Fannie Mae, Freddie Mac shares tumble after conservatorship comments
HOUSTON - Occidental (NYSE: OXY), a $36.4 billion energy company currently trading near its 52-week low, and its subsidiary 1PointFive have received approval from the U.S. Environmental Protection Agency (EPA) for Class VI permits, paving the way for the operation of what is set to be the world's largest Direct Air Capture (DAC) facility. The STRATOS project, located in Ector County, Texas, is designed to capture up to 500,000 tonnes of carbon dioxide (CO2) annually and is expected to begin commercial operations within the year. According to InvestingPro data, Occidental maintains strong operational efficiency with a gross profit margin of 63.3% and generated $4.1 billion in levered free cash flow over the last twelve months.
The issuance of these permits is a significant step for Occidental, marking the first time the EPA has granted approval for a DAC project to sequester CO2. The permits allow Occidental to store the captured CO2 in geologic formations more than one mile underground, ensuring secure and durable sequestration. During the EPA's comprehensive review process, Occidental demonstrated that its technologies and monitoring programs comply with federal and state regulations under the Safe Drinking Water Act's Underground Injection Control program.
Vicki Hollub, President and CEO of Occidental, stated that the permits are crucial for the company's strategy to manage large quantities of CO2 and bolster the United States' energy security, as well as facilitating economic growth in Texas. According to Hollub, this milestone will help unlock the potential of CO2 and advance DAC technology, offering solutions for organizations aiming to address their emissions or to produce essential resources and fuels.
Occidental, an international energy company with significant operations in the United States, the Middle East, and North Africa, is a major oil and gas producer generating annual revenues of $26.7 billion. The company's low carbon ventures subsidiary is focused on developing technologies to reduce emissions and promote a lower-carbon world. With a 52-year track record of consistent dividend payments and a current yield of 2.37%, Occidental demonstrates strong financial stability despite recent market challenges.
1PointFive, a Carbon Capture, Utilization, and Sequestration (CCUS) company, is collaborating with Occidental to deploy decarbonization solutions, including Carbon Engineering's Direct Air Capture and AIR TO FUELS™ technologies, alongside geologic sequestration hubs.
The news release includes forward-looking statements regarding the development and operation of STRATOS, the benefits of the permits, and their impact on carbon emissions and the production of low-carbon products. These statements are based on current expectations and are not guarantees of future performance due to various risks and uncertainties.
This news is based on a press release statement, and additional information can be found in Occidental's filings with the U.S. Securities and Exchange Commission. InvestingPro analysis indicates that Occidental is currently undervalued, with analysts setting price targets up to $68 per share. For comprehensive insights into OXY's valuation and 8 additional ProTips, explore the detailed Pro Research Report available on InvestingPro.
In other recent news, Occidental Petroleum has achieved its near-term debt repayment goal by paying off $4.5 billion in the last quarter of 2024. The company has also announced agreements to divest certain upstream assets for $1.2 billion, with plans to direct these proceeds toward remaining debt maturities. Fitch Ratings has upgraded the outlook for Occidental Petroleum from Stable to Positive, maintaining its rating at 'BBB-', due to the company's accelerated debt repayment strategy and divestiture plans. Additionally, Occidental Petroleum has temporarily reduced the exercise price of its warrants from $22.00 to $21.30 per share, allowing investors to purchase shares at a lower cost until the end of March 2025.
Meanwhile, Carlyle Group is seeking a buyer for its Colombian oil production company, SierraCol, at an expected price of $1.5 billion. SierraCol, established in 2020, has reported a free cash flow of $172 million in the twelve months leading up to September and a net debt of $511 million. Furthermore, Occidental Petroleum's integrated business model continues to provide earnings diversification, and the company plans to expand its Battleground, TX chlor-alkali plant in 2026. These developments highlight significant strategic moves within the energy sector, reflecting ongoing efforts to manage debt and optimize portfolios.
This article was generated with the support of AI and reviewed by an editor. For more information see our T&C.