Occidental Petroleum has gained traction as an appealing energy stock, especially after Warren Buffett’s investment through Berkshire Hathaway, which owns over 265 million shares. Despite facing market volatility, the company continues to demonstrate stability in its operations.
Current Market Overview of Occidental Petroleum
As of the latest trading day, Occidental’s stock saw an increase of 6.01%, raising its price to $56.27. The company’s market capitalization stands at approximately $52 billion. Below are key performance metrics:
| Key Data Points | Values |
|---|---|
| Day’s Range | $56.16 – $56.34 |
| 52 Week Range | $34.78 – $56.34 |
| Volume | 3M |
| Average Volume | 11M |
| Gross Margin | 31.94% |
| Dividend Yield | 1.81% |
Reasons to Buy or Hold Occidental Petroleum
Occidental’s primary challenge came from a significant debt burden related to its acquisition of Anadarko in 2019, which ballooned to nearly $48 billion. However, over the past 20 months, the company has made substantial strides in paring down its debt by $13.9 billion, thereby strengthening its financial position.
- Strong earnings performance despite fluctuating oil prices.
- Generated $4.3 billion in free cash flow last year.
- Midstream segment exceeded pre-tax income guidance by over $550 million, boosted by the Permian Basin performance.
Additionally, the growing demand for natural gas from various sectors presents a promising outlook for Occidental. In the previous year, the company sold an average of 2,278 million cubic feet per day of natural gas and maintains proven reserves of 7,745 billion cubic feet.
Reasons to Consider Selling Occidental Petroleum
In a move to reduce its debt further, Occidental divested its chemical segment, OxyChem, to Berkshire Hathaway for $9.7 billion. This strategic sale allowed the company to focus on its core U.S. oil and gas production but also resulted in a loss of diversification.
- The absence of OxyChem may increase earnings volatility.
- Occidental still carries approximately $8.3 billion in preferred stock, primarily held by Berkshire Hathaway.
- Last year, the company paid $679 million in preferred dividends.
Furthermore, Occidental is constrained from paying common dividends unless preferred dividends are fully paid, which could limit shareholder returns.
Conclusion: Should You Buy, Sell, or Hold Occidental Petroleum?
Occidental has successfully fortified its balance sheet and offers investors a potential return as energy prices rise. However, the reduced diversification after selling its OxyChem business might expose investors to more significant risks associated with declining oil and gas prices.
If you are optimistic about energy commodity prices soaring, Occidental could be a worthwhile investment. Conversely, if you foresee a downturn in oil prices, it might be prudent to consider selling, especially following the stock’s 24% rally leading up to early 2026.
