Occidental: a fine business with an unhedgeable input

The constraint is that commodity price dominates the earnings variance. Company-specific improvements are real and second order against an input that moves more in a month than operations move in a year. The sensitivity table in the filings makes the point: a ten percent move in the commodity price swings earnings by more than the entire operational improvement programme. The position: no call. This is a name I want to own and not at this level, so there is nothing locked here and nothing for the record to grade. If the entry improves I will say so in a piece that does carry a call. The risk is that decline rates stabilise with a modest change in completion design, which has happened before and would remove the capital intensity argument.