full article at Seeking Alpha.  Disclosure: No position mentioned. Please review the disclaimer page for more details. 

Though oil continues plunging, the oil giants continue producing more. For Q4, Occidental Petroleum (OXY) had roughly flat production. The worst part is that OXY plans to grow production by 2% to 4% in 2016. The stock has held up somewhat strong, but the inability to turn off the spigot remains troubling. Disclosure: No positions mentioned. Please review the disclaimer page for more details. 

Halton Resources cut capital spending levels again, marking dramatic reductions from the original 2015 levels. The oil producer remains in a distressed position, requiring a reverse stock split. The recommendation is to avoid the stock, but investors should watch oil production from the company for key indications on price stability. The initial headline that Halcon Resources (NYSE: HK ) was cutting 2016 capital spending in half yet maintaining flat production levels was very troubling. If the distressed oil producer can maintain production levels while undergoing a reverse split, the oil market is in big trouble next year. Read the full article on Seeking Alpha. Disclosure: No position mentioned. Please review the disclaimer page for more details.

ConocoPhillips provided investors with the 2016 capital budget and operating plan. The company remains solidly focused on paying the dividend with no intent to curtail production. The recommendation remains to avoid the stock until the priority is to focus on the business and not sending cash to shareholders that isn't earned. With the new competitive environment in the commodity energy business, a company needs ultimate flexibility to build for the future. One of the biggest problems with capital intensive businesses is that volatile commodity prices make dividend payments to shareholders difficult during the lean years. A company must either borrow debt, sell assets at the bottom of the cycle, or cut capital spending to the bone to cover the cash payments. Neither is a good option and the latter two hurt the business over the long run. Read the full article on Seeking Alpha. Disclosure: No position mentioned. Please review...

Interesting research from Global Hunter Securities suggesting that a lot of shale producers are willing to increase capital spending when oil sits around the current WTI prices of $55. If so, this is bullish for airlines, consumer stocks, and even oil services firms. The move is bearish for E&P firms needing oil prices above $55. Disclosure: Long airlines and oil services firms. Please review the disclaimer page for more details.

Atwood Oceanics remains well positioned for the offshore drilling market. Barclays placed an extremely negative call on the deepwater drilling segment even after huge declines by the associated stocks. The company has a modern fleet of rigs that already produce the majority of EBITDA. The negative call on the offshore drillers by Barclays is strange considering the segment is already beaten down. The analyst call was very bearish on some of the drillers that lack a fleet of modern rigs, but the call was rather neutral on Atwood Oceanics (NYSE: ATW ) despite the positive rig position. Read the full article at Seeking Alpha. Disclosure: Long ATW. Please review the disclaimer page for more details. 

Halcon Resources recently refinanced and exchanged debt to reduce leverage and interest expenses. The company no longer focuses on the TMS after making a big financing deal only a year ago. The $1 stock still faces an uphill battle to consider an investment at this point. Probably no other stock in the energy exploration and production sector of its size garnered so much attention as Halcon Resources (NYSE: HK ) . Ironically though, the company has struggled mightily despite well-respected CEO Floyd Wilson. Halcon Resources has long been a lightning rod in the investor community due to the high debt position and late entry into shale drilling. Read the full article at Seeking Alpha. Disclosure: No positions mentioned. Please review the disclaimer page for more details. 

Summary Transocean dividend cut proves that Seadrill appropriately paused the dividend three months ago. The aggressive dividend cut by Seadrill provides more opportunity for management to allocate capital for long-term benefits. The disconnect between earnings cuts and stock losses in the sector provide a great buying opportunity for Seadrill. The weekend news that the CEO of Transocean (NYSE: RIG ) was stepping down and the company is asking shareholders for a major dividend cut is another sign that Seadrill (NYSE: SDRL ) is leading the sector. The offshore drillers remain in a grueling market downturn with plenty potential upside for the driller that pulls out of the downturn with the best positioned rigs and management teams. Read the full article at Seeking Alpha. Disclosure: Long SDRL. Please review the disclaimer page for more details. 

Over the last couple of years, Pioneer Natural Resources  ( NYSE: PXD     ) has quickly developed into an oil major with a massive reserve base in the Permian Basin. Unfortunately, the company has garnered a stock valuation that equally matches the potential for production growth. At $28 billion, the stock now trades for seven times expected 2014 revenue. After the divestiture of Alaska and Barnett shale assets, Pioneer Natural Resources is now focused on developing the Permian Basin and Eagle Ford Shale acreage with a net recoverable reserve potential of more than 10 billion barrels of oil equivalent. Read the full article here . Disclosure: No positions mentioned. Please review the disclaimer page for more details. 

While Seadrill ( NYSE: SDRL     ) confirmed that exploration and production firms had recently cut back on capital spending budgets for 2014 due to escalating costs, the company actually sees a very positive scenario on the future outlook. Other deepwater drillers have speculated that the pause to drilling growth is needed for crews and suppliers to catch up with demand in order to refresh the market. Seadrill actually predicts the pause is greater undersupply of rigs by 2016. Seadrill is a leading deepwater driller with a focus on aggressively building out new rigs for what it forecasts as a major undersupply in rigs by 2020. Ironically, fellow deepwater driller Transocean ( NYSE: RIG     ) expects a weak market yet recently ordered two ultra-deepwater drillships. Read the full article here. Disclosure: No positions mentioned. Please review the disclaimer page for more details. 

About two years after announcing the surprising purchase of Gulf of Mexico producer Dynamic Offshore Resources, LLC, SandRidge ( SD ) is announcing the sell of those related assets at a fraction of the original cost. The good news is that though the deal was value destructing, the company did pay a large portion of the original deal for stock at higher prices. The deal highlights the importance of focusing on core competency and questions why the new management team is willing to dump the assets at such low prices. Reading the recent presentations from the company it is apparent that the new management team wasn't exploring the development of the Gulf of Mexico assets. Oddly, the team appeared willing to dump these assets without even attempting to spruce them up. Read the full article at Seeking Alpha. Disclosure: No positions mentioned. Please review the disclaimer page for more details. 

It might sound counterintuitive to buy a company after it encounters multiple operational issues, but in some situations the quality of assets and management team warrant such a move. In the case of Laredo Petroleum Holdings ( NYSE: LPI     ) , the company has fantastic acreage in the suddenly hot Permian Basin. Note that Pioneer Natural Resources ( NYSE: PXD     ) has suggested the Permian Basin contains more than 50 billion barrels of oil equivalent, making it the largest domestic oil field. Laredo also has an executive team that has developed and successfully sold multiple exploration companies in the past.   Read the full article here . Disclosure: No position mentioned. Please review the disclaimer page for more details. 

When reviewing the numbers of Delta Airlines ( NYSE: DAL     ) , you might be shocked that it's, well, an airline. The domestic airline with the largest market cap is starting to act like a real corporate citizen: paying down debt, paying a dividend, and actually buying back company stock. And amazingly, it's achieved this success despite stubbornly high oil prices. Just last year, Delta bought a refinery in an attempt to dramatically reduce the costs of jet fuel. What originally looked like a desperate, ill-conceived move has become almost an afterthought, with Delta and other airlines reporting strong profits despite the high price of fuel. Even bankrupt  AMR (NASDAQOTH: AAMRQ) and its prospective partner  US Airways ( NYSE: LCC     ) are generating huge gains, despite fuel costs and a merger blocked by the Department of Justice. Read the full article here . Disclosure: Long LCC. Please review the disclaimer page for more details....

With the recent run-up in Carrizo Oil & Gas ( NASDAQ: CRZO     ), you are probably wondering if the stock has any room for future gains. Balancing long-term potential and the risk of losing 100% in gains can be a difficult task. The company is a small exploration firm focused on the production of oil in the Eagle Ford Shale, Niobrara Shale, and natural gas in the Marcellus Shale. In addition, it recently completed the first well in the Utica Shale. Read the full article here . Disclosure: Long CRZO. Please review the disclaimer page for more details.