Although only the fourth-largest U.S. energy firm, Occidental Petroleum (OXY) has been acting like the leader it should be. Shares of the company shed nearly 30% from a May 2011 peak of $115 a share to the end of 2012, but so far this year, it’s out ahead of the broader market with 17% gains.
Many analysts are calling for it to be the next target for activist shareholders, especially because its 23-year tenured CEO just retired. Speculation is that a big shareholder could push OXY to shed its international assets and focus on Texas and California. The company has the most acreage in California’s Monterey shale and is the top producer in Texas. A sale or spinoff the international business could fetch about $35 billion in proceeds, according to analyst estimates.
Additionally, OXY has all sorts of midstream and chemical refining assets that would fit perfectly in a tax-advantaged master limited partnership.
All in all, analysts predict that a break-up of OXY could be worth about $115 per share — about $25 higher than today’s selling price. It’s easy to see why Cooperman would be interested in Occidental and why he recently purchased more than 970,000 shares.