THE BUSINESSWEEK 50 RANKINGS + 25

65

Occidental Petroleum

Those who remember the globe-trotting Armand Hammer may think of Occidental as the ultimate multinational, but it generates two-thirds of its revenue from the U.S., mainly Texas and California. It also has wells in Latin America, the Mideast, and Libya. Oxy avoids competing head-to-head with the super­majors by focusing on older fields that aren’t gushing crude anymore but still have plenty of oil in place. Thanks to cost-cutting under CEO Ray Irani, who took over upon Hammer’s death in 1990, Oxy has fat profit margins: over $20 a barrel in 2006. The perennial question: When will it get gobbled up? CFO Stephen Chazen says Oxy isn’t for sale as long as management “keeps creating value in excess of the cost of capital.” Analyst Fadel Gheit of Oppenheimer says Oxy’s not a great fit for everyone but could appeal to Conoco­Phillips or Royal Dutch Shell.

Overall Grade

A-

Market Data

OXY

Market Value
(2/28/2007)

$38.7 Billion

Profitability*

34.8%

A

Sales Growth Rate**

24.2%

C

12-Month Sales

$17.7 Billion

12-Month Net Income

$4.4 Billion

Total Return Past 12 Months

2.4%

Past 36 Months

119.3%

Economic SectorEnergy
IndustryIntegrated Oil & Gas
The overall sector letter grade reflects how the weighted average of the return on income, or return on equity, and sales growth grades compare with others in the same sector. For the overall grade as well as the ROE/ROI and sales growth grades, an "A" places a company in the top 7% of its sector and an "A-" in the top 14% of the sector. The actual ranking was done using the underlying numerical measures. Grades are for information only.
* For nonfinancial companies, three-year average pretax operating profit before interest and special items as a percentage of average invested capital. For financial companies, pretax profits as a percentage of average shareholder's equity.
*Three-year average annual sales growth based on the most recently reported 36 months, calculated using the least-squares method.

Ray R. Irani

Ray R. Irani, 72

CEO since 1990


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Data as of 2/28/07 provided by Standard & Poor's Compustat