Why Buffett Is Betting Big on OXY

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Introduction

Hello! Today, I've brought this topic to you! We're diving into the world of energy stocks to answer a big question: Is Occidental Petroleum (OXY) a top-tier investment right now? With the legendary Warren Buffett making a huge bet on the company, many investors are curious. Let's break down the key factors that make OXY a compelling choice for those interested in crude oil.

☆ Topic 1: Rock-Solid Production & Low-Cost Advantage
One of the biggest strengths of Occidental Petroleum is its position as a leading producer in the Permian Basin, one of the most resource-rich areas in the United States. The company boasts some of the lowest-cost and longest-life production assets in the industry.

What does this mean for investors? It means OXY can remain profitable even when oil prices are low. The company can stay cash flow positive with crude oil prices down in the low $30s per barrel range.

For example, think of it like owning a coffee shop that has a secret, cheap source for high-quality beans. While other coffee shops struggle when bean prices rise, your shop continues to thrive. That's the kind of competitive edge OXY has in the oil market.

☆ Topic 2: Tackling Debt Head-On
Investors have been a bit nervous this year, causing the stock to fall over 8%. The main reason for this concern was the company's debt, which grew after its $12 billion acquisition of CrownRock last year.

However, OXY has been aggressively addressing this issue. In just the last 10 months, the company has already repaid a whopping $6.8 billion in debt! This smart move has reduced its annual interest payments by $370 million. Furthermore, OXY has already paid off all its debt due in 2025 and has only a small amount ($284 million) maturing over the next 14 months. Given that it generated $1.2 billion in free cash flow in the first quarter of 2025 alone, this is a very manageable situation.

☆ Topic 3: The Warren Buffett Seal of Approval
Perhaps the most significant vote of confidence in Occidental Petroleum comes from one of the world's most successful investors: Warren Buffett. His company, Berkshire Hathaway, owns a massive 28.2% stake in OXY.

When an investor famous for his long-term, value-driven strategy invests so heavily in a company, it signals strong belief in its underlying value and future prospects. Buffett doesn't make these kinds of bets lightly. This endorsement suggests he sees OXY as a durable, well-managed company poised for long-term success.

☆ Questions
Q1. Why were investors concerned about OXY stock this year?
A. The primary concern was the significant debt the company took on after its $12 billion acquisition of CrownRock, which made some investors nervous about its financial health.

Q2. How is Occidental Petroleum managing its debt?
A. The company is actively and successfully managing its debt. It has repaid $6.8 billion in the last 10 months, cleared all debt maturing in 2025, and maintains strong free cash flow to cover its remaining obligations.

Q3. What is so special about Warren Buffett investing in OXY?
A. Warren Buffett is known for meticulous research and investing in high-quality companies for the long term. His large 28.2% stake is seen as a powerful endorsement of OXY's assets, management, and overall value proposition.

☆ Conclusion
Occidental Petroleum (OXY) presents a strong case for being a top investment choice in the crude oil sector. Despite recent stock pressure due to acquisition-related debt, the company has demonstrated impressive financial discipline by rapidly paying it down. With its low-cost production assets providing a safety net against price drops and the powerful backing of Warren Buffett, OXY stands out as a resilient and promising energy stock for the discerning investor.