Occidental Petroleum (OXY -0.19%), an S&P 500 stock, was a significant underperformer in 2024 when it lost 17% of its value. Unfortunately for investors in the oil stock, its losing streak has continued into 2025 so far, with shares of Occidental shedding another 15% in the first half of the year according to data provided by S&P Global Market Intelligence.

Crude oil prices have fallen in 2025, and that doesn't bode well for any oil producer. But is there more to Occidental stock's fall than just oil prices, or has the market overreacted and given investors a once-in-a-lifetime opportunity to buy a stock that even legendary investor Warren Buffett loves?

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Occidental Petroleum has plenty of cash and is paying bigger dividends

It has been a volatile year for crude oil prices so far. In early April, benchmark crude oil prices even slid to four-year lows amid the tariff and trade uncertainty, among other things. Falling oil prices are a double whammy for Occidental Petroleum. They hurt earnings and cash flows, and they make it tougher for the company to service debt that has ballooned since its multibillion-dollar CrownRock acquisition in August last year.

Occidental, however, paid debt worth $4.5 billion within five months of the acquisition, way ahead of its 12-month target. During its first quarter, the oil giant sold some noncore upstream assets as already planned last year and paid down another $2.3 billion in debt.

Here's where things stand now for Occidental when it comes to debt: It has already repaid all of its debt maturing in 2025 and has only $284 million maturing over the next 14 months. With the company generating $2.1 billion in operating cash flow in Q1, Occidental can easily pay debt through 2026 and still have excess cash available to pay dividends and deploy elsewhere.

Why Occidental stock can turn around

Given Occidental's cash-flow and debt profile, the stock's price fall appears to be overdone. One problem is that Occidental doesn't hedge its price risk, which means its revenues and earnings are highly susceptible to the volatility in oil and gas prices. While the lack of hedging can benefit companies like Occidental in a high-oil-price environment, the reverse is true when commodity prices fall.

That said, Occidental continues to generate strong cash flows. It also operates midstream and chemical businesses, both of which had a strong showing in Q1, and it's expanding its high-potential low carbon ventures business. In April, Occidental signed a 25-year carbon offtake agreement with fertilizer giant CF Industries to boost production of low-carbon products through sequestration technology.

While the consistent drop in Occidental Petroleum's stock price largely mirrors a pullback in commodity prices, the company continues to build a strong balance sheet and remains committed to growing its dividend. Occidental increased its dividend by 9% in April and yields 2.3%. If and when oil prices recover, this beaten-down oil stock could quickly turn around.