Occidental Petroleum (NYSE:OXY) has reportedly started construction of its first direct-air carbon capture plant, Stratos, in the Permian Basin, located in West Texas. The plant was initially expected to be launched in 2024 but was delayed due to supply-chain issues. Nevertheless, the company has set a new deadline of 2025.
The massive oil and gas company wants to sell the carbon it has trapped to businesses that make plastic and synthetic fuel. With the potential to scale up to 1 million tons per year, Stratos is anticipated to have an initial capacity to capture 500,000 tons per year of carbon dioxide.
It is noteworthy that Occidental plans to build 100 direct-air capture facilities worldwide by 2035, in addition to five more such plants, the first of which is Stratos, in Texas and Louisiana.
Is OXY a Buy or Sell Now?
Last month, Warren Buffett’s Berkshire Hathaway (BRK.A) (BRK.B) bought over 3.66 million additional OXY shares for $216 million, which raised its stake in Occidental to 23.6%.
The company’s improving operating and financial performance is encouraging. Also, Occidental’s debt load has decreased substantially over the past year, which bodes well for its financial position.
Overall, Wall Street analysts are cautiously optimistic about OXY stock and have a Moderate Buy consensus rating, which is based on nine Buys, seven Holds, and one Sell. The average price target of $71.82 implies 16.7% upside potential. The stock has gained 1.1% so far in 2023.
