Occidental Petroleum (OXY 1.53%) and Devon Energy (DVN 1.61%) have been two of the best-performing energy stocks this year. Shares of Occidental Petroleum have more than doubled, while Devon's stock is up almost 50%; both have vastly outperformed the S&P 500 and other energy stocks. 

These oil stocks could have further to run if oil prices remain elevated. Here's a closer look at which one looks like the better buy these days.

The case for and against buying Occidental Petroleum

Occidental Petroleum reached a critical inflection point earlier this year. The oil giant completed its near-term debt reduction goal, enabling it to start returning more cash to shareholders. Occidental did that by boosting its dividend by a whopping 1,200% and authorizing a $3 billion share repurchase program. 

The company's near-term goal is to complete that buyback authorization and continue paying down debt, targeting to reduce gross debt to the high teens by the end of the year. That would put the oil company in the position to return more cash to shareholders next year. It sees the potential of returning $4 per share through a combination of share repurchases and dividends. The company could pay more if oil prices cooperate, but it would first have to start redeeming the $10 billion of preferred stock owned by Warren Buffett's Berkshire Hathaway (BRK.A 0.63%) (BRK.B 0.52%) that helped pay for its 2019 Anadarko deal. 

Given its outstanding liabilities, shareholder returns will be somewhat muted in the near term, especially if oil prices cool off. However, there's ample upside potential if oil prices remain elevated. On top of that, there's an outside possibility that Buffett's Berkshire Hathaway could offer to acquire Occidental. It has bought a massive stake in the company -- Berkshire now owns more than 20% of Occidental's stock, worth over $11 billion -- and has stock warrants to purchase another $5 billion in shares. 

The case for and against buying Devon Energy

Devon Energy reached its turning point last year when it closed its merger with WPX Energy. That deal enabled the company to launch the industry's first fixed-plus-variable dividend framework. Under that policy, Devon pays a sustainable base dividend that it complements with a variable payment of up to 50% of its quarterly free cash flow. The company uses the other half of its excess cash to strengthen its already top-notch balance sheet, repurchase shares, and acquire cash-flowing oil properties.

Devon Energy has already boosted its base dividend twice and has paid a steadily rising variable payout. The combined dividend payment has an annualized yield of over 10% at Devon's current stock price. Meanwhile, its share repurchase program has retired 4% of its outstanding stock. On top of that, it has a cash-rich balance sheet with a leverage ratio well below its target level.

Given the strength of its balance sheet, Devon has been able to go on the offensive this year. It has already made two acquisitions that will grow its cash flow in the coming quarters, giving it more fuel to increase the dividend.

The downside with Devon is that its dividend payments will ebb and flow with oil prices. However, thanks to its cash-rich balance sheet, Devon can continue to buy back stock and could acquire additional cash-flowing oil properties in the future to help insulate its variable dividend from the impact of lower oil prices.

A surer thing

It's hard to bet against Warren Buffett. However, Occidental Petroleum needs oil prices to remain high to pay off debt and redeem Berkshire's preferred stock, which is currently holding it back from returning more cash to investors. Meanwhile, Devon Energy is already sending most of its cash flow gusher to shareholders. Because of that, it looks like the better oil stock to buy right now.