No one is kicking sand on the mighty Occidental Petroleum Corp. (NYSE: OXY), but an analyst suggests the $71 billion company might want to bulk up its core a bit anyway.

Specifically, the company’s Permian Basin core holdings could stand to be larger, said Edward Westlake, analyst, Credit Suisse.

The Houston company performed solidly in the third quarter of 2014. Despite an earnings miss, blamed on a variety of factors such as higher operating expenses, Occidental's Permian production grew 26% compared to a year ago.

Steve Chazen, president and CEO, said in an Oct. 23 conference call that the spinoff of its California subsidiary and other asset sales should generate large cash proceeds. The bulk of the proceeds will be used to repurchase shares.

However, “we also hope to invest in the business through attractive bolt-on acquisitions in our core area of the Permian Basin,” he said.

Westlake said Occidental needs to make that happen. The company’s “core of core” Permian might not be large enough, especially since the company considers its resources there to represent the key area of oil growth for its domestic operations.

Occidental's Permian holdings are spread across 2 million acres in the Midland Basin, Central Basin platform, Northwest Shelf and Delaware Basin. The company has identified 7,100 potential well locations.

Westlake noted the company’s strongest well results in the Texas Delaware Basin and northern Midland Basin are small relative to Occidental's enterprise value.

The assets “will drive growth through 2020 and are valuable, but not large enough to move a $75 billion enterprise value company, particularly when the valuation premium for pure play peers, albeit riskier, have compressed,” he said. “We'd like to see improved well results in the industry's New Mexico Delaware to drive the NAV [net asset value] higher or M&A [mergers and acquisitions] in the current core.”

Chazen said the Permian should see production growth of at least 20% in 2015, primarily from oil.

But now might be a good time to buy. With weakened oil prices, Occidental is well positioned to grow its acreage, Westlake said.

Occidental's balance sheet is pristine and looks ready to improve as lucrative assets are divested. The sale of its remaining interest in Plains GP Holdings LP (NYSE: PAGP), the general partner of Plains All American Pipeline LP (NYSE: PAA), should be significant. The spinoff of its remaining interests in California Resources Corp. (CRC) should fetch about $1 billion to go along with the $5 billion it has already received, said Sameer Uplenchwar, senior analyst, Global Hunter Securities.

Occidental said it also plans to sell additional midstream assets “when market conditions warrant.” Overseas, the company is negotiating the partial sale of its assets in the Middle East.

And earlier this year, the company used proceeds from the sale of its Hugoton Field assets to pick up acreage, said Chris Stavros, Occidental’s executive vice president and CFO.

“During the first nine months of this year, we received proceeds of $1.3 billion from the sale at our Hugoton assets and spent about $425 million toward domestic bolt-on acquisitions,” he said.

Chazen said opportunities may exist for accretive property acquisitions that have current production, growth prospects and complement the company’s existing acreage.

Westlake said using Occidental should take the opportunity to transform its shale footprint.

“Yes, technology creates new shale opportunities in the Permian, such as OXY's Barilla Draw sweet spot in Reeves County, Texas,” Westlake said. “However, based on current well results, OXY's core acreage in the Permian feels small relative to the size of the company's enterprise value, even after the CRC spin. So M&A feels needed.”