Warren Buffett has been buying more shares of Occidental Petroleum. Berkshire Hathaway now owns about 28.8% of Occidental’s outstanding shares. This stake is worth approximately $15.9 billion.
Buffett praised Occidental CEO Vicki Hollub in his latest letter to Berkshire shareholders. He highlighted Occidental’s vast oil and gas holdings in the United States. He also noted the company’s leadership in carbon-capture initiatives.
Occidental is set to strengthen its position in the Permian Basin. The company plans to acquire CrownRock for $12 billion. The deal is expected to close in the third quarter.
Hollub plans to sell off non-essential assets to reduce debt.
Buffett expands Occidental investment stake
This includes Permian assets worth over $1 billion, according to a May report from Reuters.
Occidental’s revenue largely depends on oil prices. However, the company is well-positioned to generate significant cash flow for shareholders. Oil prices are expected to remain in the $80 to $85 range through 2025.
Buffett’s investment strategy involves buying Occidental shares when they dip below $60. This makes the stock attractive for value investors at around 14 times forward earnings. Occidental’s valuation isn’t as low as some other oil producers.
However, the company’s aggressive growth strategy under Hollub could lead to substantial long-term profit growth. Buffett’s continued faith in Occidental suggests confidence in the company’s strategy and potential. Whether investors should follow Buffett’s lead depends on their risk tolerance and long-term investment goals.
Nevertheless, Occidental’s current stability and cash generation capabilities make it a compelling option for those seeking a mix of value and growth in the energy sector.
