Warren Buffett’s bet on Occidental Petroleum (NYSE: OXY) is seemingly paying off, with the stock rising over 50% in the past year.
Notably, OXY shares reached a 52-week high of $67.45 on March 31 before retreating and recovering, settling at $62 as of press time, up 52% over the past year.
Occidental’s recovery reflects improving fundamentals and higher oil prices amid US-Iran tensions and concerns about disruptions to crude shipments through the Strait of Hormuz. Its average realized crude oil price rose 32.6% year over year in the third quarter.
Berkshire’s Hathaway’s (NYSE: BRK.A, BRK.B) investment gives it exposure to Occidental’s production assets and cash flows.
Berkshire stake in Occidental
The relationship also deepened when Berkshire completed its $9.7 billion cash acquisition of Occidental’s OxyChem business on January 2, 2026, giving the oil producer greater flexibility to reduce debt and focus on its core operations.
At the same time, Berkshire’s first-quarter filing showed a 26.9% stake, excluding the potential effect of outstanding warrants.
Occidental’s 2025 annual filing separately listed Buffett and affiliated entities as holding 348.9 million shares and warrants, equivalent to 32.43% of outstanding common stock under that disclosure’s methodology.
Meanwhile, Occidental’s second-quarter 2026 results reported net income of $2.8 billion, or $2.75 per diluted share, and adjusted earnings of $2.40 per share. Operating cash flow reached $5.1 billion, while free cash flow before working capital hit $3 billion, its highest level since Q3 2022.
Production averaged 1.433 million barrels of oil equivalent per day, exceeding the high end of guidance. Occidental also reduced principal debt by $1.9 billion to $11.8 billion, moving closer to its $10 billion target.
Further debt reduction could lower interest expenses and free up cash for dividends, share repurchases and production investments.
OXY third quater outlook
Third-quarter pricing data reinforced the favorable operating environment. Occidental’s average realized crude oil price rose 32.6% year over year to $85.91 per barrel, while Brent averaged $89.27, up 31.2%. Realized natural gas liquids prices increased nearly 26% to $24.63 per barrel.
However, production at some Gulf of America facilities was temporarily curtailed in September because of a third-party gas pipeline constraint and maintenance.
Production was partially restored, with the remaining affected output expected to return as the issue was resolved.
Oil-price volatility remains the main risk. In this case, easing geopolitical tensions, weaker demand, increased competing supply, or changes in OPEC+ output could pressure crude prices and Occidental’s margins.
Other risks include debt obligations, production costs, exploration uncertainty, environmental regulations and operational disruptions.
OXY investment case
Overall, after its 52% rally, Occidental is no longer an obvious bargain. Its investment case depends on sustained cash generation, disciplined spending and further debt reduction.
Berkshire’s substantial stake supports investor interest but does not guarantee future returns, particularly given its longer investment horizon.
