Occidental Petroleum (OXY) has finalized its largest divestment to date, transferring its chemical division, OxyChem, to Warren Buffettâs Berkshire Hathaway (BRK.A) (BRK.B) for an impressive $9.7 billion. This transaction marks a significant shift for Occidental as it continues to work through its debt-laden balance sheet following substantial acquisitions.
With $6.5 billion of the proceeds earmarked for debt reduction, Occidental aims to reduce its principal debt below the $15 billion threshold set after last yearâs $12 billion CrownRock acquisition. This represents a crucial milestone for a company that had $23.3 billion in debt as of June.
The divestiture further strengthens Berkshireâs influence over Occidental. Already its largest shareholder with a 27% stake, Buffett is now incorporating a chemicals segment into his portfolio, enhancing his holdings beyond just oil and gas. For Occidental, the sale illustrates a refined focus on oil and gas production, which accounted for 75% of earnings in 2024. CEO Vicki Hollub characterized the agreement as a means to âunlock over 20 years of low-cost resource potentialâ within their core upstream operations.
Occidental Petroleum Corporation, valued at $43 billion in market capitalization, operates as a global energy enterprise, with activities spanning the U.S., the Middle East, and North Africa. OXY’s operations encompass Oil and Gas, Chemical (OxyChem), and Midstream segments, in addition to investments in low-carbon initiatives. The firm effectively merges traditional energy production with carbon management to foster sustainable growth.
On October 2, Occidental Petroleum (OXY) shares fell by over 6% following the news of the deal, reflecting persistent investor apprehension regarding the Berkshire Hathaway agreement. As of early October 2025, the stock has remained in the mid-$40s range, resulting in a 10% dip year-to-date (YTD). This trend mirrors wider challenges within the energy sector, as oil prices reached four-month lows in September amid concerns of oversupply.
The valuation of OXY appears elevated, with a forward P/E ratio of 20, significantly above the sector average of 13, indicating potential overvaluation compared to rivals. On the other hand, its price-to-cash-flow ratio of 4 is below the sector’s median of 5, hinting at some undervaluation.
Occidental Petroleum continues to provide shares holders with a quarterly dividend of $0.24 per share, yielding roughly 2% forward. While the company has seen varied growth over the past five years, it has sustained dividend payments for three consecutive years, maintaining a modest payout ratio of 30%.
