In the previous quarter, Occidental Petroleum's domestic oil and gas production increased by 3% from the same period a year ago to 464,000 barrels of oil equivalents per day. But the company is focused on increasing production, doubling the number of rigs at its core Permian Basin positions in Texas by 2016.
The shares of Occidental Petroleum, as well as most of its peers such as Exxon Mobil (XOM) , Chevron (CVX) , ConocoPhillips (COP) , EOG Resources (EOG) and Anadarko Petroleum (APC) dropped last week, partly due to the deteriorating oil prices. Brent crude dropped to below $100 a barrel, touching 17-month lows on Tuesday, closing at $97.89 a barrel on Friday.
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Similarly, U.S. crude oil prices have fallen by 13.7% over the last three months to $92.21 a barrel. Meanwhile, China's National Bureau of Statistics has said that the country's industrial output has expanded at the weakest pace since the global financial crisis, raising concerns about future oil demand.
Yet, global oil demand is still expected to grow by 1.2 million barrels a day in 2015, an improvement from 0.9 million barrels a day this year, according to the International Energy Agency in a recent report.
For the year to date, Occidental Petroleum's shares have risen by over 3% to $98, trading 12.8 times the company's trailing earnings, which is in line with the price to earnings ratio of most of its aforementioned peers. However, unlike most of them, Occidental Petroleum intends to buy back as much as 13% of its stock in the near future, the company said during its second-quarter conference call. Although value hunters might want to wait for the shares to drop further before buying, stocks like Occidental Petroleum, representing one of the biggest names in the U.S. energy space, are rarely available at a bargain.
Buybacks can have positive impact on a company's earnings per share growth. A drop in the number of shares is going to give a boost to the company's earnings per share, even without any meaningful growth in net income.
Since the third quarter of 2013, Occidental has repurchased 26 million shares for $2.5 billion and it still has another 20.5 million to go under the current buyback program. On top of this, Occidental expects to repurchase 85 million shares by spinning off of its California business and by selling its interest in Plains All American Pipeline (PAA) .