The Best Oil Company You've Never Heard Of

The biggest of the biggest, Exxon Mobil

, announced third quarter earnings this morning. It was a decent report, as the world's largest oil & gas company reported quarterly revenues that were over $125 billion. Yet, just because it is the biggest, does not make it the best. That distinction might go to Occidental Petroleum

, which is highly levered to the price of oil, and reported third quarter earnings which blew out estimates. The Los Angeles, Ca.-based company reported third quarter earnings of $2.18 per share on $6.01 billion in revenues. Wall Street analysts had been expecting earnings of $1.95 per share on $5.70 billion in revenues. Shares are soaring this morning, up almost 3%, helped by a deal out of Europe, as well as the stellar earnings report. Occidental competes with the likes of Exxon, Conoco Phillips

and Chevron

, yet Occidental offers one thing these oil behemoths do not. Growth. And lots of it. Last year, Occidental reported earnings of $1.47 per share on $4.90 billion in revenues. That means the company grew earnings 46% year-over-year, and revenues grew 22.6% year-over-year. For an exploration and production company valued over $70 billion, that is tremendous growth. You are not going to see that kind of revenue and earnings growth from the oil majors. Occidental also trades along with the price of oil. Oil looks like it's going to $100 per barrel oil, especially after Europe has started to really figure out some concrete plans to save the European Union. West Texas Intermediate oil is over $90 per barrel, and now that China has started to signal about doing something to help the economy, we could see $100 per barrel very soon. $100 per barrel oil is a psychological number that gets the media talking, although it does not slow consumption. However it does get people talking, but talk is different than action, and no action is good for Occidental. Occidental trades at an estimated 10 times 2012 earnings estimates, and sports a 2.2% dividend yield. For a company growing revenues at 22% year to year and earnings 46%, that does seem to be a bit on the cheap side. Yesterday, Goldman Sachs

on Occidental going into earnings. The analyst, Arjun Murti, said that he saw 17% upside to his 6-month price target, and that buying straddles on the name would be a good way to gain exposure to oil shale in California. Occidental is growing extremely fast, and is highly levered to the price of oil, which looks to be in an uptrend. Very few people outside of Wall Street have heard of Occidental Petroleum, but with results like this quarter after quarter, it will definitely make people stand up and notice.

Traders who believe that oil will go higher might want to consider the following trades:

Traders who believe that Europe's plan will not really solve anything and take risk assets sharply lower may consider alternate positions: