Large-cap oil exploration and production company Occidental Petroleum ( OXY) is putting in an impressive start for 2012. Already, shares have rallied more than 11% this year, and the firm's 17.4% dividend hike yesterday should help to put more distance between OXY's returns and breakeven. The hike puts Occidental's payout at a quarterly 54 cents per share - that's a 2.07% yield at current prices. Occidental produces approximately three-quarters of a million barrels of oil each day, production that leaves the firm well shy of the supermajors but puts OXY in excellent position with oil prices skirting triple-digit levels this month. Scale isn't a huge advantage in the oil business -- instead, the cost of pulling crude out of the ground is the key factor that sets a firm apart. Occidental's costs are reasonably low, and stand to potentially get even lower if current exploration efforts pan out as analysts expect. Meanwhile, with renewed tension in the Middle East threatening a spike in oil prices, natural gas exposure could meaningfully buoy share prices for OXY this year as consumers start substituting one fuel source for another. With a bulletproof balance sheet and deep net margins, investors should expect OXY to continue hiking its yield going forward. Occidental, one of TheStreet Ratings' top-rated oil and gas stocks, shows up on a list of 5 Oil & Gas Stocks Headed Higher in 2012.