Occidental Petroleum: 4 Reasons to Love These Prices
President Trump campaigned on a “Drill, baby, drill” policy, promising to bring down fuel and energy prices. This policy has been coming to fruition in the oil sector. While the oil and energy sector is feeling the pain, investors may be able to seize some buying opportunities.
Leading U.S. oil and gas producer Occidental Petroleum Co. (NYSE: OXY) stock has been teetering near 52-week lows as crude oil prices have fallen by more than 11% since the start of 2025.
Here are four reasons to love these prices for Occidental Petroleum.
1) Warren Buffet Still Loves the Stock as Berkshire Raised Their Stake to $29 Billion
Berkshire Hathaway purchased 763,017 shares of Occidental Petroleum for around $35.7 million on Feb. 10, 2025, as shares fell 30% off their highs.
This transaction grew their stake to just over 28% of the company, which makes them the largest shareholder.
Berkshire also owns 8% of Occidental’s preferred stock.
Overall, Berkshire owns more than 264 million shares.
They’ve been buying since 2019, so their average price is estimated to be around the lower $50 range. Investors taking positions at recent prices would be getting in cheaper than "The Oracle of Omaha."
2) The $12 Billion Crown Rock Acquisition Was Accretive in Many Ways
Occidental Petroleum closed its $12 billion acquisition of CrownRock in August 2024. The acquisition helped bump up Occidental’s domestic well inventory to 80% from 50%. It added 1,700 new well locations, of which 1,250 have less than $60 breakeven costs and 750 at sub-$40 WTI breakeven, boosting that inventory by 35%. It provided scale to its Midland Basin operations, adding 94,000 net acres, which is one of the three basins in the Permian Basin.
The Permian Basin is the size of North Dakota. The increased cash flow enabled a dividend increase. It also added the production of 170,000 barrels of oil per day. However, Occidental incurred an additional $9.1 billion of new debt, in addition to assuming $1.2 billion of CrownRock’s existing debt during the acquisition.
3) Occidental Petroleum Has Been Growing Its Carbon Capture Business
Occidental is a pioneer in carbon capture, utilization and storage (CCUS), which enables new revenue streams while aligning with the global decarbonization trends.
The company’s $1.1 billion acquisition of Carbon Engineering in August 2023 fuels its Stratos Direct Air Capture (DAC) plant in Texas, which captures 500,000 metric tons of CO2 annually.
Occidental plans to add 100 more DAC plants by 2035. Selling carbon credits generated from the DAC plants helps offset the emissions from its oil production.
Carbon dioxide removal (CDR) is carbon credits representing the removal of one metric ton of CO2 equivalent. While they are an important tool for achieving net zero emissions, they are also a revenue generator. CDR credits can be sold in the voluntary carbon markets for $500 to $1100 per metric ton or generate a tax credit of $130 to $140 per metric ton under the Inflation Reduction Act (IRA).
Occidental is in a carbon credit deal with Microsoft Co. (NASDAQ: MSFT) to purchase carbon credits that are generated from its DAC plants.
4) Occidental Continues to Lower Breakeven Production Costs Per Barrel
While crude oil prices have fallen nearly 14% year-to-date (YTD) as of Mar. 16, 2025, Occidental Petroleum is still making money. West Texas Intermediate (WTI) crude oil at $67.18 per barrel on Mar. 16, 2025. CEO Vicki Hollub stated in their Q4 2024 conference call that they have been "…replacing higher cost production with a higher volume of lower cost new reserves.”
This helps to drive higher earnings per barrel and ultimately higher earnings-per-share (EPS). They improved their average well breakeven by 6%. The company improved drilling and completion costs by 12% against 2023 levels and forecast a 7% drilling cost improvement in 2025. Breakeven production costs per barrel are well below $60 as new wells cost more, but existing wells in the Permian Basin can be in the low $30s.
Learn more about OXY
