Can Occidental Petroleum Stock Fall 30%

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A 30% fall would not be new for Occidental Petroleum (OXY) stock. The shares fell that far or more within the year in six of the last ten calendar years. Even a 38.8% drop from its latest close would only take the stock back to its lowest close of the past three years. On its November 10 call, management pointed to one part of the business where output could weaken. So where could Occidental's output slip, and why?

Occidental Warns Gulf Of America Output Could Drop

The weak spot is the Gulf of America. Management said production there could see some reduction from its 2026 level in 2027 because of the timing of new water injection wells. These wells serve a waterflood program that aims to recover more from existing fields, and management has identified roughly 450 million barrels of oil equivalent of waterflood resource there.

The Gulf has already been a drag in 2026. Third-quarter production there fell as maintenance and a third-party gas pipeline constraint forced Occidental to curtail output at some facilities. The company kept some output curtailed into the fourth quarter, and it also lost production to a hurricane in early October. Management said production was fully restored by late October.

Overseas, management said the terms of its production-sharing contracts would weigh mostly on oil production in Oman and Algeria. It added that the range for its production would be set largely by the Gulf of America and its international operations, placing the risk away from the U.S. onshore fields.

Where The Risk Sits, And What The Shares Already Price In

The output at risk belongs to Occidental's oil and gas segment, by far its largest business, which brought in $20.9 billion in fiscal 2025, about $0.8 billion less than in fiscal 2024. For 2027, management expects production to be relatively flat against 2026 at planned capital spending of about $5.9 billion.

The shares have already had a good year, returning 39.7% over the year to November 11, 2026, against 12.8% for the S&P 500. Occidental trades at 2.3 times sales, below the S&P 500's 3.2. Against its own past, the multiple is not low: at the end of September 2026 it stood at 2.2 times sales, higher than at 24 of the other 39 quarter ends since late 2016. So holders are paying more for each dollar of sales than they usually have, after a large gain in the shares.

Onshore Wells Have Covered Occidental's Shortfall So Far

Total third-quarter production averaged 1.43 million barrels of oil equivalent a day. This beat the midpoint of guidance by 7,000 a day, as the U.S. onshore business more than made up for the weaker regions. The onshore wells alone beat their guidance midpoint by 20,000 a day.

So far, the onshore wells have covered the Gulf of America's shortfall, but the Gulf risk management flagged has not gone away. The output drop is still ahead, tied to when the new injection wells come on. Occidental's fourth-quarter guide of 1.43 million to 1.47 million barrels of oil equivalent a day already reflects the pipeline curtailments and the hurricane. Occidental's Gulf of America production is the figure to watch when the company next reports, expected in February 2027.

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