Occidental Petroleum Corporation (OXY) is one of Raymond James Analyst Pavel Molchanov’s top ideas in the oil & gas sector for 2015. He says the company is uniquely positioned to provide visibility on share buybacks for this year because it is the only U.S. oil & gas producer with market cap in excess of $20 billion that ended 2014 with more cash on hand than debt.
“The reason is the $6 billion special dividend received by Occidental as part of the spinoff of California Resources (CRC) at the end of November,” Molchanov says. “This was a very one-sided spinoff, with California Resources levering up to the hilt, and Occidental getting the full benefit.”
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Molchanov speculates that if Occidental were to use the entire special dividend for share buybacks, that would be 10% of shares outstanding.
“I cannot think of any other oil and gas company that will be in a position to repurchase 10% of shares outstanding in the next 12 months,” he says.
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