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HOUSTON - Occidental (OXY), a $42.7 billion market cap energy company with a "Fair" financial health score according to InvestingPro, and its subsidiary 1PointFive have entered into a strategic framework agreement with XRG, an investment arm of the Abu Dhabi National Oil Company (ADNOC), to assess the potential for a joint venture that would develop a Direct Air Capture (DAC) facility in South Texas. The proposed facility aims to capture 500,000 tonnes of carbon dioxide annually.
During a state visit by U.S. President Donald J. Trump to the United Arab Emirates, Occidental President and CEO Vicki Hollub and ADNOC Group CEO Dr. Sultan Ahmed Al Jaber signed the agreement. This initiative is a continuation of discussions between Occidental and ADNOC that began with a memorandum of understanding in 2023, focusing on carbon capture, utilization, and storage (CCUS) projects in the United States and UAE. The company, which currently offers a 2.2% dividend yield and has maintained dividend payments for 52 consecutive years, continues to demonstrate strong commitment to both shareholder returns and environmental initiatives.
XRG is considering investing up to $500 million in the joint venture. The South Texas DAC Hub, planned for King Ranch in Kleberg County, is strategically located near industrial and energy infrastructure along the Gulf Coast, facilitating the transportation and storage of CO2.
The announcement comes on the heels of Occidental’s progress with its first DAC facility, STRATOS, in West Texas, which is expected to commence commercial operations in 2025. The U.S. Department of Energy has also awarded up to $650 million to support the development of the South Texas DAC Hub.
Khaled Salmeen, Chief Operating Officer of XRG, highlighted the partnership’s role in driving scalable and strategically attractive projects that generate sustainable value. The collaboration aligns with XRG’s focus on global investments that create value across natural gas, chemicals, and lower-carbon energy solutions.
Occidental, an international energy company with significant operations in the United States, the Middle East, and North Africa, emphasizes its commitment to carbon management and the advancement of a lower-carbon world through its subsidiaries, including Oxy Low Carbon Ventures and OxyChem.
This news release contains forward-looking statements regarding the benefits of the agreement and the impact on carbon emissions. These statements are based on current expectations and are subject to risks, uncertainties, and changes in circumstances that may affect the realization of such benefits and the deployment of DAC technology. According to InvestingPro analysis, Occidental appears undervalued based on its Fair Value estimate, with analysts setting price targets ranging from $38 to $64 per share. For deeper insights into OXY’s valuation and growth prospects, including 6 additional ProTips and comprehensive financial metrics, explore the full Pro Research Report available on InvestingPro.
The information provided is based on a press release statement and does not necessarily reflect material information for investors in Occidental’s securities.
In other recent news, Occidental Petroleum reported strong financial results for the first quarter of 2025, surpassing analyst expectations. The company achieved an adjusted earnings per share of $0.87, significantly higher than the forecasted $0.69, while revenue reached $6.84 billion, exceeding projections by $130 million. Occidental generated $3 billion in operating cash flow, highlighting its operational efficiency and robust financial health. The company plans to cut its full-year capital expenditure by $200 million, focusing on operations in the Permian Basin and Gulf of Mexico. Additionally, Occidental aims to reduce operational expenses by $150 million in 2025. JPMorgan recently adjusted its price target for Occidental shares from $52 to $47, maintaining a Neutral rating. The firm cited Occidental’s cost-cutting measures and improvements in drilling efficiency as positive factors. Occidental is also negotiating a 15-year extension for its Block 53 contract in Oman, which could enhance cash flow through improved recovery methods.
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