Occidental Petroleum's Q2 2025: A Buying Opportunity Amid Institutional and Congressional Confidence?

The energy sector's shifting landscape has never been more fraught with paradoxes: the world demands both more oil and a greener future. Occidental Petroleum (NYSE: OXY) sits at this crossroads, and its upcoming Q2 2025 earnings report—set for August 6—will test whether the company's dual focus on fossil fuel dominance and carbon management can attract sustained investor confidence. Recent signals from institutional investors and even Capitol Hill suggest the market is undervaluing OXY's potential. Here's why this quarter could mark a turning point.

Institutional Buying: A Vote of Confidence in Undervaluation?

The most compelling sign of OXY's undervaluation lies in the actions of major institutional investors. Vanguard Group and Dodge & Cox collectively added over 23 million shares in Q1 2025—a 33% increase in their combined holdings—while Berkshire Hathaway quietly purchased $35.7 million in shares. These moves contrast sharply with the exit of hedge funds like Marshall Wace, which unloaded its entire stake.

The question is: Why are long-term investors doubling down? One answer lies in OXY's low-carbon ventures, which could unlock value as regulatory pressures on emissions grow. Oxy Low Carbon Ventures, the company's subsidiary, is advancing carbon capture and storage (CCS) projects that could position OXY as a leader in a $1.2 trillion global decarbonization market by 2030.

Congressional Trading: A Rare Bullish Signal

Even more intriguing is the activity of congressional members. Over the past six months, 10 trades of OXY stock were reported, with purchases outweighing sales. Notable buyers included Rep. Robert Bresnahan and Rep. Jefferson Shreve, suggesting political allies see value in OXY's strategy. Such activity is rare and often signals an undervalued stock in sectors with regulatory tailwinds—like energy transition policies.

Strategic Positioning: Permian Power and Carbon Ambition

OXY's operational strength in the Permian and DJ basins remains its financial bedrock. These regions account for over 70% of its oil production, and management has consistently outperformed peers in cost efficiency. But the real growth catalyst is its carbon management pivot. By integrating CCS into oil operations, OXY can monetize carbon credits and reduce emissions—a dual win in an era where ESG compliance drives investor sentiment.

The company's recent partnership with Project Alto, a $2.3 billion CCS project in the Permian, underscores this strategy. If scaled, such projects could turn OXY's carbon footprint into an asset rather than a liability, appealing to ESG-focused funds.

Analyst Divide: Overweight vs. Sell—Who's Right?

Analysts are split. Morgan Stanley's Overweight rating and $58 price target reflect optimism about OXY's dual play on oil and carbon tech, while Goldman Sachs's Sell rating cites valuation risks and near-term oil price volatility. The median target of $54 suggests the market is pricing in a cautious outlook.

Investment Thesis: Buy the Dip Ahead of Earnings

Investors should consider three factors as Q2 earnings approach:

1. Production Metrics: Permian output growth and cost efficiencies will validate management's operational prowess.
2. Carbon Revenue: Early signs of revenue from carbon credits or projects like Project Alto could catalyze a re-rating.
3. Institutional Momentum: The buying spree by Vanguard and Berkshire suggests a floor under the stock, even if oil prices dip.

The Bottom Line

Occidental's Q2 results are a referendum on its ability to balance legacy energy strengths with a green future. Institutional and congressional buying signals suggest the market is underestimating the long-term value of its low-carbon initiatives. If earnings reflect progress in both production and carbon monetization, OXY could outperform peers.

For investors, now is the time to position ahead of August 6. The stock trades at just 6.5x EV/EBITDA—a discount to its peers—and offers a 3.2% dividend yield, providing a cushion against volatility. The risk? Oil prices cratering or delays in carbon projects. But with OXY's operational discipline and strategic bets, the reward appears worth it.

Recommendation: Buy OXY ahead of earnings, targeting $55–$60, with a stop below $48. The energy transition isn't a binary choice—Occidental's hybrid model could be the sweet spot.