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Occidental Garners SunTrust Upgrade on Cash Flow Strength

SunTrust analyst Neal Dingmann says the possibility of 'massive' asset sales by Occidental is 'compelling.'
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Occidental Petroleum  (OXY) - Get Occidental Petroleum Corporation Report shares rose after SunTrust analyst Neal Dingmann raised his rating on the oil producer to buy from hold and lifted his price target to $25 from $13.

The company’s cash position is strong, he wrote in a commentary. Occidental has enough free cash flow and assets to manage its hefty debt burden, he said. The company’s debt totaled $39.74 billion in the first quarter, according to Morningstar.

Occidental should continue to improve its balance sheet with both internal and external moves, Dingmann said. The possibility of "massive" asset sales - both domestic and foreign - is "compelling," he said.

With a conservative estimate for oil prices, Occidental could enjoy more than $1 billion in free cash flow this year and $2.8 billion in 2021, Dingmann said.

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He also raised his rating for oil and gas producer EOG Resources  (EOG) - Get EOG Resources Inc. Report to buy from hold.

EOG and Occidental could “quickly become among the most active E&Ps [exploration and production companies] translating into massive 2021 FCF [free cash flow] among other catalysts,” according to Bloomberg.

Earlier this month, TheStreet's Jim Cramer said he liked EOG. He’s impressed with its ability to cut costs without destroying production. “EOG has taken its rig count down from 36 to 8, and it intends to go down to 6 rigs for the rest of 2020,” he wrote.

Occidental shares recently traded at $20.78, up 5.64%. The stock has soared 98% over the last three months.

EOG traded at $55.21, up 4.31%, and has jumped 85% over the past three months.