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Occidental Petroleum Is Showing Why It Has Become a Top Warren Buffett Stock
OXYOXY(OXY) The Motley Fool·2025-05-10 18:27

Core Viewpoint - Berkshire Hathaway has invested nearly 280billionintopubliclytradedcompanies,withOccidentalPetroleumbeingoneofitstopholdings,representing3.9280 billion into publicly traded companies, with Occidental Petroleum being one of its top holdings, representing 3.9% of its portfolio [1][2] Group 1: Occidental Petroleum's Financial Performance - Occidental Petroleum reported an average production of nearly 1.4 million barrels of oil equivalent (BOE) per day in Q1, generating 3 billion in operating cash flow and 1.2billioninfreecashflow[4]−Thecompanyincreaseditsquarterlydividendby91.2 billion in free cash flow [4] - The company increased its quarterly dividend by 9% earlier this year, utilizing strong free cash flow for this purpose while retaining the rest to repay debt [5] - Occidental has repaid 2.3 billion of debt so far this year and has exceeded its target by repaying 6.8billionsinceQ3oflastyear[5]Group2:DebtManagementandFutureOutlook−Thecompanyhassignificantlyreduceditsdebt,whichhasloweredinterestexpensesandpositionedittobetterhandlefluctuationsinoilprices[6]−Occidentalaimstoreduceitsprincipaldebtbalancebelow6.8 billion since Q3 of last year [5] Group 2: Debt Management and Future Outlook - The company has significantly reduced its debt, which has lowered interest expenses and positioned it to better handle fluctuations in oil prices [6] - Occidental aims to reduce its principal debt balance below 15 billion, with a long-term debt balance of over 24billionattheendofQ1[7]−Startingin2026,Occidentalexpectsasignificantboostinfreecashflowfromnon−oilandgassources,projectinganadditional24 billion at the end of Q1 [7] - Starting in 2026, Occidental expects a significant boost in free cash flow from non-oil and gas sources, projecting an additional 1 billion in 2026 and $500 million in 2027 [8] Group 3: Investment Rationale - The investment by Berkshire Hathaway in Occidental Petroleum is driven by the company's potential for value creation through debt reduction and free cash flow growth from its non-oil businesses [9] - These factors are expected to enhance shareholder value even in a volatile oil market, making Occidental a resilient investment choice [9]