Occidental Petroleum: A Buffett-Backed Play on Oil’s Resilience and Strategic Growth

The oil market has faced turbulence in 2025, with prices dipping below $60 per barrel amid oversupply concerns and geopolitical tensions. Yet, one company stands out as a beacon of stability and growth: Occidental Petroleum (OXY). Backed by Warren Buffett’s Berkshire Hathaway, fueled by aggressive debt reduction, and positioned to capitalize on oil’s long-term resilience, OXY offers a rare opportunity to capture life-changing returns.

Buffett’s Unwavering Endorsement

Berkshire Hathaway’s $19.5 billion bet on OXY since 2022 has long been a signal of confidence. As of early 2025, Berkshire holds a 28.2% stake in OXY, plus $8.5 billion in preferred stock and warrants to buy 83.9 million additional shares. Despite the stock’s 21% decline from its 2025 peak to $42.16, Berkshire doubled down in February, purchasing 763,000 shares at an average price of $46.82.

This move underscores Berkshire’s belief in OXY’s fundamentals, even as Buffett steps back from daily operations. Successor CEO Greg Abel now faces a decision point: leverage OXY’s undervalued position or hold for long-term gains. The message is clear: OXY’s strategic vision aligns with Berkshire’s long-term value approach.

Strategic Growth: Debt Reduction and Operational Excellence

OXY’s first-quarter 2025 results highlight its disciplined execution:
- Production up 19% year-over-year to 1.39 million barrels of oil equivalent per day, driven by gains in the Rockies and Gulf of America.
- $3 billion in operating cash flow, with $1.2 billion in free cash flow after capital expenditures.
- $6.8 billion in debt repaid since Q3 2024, reducing total debt to $24 billion and eliminating near-term refinancing risks.

By targeting $15 billion in long-term debt—a 38% reduction from current levels—OXY is fortifying its balance sheet. The company plans to boost free cash flow by $1.5 billion by 2027 through cost savings, reduced capex, and interest payments. This strategy not only reduces financial risk but also positions OXY to capitalize on non-oil growth in chemicals, midstream, and carbon capture projects.

Long-Term Oil Price Resilience: A Structural Tailwind

Bearish forecasts often overlook oil’s enduring role in the global economy. Goldman Sachs projects oil prices will stabilize at $70–$85/bbl post-2026, with upside risks from geopolitical instability and OPEC+ supply discipline. Key drivers include:
1. Emerging Market Demand: India’s GDP growth (4% in 2025) and industrialization will add 300,000 bpd to global demand.
2. Aviation and Petrochemicals: Jet fuel demand is nearing pre-pandemic levels, and petrochemicals will account for 60% of oil demand by 2040, shielding prices from EV adoption.
3. OPEC+ Supply Control: With spare capacity at 5.48 mb/d, the group can curb oversupply, ensuring prices don’t collapse below $60/bbl.

Even in a “worst-case” climate scenario, Wood Mackenzie’s $40/bbl forecast for 2030 is highly speculative, requiring unprecedented demand destruction. OXY’s diversified assets—midstream infrastructure, carbon capture, and shale reserves—buffer it against volatility.

Why Act Now?

OXY’s stock trades at ~$42, down 21% from its 2025 peak, despite strong operational progress. With debt reduction on track and free cash flow accelerating, this is a rare buying opportunity.

• Debt-Adjusted Valuation: OXY’s EV/EBITDA of 4.2x is a fraction of its peers’.
• Dividend Growth: A 9% dividend hike in Q1 signals confidence in cash flow stability.
• Optionality: Its $8.5 billion in Berkshire-backed preferred stock and warrants provide downside protection.

Risks, but Not Dealbreakers

• Oil Price Volatility: Sub-$60 oil pressures margins, but OXY’s cost structure ($30–$40/bbl breakeven) offers resilience.
• ESG Challenges: Carbon capture projects face regulatory and funding hurdles, but these align with global net-zero goals.

Conclusion: A Multi-Decade Opportunity

Occidental Petroleum is a Buffett-backed, financially disciplined, and strategically positioned energy giant. With oil’s long-term resilience intact, OXY’s debt reduction, operational improvements, and non-oil growth avenues make it a once-in-a-decade investment.

At current prices, OXY offers double-digit upside potential as it deleverages and oil prices stabilize. For investors seeking life-changing returns, the time to act is now.

Invest with discipline, and let Occidental’s resilience work for you.