Warren Buffett turned 95 last year. Most people his age are busy relaxing, but the "Oracle of Omaha" spent the end of 2025 doing what he does best: making massive, multi-billion dollar moves in the energy sector. If you’ve been watching the occidental petroleum buffett stock saga, you know it’s been a wild ride. From the high-stakes bidding war for Anadarko in 2019 to Berkshire Hathaway’s recent $9.7 billion acquisition of OxyChem, the bond between Buffett and Occidental CEO Vicki Hollub is arguably the most significant corporate bromance—or partnership—in modern finance.
Honestly, it’s kinda fascinating. While the rest of the world was obsessed with AI chips and tech valuations, Buffett was quietly "hoovering up" shares of an oil company. As of early 2026, Berkshire Hathaway sits on a stake of roughly 28% in Occidental Petroleum (OXY). But if you think this is just a bet on gas prices, you’re missing the bigger picture. It's about a fundamental shift in how we think about "net-zero oil" and the Permian Basin's future.
The $9.7 Billion Parting Gift
Let's talk about the news that shook the market last October. Just months before Buffett officially handed the CEO reins of Berkshire over to Greg Abel on January 1, 2026, he pulled the trigger on a $9.7 billion all-cash deal to buy OxyChem.
OxyChem is Occidental’s chemical division. It makes things like chlorine for water treatment and vinyl chloride for plastics. It’s not "sexy" in a Silicon Valley way, but it is essential.
The deal was a masterstroke of balance sheet engineering. Occidental used $6.5 billion of that cash to slash its debt, finally getting its principal debt down toward that elusive $15 billion target. For Buffett, it was a way to double down on a business he already understood through his massive equity stake. It’s value investing at its most basic: buying a productive, cash-generating asset when the market is distracted by shiny objects.
Why the Occidental Petroleum Buffett Stock Connection is So Deep
Why Oxy? Why not just stick with Chevron?
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The answer lies in the dirt. Specifically, the dirt in the Permian Basin of Texas and New Mexico. Occidental owns roughly 2.9 million acres there. It's some of the most cost-efficient oil land on the planet. Hollub has shifted the company's focus away from speculative drilling toward high-margin, steady production. Buffett loves that. He’s often said Hollub is "running the company the right way."
But there’s a second, more futuristic reason: Carbon Capture.
- STRATOS: This is Oxy's massive Direct Air Capture (DAC) facility in Ector County, Texas. It’s designed to pull 500,000 metric tons of $CO_2$ out of the sky every year.
- The Tech Play: By mid-2025, Stratos began its commissioning phase. It’s not just an environmental project; it’s a business. Companies like Microsoft, Amazon, and JPMorgan have already bought carbon credits from this plant.
- The Loophole: This is where it gets clever. Oxy can take that captured $CO_2$ and pump it back into old oil wells to push out more oil. This is called Enhanced Oil Recovery (EOR).
It basically creates a cycle where they can produce "net-zero" barrels. In a world where ESG (Environmental, Social, and Governance) scores matter, this gives OXY a massive competitive moat. Buffett isn't just buying an oil company; he's buying a carbon management company that happens to sell oil.
The Math of the Deal
If you look at the raw numbers from the end of 2025, Occidental's earnings were surprisingly resilient. Despite oil prices hovering in a tight range—roughly $58 to $62 per barrel—Oxy managed to beat EPS forecasts in Q3 2025, reporting $0.64 against a predicted $0.50.
Vicki Hollub has been very vocal about this "tight" range. She expects oil to stay flat through 2026. While that sounds boring, it’s actually a "sweet spot" for disciplined producers. At $60 oil, Oxy’s breakeven costs in the Permian (around $45-$50) are comfortably covered. It provides enough cash to pay dividends, buy back shares, and keep Buffett happy without the boom-bust drama of $100 crude.
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What Most People Get Wrong About OXY
The biggest misconception is that Buffett wants to buy the whole company. In 2023, he told shareholders point-blank: "We’re not going to buy control."
He’s perfectly happy being the "preferred" partner. Think about the structure of his investment. Berkshire holds:
- A nearly 30% common stock stake.
- Warrants to buy another 83.9 million shares at an exercise price of roughly $59.62.
- A massive (though shrinking) pile of preferred stock that pays an 8% dividend.
By owning the chemical wing and a third of the common stock, Berkshire basically eats the "middle" of the cake. If oil prices spike, the common stock and warrants soar. If oil prices stay flat, the chemical business and dividends provide a steady yield. It’s a "coupon-clipping" bet on American energy independence.
Is it a Buy in 2026?
Wall Street is currently "kinda" split. As of mid-January 2026, the consensus rating is a "Hold," with a price target sitting around $49. Some analysts worry that a global oil glut—predicted by the IEA to reach 4 million barrels per day of surplus—could drag prices down to the $40s by late 2026.
But here’s the thing: Buffett doesn't care about the next six months. He cares about the next 20 years.
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Occidental is positioning itself for a world where natural gas is the backbone of the AI-driven electricity boom. Data centers need power, and until batteries get better, gas-fired generation is the only way to keep the lights on for those GPU clusters. Hollub’s bet on gas and carbon capture is a long-term hedge against the decline of traditional gasoline.
Actionable Insights for Investors
If you're looking at the occidental petroleum buffett stock situation for your own portfolio, here is what you actually need to watch:
- Debt Milestones: Watch if OXY hits its principal debt goal of under $15 billion this year. This is the trigger for more aggressive share buybacks.
- The $59.62 Level: This is the strike price for Berkshire’s warrants. If the stock stays below this, Buffett’s warrants are "underwater." If it breaks above it, expect significant movement as Berkshire potentially exercises them.
- Stratos Performance: Keep an eye on the operational efficiency of the DAC plant. If it can actually bring carbon capture costs down toward $100 a ton, the stock is massively undervalued.
- The Abel Transition: With Greg Abel now at the helm of Berkshire, watch for any change in tone. Abel was the one who signed the OxyChem press release, signaling he's just as bullish on this partnership as his mentor.
The era of "easy oil" is over, but the era of "smart oil" is just beginning. Buffett knows that the world can't just flip a switch to green energy overnight. By backing a company that integrates chemicals, carbon tech, and low-cost shale, he's ensuring Berkshire remains the dominant force in the American economy, regardless of what happens at the gas pump.
Keep an eye on the quarterly filings for any further "hoovering" of shares. When the Oracle buys, he usually buys for keeps.