Occidental Petroleum: Balancing Traditional Oil Business with Future Energy Innovation

Strategic Position in Energy Markets

Warren Buffett’s Berkshire Hathaway remains the largest investor in Occidental Petroleum, holding a 28.2% stake in the company. The company has faced challenges recently, with shares dropping 29% since mid-April, coinciding with a 23% decline in crude oil prices due to demand concerns and excess supply.

Operational Excellence and Financial Management

Occidental has demonstrated strong performance, reporting record-high U.S. production and generating $1.5 billion in free cash flow with an adjusted profit of $1.00 per diluted share. The company has efficiently managed its finances, using free cash flow to maintain dividend payments and accelerate debt repayment following its $12 billion CrownRock acquisition, achieving its near-term debt reduction target of $4.5 billion seven months ahead of schedule.

Future-Focused Initiatives

The company is making significant strides in sustainable energy, with its Stratos Carbon Capture and Storage Hub scheduled to begin operations this year. The facility will reach half of its 250,000-tonne capacity by the end of 2025, with full capacity expected by mid-2026, generating stable cash flow from carbon credit sales and net-zero oil production.

Investment Outlook

Analysts have set a fair value estimate of $59 per share, with projections based on expected West Texas Intermediate oil prices averaging $62 per barrel in 2025 and $58/bbl in 2026. For long-term investors, the recent stock price pullback may present a strategic buying opportunity, as the company continues to focus on debt reduction, diversification, and innovation to build sustained cash flow and long-term shareholder value.