Berkshire Hathaway's Occidental Stake and the Implications of Warren Buffett's Succession

The acquisition of Occidental Petroleum's OxyChem division for $9.7 billion in 2025 marks a pivotal moment in Berkshire Hathaway's energy strategy, signaling both a culmination of Warren Buffett's long-term vision and the dawn of Greg Abel's leadership era. As Buffett steps down as CEO at year-end 2025, the transition to Abel-a seasoned operator with deep energy expertise-raises critical questions about how Berkshire will manage its 26.79% stake in Occidental Petroleum, valued at $11.8 billion as of Q3 2025 according to StockCircle transactions. This analysis explores the interplay between Berkshire's legacy-driven investments, the strategic implications of the OxyChem acquisition, and the potential shifts in value retention under Abel's stewardship.

The Current State of Berkshire's Occidental Stake

Berkshire's ownership of Occidental dates back to 2019, when it provided financing for Occidental's acquisition of Anadarko. Over time, Berkshire has incrementally increased its stake, including warrants to purchase 83.9 million additional shares at $59.58 each, as reported by AP News. Despite this, the investment has faced challenges: a 18% loss on the initial purchase price due to market volatility and Occidental's debt-heavy balance sheet, according to Investopedia. The recent $9.7 billion OxyChem acquisition, however, represents a strategic pivot. By divesting this petrochemical unit, Occidental will reduce its debt by $6.5 billion, aligning with its goal to deleverage to below $15 billion, a development noted by Reuters. For Berkshire, the acquisition complements its existing chemical portfolio (e.g., Lubrizol) and strengthens its foothold in essential industrial assets, as highlighted by Yahoo Finance.

Warren Buffett's Succession and Greg Abel's Leadership Style

Warren Buffett's decision to step down as CEO by year-end 2025 underscores a deliberate, years-in-the-making succession plan. Greg Abel, who will assume the CEO role in January 2026, brings a distinct operational focus to Berkshire. Unlike Buffett's hands-off, capital-allocation-first approach, Abel is known for his meticulous engagement with subsidiaries, emphasizing performance metrics and operational efficiency, as described in a Fortune profile. His tenure at Berkshire Hathaway Energy, where he oversaw a shift toward renewable energy and large-scale acquisitions like NV Energy, highlights his strategic emphasis on infrastructure and industrial assets, according to Press.Farm.

Abel's leadership style may influence Berkshire's approach to Occidental in two key ways:
1. Operational Activism: Abel's background suggests a willingness to engage more directly with Occidental's management, potentially driving cost efficiencies or strategic realignments. This contrasts with Buffett's historical preference for passive ownership.
2. Capital Deployment: With $347.7 billion in cash reserves as of Q1 2025, per a Monexa analysis, Abel may prioritize deploying capital into high-conviction energy plays, including Occidental's core oil and gas operations or its emerging carbon capture initiatives.

Strategic Continuity and Discontinuity

While Abel's operational focus introduces new dynamics, Berkshire's core principles-long-term value creation, disciplined capital allocation, and ownership of durable businesses-remain intact. Buffett has explicitly stated that he has no plans to acquire full control of Occidental, a stance likely to persist under Abel, as noted in a separate Fortune article. However, the OxyChem acquisition reflects a broader strategic alignment: Abel's emphasis on industrial resilience and Buffett's legacy of acquiring "essential" businesses.

A critical question is whether Abel will leverage Berkshire's cash reserves to further consolidate its position in Occidental or explore new energy ventures. For instance, Occidental's post-deleveraging focus on climate-aligned projects (e.g., carbon capture) could align with Abel's renewable energy ambitions, creating synergies between Berkshire's existing energy holdings and Occidental's evolving strategy, as discussed by Business News Today.

Implications for Value Retention

The transition to Abel introduces both risks and opportunities for Berkshire's Occidental stake. On one hand, increased operational scrutiny could enhance Occidental's profitability, supporting share value. On the other, a more aggressive capital deployment strategy might divert resources from Occidental to other sectors, such as renewables. Investors should also consider Buffett's continued role as chairman: his oversight ensures continuity in major decisions, mitigating abrupt shifts in strategy, according to a LinkedIn piece.

Conclusion

Berkshire's Occidental stake embodies the tension between legacy and evolution in its investment portfolio. While Buffett's succession to Abel signals a shift toward operational rigor and energy-sector focus, the core tenets of long-term value retention remain unchanged. The OxyChem acquisition, coupled with Abel's strategic priorities, positions Berkshire to navigate the energy transition while preserving the durability of its industrial holdings. For investors, the key will be monitoring how Abel balances Buffett's conservative ethos with his own operational acumen-a duality that could redefine Berkshire's approach to legacy investments in the post-Buffett era.