ConocoPhillips or Occidental Petroleum: Which Oil Stock Should You Buy Now?

With energy demand shifting and global markets in flux, choosing between two of the largest oil producers requires looking beyond the surface. Is the diversified giant or the low-carbon pioneer the better fit for your portfolio?

ConocoPhillips (NYSE:COP) and Occidental Petroleum (NYSE:OXY) are industry leaders, but they take different paths to growth. ConocoPhillips is a massive, globally diversified producer. Occidental Petroleum is increasingly focused on domestic assets and high-tech carbon capture initiatives following recent divestitures of legacy chemical businesses.

The case for ConocoPhillips

ConocoPhillips functions as an independent exploration and production company that identifies and extracts oil and natural gas globally. The company manages a vast portfolio of assets across 14 countries, including significant positions in Norway, Qatar, and Malaysia. It operates through strategic partnerships with organizations like QatarEnergy and CNOOC, and recently secured a landmark 25-year extension for the Waha joint venture concessions in Libya, ensuring it can operate in the coutnry through 2050.

During FY 2025, the company generated revenue of nearly $58.9 billion, representing growth of roughly 7.5% year over year. Net income for the period of $8 billion meant a healthy net margin of around 13.6%. This net margin represents the percentage of total revenue remaining as profit after the company pays all its operating and non-operating costs.

As of its December 2025 balance sheet, the company maintained a debt-to-equity ratio of nearly 0.4x, calculated as total debt divided by shareholders’ equity. The current ratio, which measures the ability to cover short-term liabilities with short-term assets, stood at approximately 1.3x. Free cash flow (FCF), calculated as cash from operations minus capital expenditures, reached roughly $16.8 billion during the fiscal year.

The case for Occidental Petroleum

Occidental Petroleum focuses on the production and transportation of oil and natural gas with a heavy emphasis on the Permian and DJ basins. Following the divestiture of its OxyChem business in early 2026, the company has pivoted more aggressively toward low-carbon ventures. These initiatives, which include carbon sequestration and direct air capture, set the firm apart from many traditional renewable energy stocks that focus primarily on wind or solar power.

In FY 2025, revenue was nearly $22 billion, down just about 2% from the previous year. Despite the revenue decline, the company reported a net income of nearly $2.4 billion and a net margin of 11%, indicating the portion of each dollar of sales that the company retains after accounting for all expenses.

According to its December 2025 balance sheet, the company carries a debt-to-equity ratio of roughly 0.7x. The current ratio is approximately 0.9x, suggesting that short-term liabilities slightly exceed short-term assets. FCF, or the cash a company generates after subtracting the money spent on equipment and infrastructure, was close to $4.1 billion for the year.

Risk profile comparison

ConocoPhillips faces significant risks from commodity price volatility, as its cash flows depend heavily on global crude oil and natural gas prices. The company is also navigating ongoing climate-related litigation and must maintain environmental compliance in diverse jurisdictions. Finally, the company competes with giants like ExxonMobil (NYSE:XOM) and Chevron (NYSE:CVX) for limited resources and new exploration opportunities.

Occidental Petroleum is also exposed to oil price volatility. It also has a high debt load, though the company is aggressively reducing it. Its strategic pivot to carbon management relies on unproven technologies like direct air capture that carry high capital and regulatory risks, and are significantly dependent on government subsidies.

Valuation comparison

Occidental Petroleum trades at a lower Forward P/E (price versus future earnings estimates), while ConocoPhillips shows a lower P/S ratio (price versus revenue).

Sector benchmark uses the SPDR XLE sector ETF.
Valuation metrics sourced from Financial Modeling Prep (FMP) and may differ from other data providers.

Which stock would I buy in 2026?

ConocoPhillips is a massive, geographically diversified company with a strong balance sheet. The company has successfully integrated its 2024 acquisition of Marathon Petroleum, unlocking over $1 billion in run-rate operational synergies.

ConocoPhillips remains disciplined about shareholder returns, maintaining a firm commitment to return 45% of its cash flow from operations directly back to investors through a mix of steady dividends and heavy share buybacks. It expects to generate $7 billion in incremental FCF by 2029, including $1 billion per year from 2026 to 2028.

Occidental Petroleum entered the year with a heavy debt load from previous aggressive acquisitions, but the OxyChem sale helped the oil giant reduce debt by over $7 billion since mid-December to $13.1 billion as of the end of the first quarter of FY 2026. Occidental is targeting $10 billion in debt, which should significantly cut interest costs. The oil giant also raised its dividend by 8% this year.

I like where both companies are headed, but if I were to buy only one stock among the two today, I would invest in ConocoPhillips. That’s because the company has lower debt, high returns on capital, and has been a reliable dividend payer. Its strong projected cash-flow trajectory should appeal to income investors.

Neha Chamaria has no position in any of the stocks mentioned. The Motley Fool has positions in and recommends Chevron. The Motley Fool recommends ConocoPhillips and Occidental Petroleum. The Motley Fool has a disclosure policy.