Energy / Oil and Gas Exploration and Production · Deep dive

Occidental Petroleum

The 1920 California oil company Vicki Hollub bet the balance sheet on to steal Anadarko from Chevron in 2019, sold to Berkshire Hathaway a chunk of itself twice over — first as $10B of 8% preferred and 80M warrants, then as the entire OxyChem chlor-alkali business for $9.7B cash on 2 Jan 2026 — and is now a Permian pure-play E&P with ~26.5% Berkshire common ownership and a $1.3B direct air capture plant nobody else has the CO2-injection reservoirs to run economically.

well positioned

The 2 January 2026 OxyChem sale to Berkshire cleared enough debt to make Occidental — for the first time since April 2019 — a Permian pure-play E&P with a manageable balance sheet, a defensible top-quartile Permian resource base, and the world's most patient anchor shareholder holding 26.5% of the common and the entire chlor-alkali business next door.

My take ★★ Very interesting ★ Interesting − Maybe ✗ Not interesting

Snapshot

Occidental Petroleum is a Houston-based, Permian-anchored oil and gas producer that as of Q2 2026 is a very different company from the one that closed the $38B Anadarko deal in August 2019. On 2 January 2026 it sold OxyChem — the chlor-alkali and PVC business Armand Hammer bought in 1968 — to Berkshire Hathaway for $9.7B cash, retiring roughly $6.5-7B of principal debt in the first four months of the year and reducing the go-forward stack to ~$11.8B (company disclosure, mid-2026). Berkshire owns about 26.5% of the common (~264.94M shares, Fintel), holds $8.485B remaining face of 8% cumulative preferred with $59.62-strike warrants on 83.86M shares, and now owns 100% of OxyChem separately. Vicki Hollub has been CEO since April 2016. Q2 2026 revenue was $8.33B (5 August release), up 52% year on year on higher oil prices and midstream strength, EPS $2.40 versus consensus $1.87. Market cap sits near $57-60B (mid-August 2026).

Founding story

Occidental was incorporated in California in 1920 as a small wildcatter and spent its first 37 years as a nearly worthless shell. In 1956 Armand Hammer — a 58-year-old New York physician-turned-Soviet trader-turned-art dealer — put a small stake into the company as a passive tax-loss investment. Within a year he had taken operating control. The 1961 Lathrop gas field discovery in California put a real reserves base under the ticker; the 1966 Libya concession under King Idris turned Occidental into the largest single foreign producer in that country; and a stock-swap conglomeration binge — Island Creek Coal (1968), Hooker Chemical / OxyChem (1968), IBP (1980s) — turned a shell into a Fortune 500 industrial. Hammer ran the company for 33 years until his death in 1990.

The post-Hammer era was messy. Ray Irani took over in 1990, spent two decades focusing the portfolio on Permian oil, MENA gas (Al Hosn in the UAE, Mukhaizna in Oman) and OxyChem, spun off California Resources Corporation in May 2014, and left in 2013 amid pay-package controversy. Steve Chazen ran the disciplined years 2011-2016 and handed the CEO seat to Vicki Hollub in April 2016. Hollub had spent her entire career at Occidental — she joined Cities Service (later acquired by OXY) in 1981 straight out of the University of Alabama, ran the Permian business, and rotated through operating roles on three continents. Her tenure is defined by two bets: Anadarko in 2019 and CrownRock in 2024.

How it works

Occidental produces roughly 1.4M boe/d (Q3 2026 guidance 1,400-1,440 Mboe/d; company release, 5 August 2026). The dominant business is US onshore E&P, and the dominant sub-basin is the Permian. In the Midland Basin, OXY runs long horizontal laterals through the Wolfcamp, Spraberry and Bone Spring intervals, drilled by rig contractors on multi-well pads. The Delaware Basin adds the Wolfcamp and Bone Spring at greater depth and higher pressure. Wells are hydraulically fractured in stages down the lateral, produced by artificial lift (rod pumps, gas lift), and gathered by regional midstream to sales points at Midland-Cushing and Delaware-Wink hubs.

The differentiator versus a pure Diamondback or Devon: enhanced oil recovery. Occidental has run large-scale CO2 flood projects in West Texas since the 1970s — Denver Unit, Wasson Field — and is the largest handler of anthropogenic CO2 in the US oil patch. That reservoir engineering base is exactly what the 1PointFive Direct Air Capture business is selling: a company that can take captured CO2, transport it, inject it into subsurface storage or into a mature waterflood, and sell either the resulting incremental oil (with a much lower carbon footprint on paper) or a permanent-storage removal credit. Stratos, the first commercial DAC plant, sits in Ector County, Texas and is designed for 500,000 tonnes/yr nameplate capacity; commissioning ran through late 2025 into 2026, delayed at one point by a component issue (Carbon Herald, 2026).

International production comes from Oman, Algeria, the UAE (Al Hosn Gas) and offshore Gulf of America. Midstream & Marketing captures gathering, processing and CO2 sales margin.

Product and business overview

Oil and Gas — US Onshore. The core. Permian Resources (Midland + Delaware), Rockies (DJ Basin from the Anadarko deal), and legacy Anadarko-inherited midcontinent. FY2025 production skewed roughly 60% Permian.

Oil and Gas — International. Al Hosn (UAE gas, 45%-owned JV), Oman blocks 9/27/30/53/62/65, Algeria Berkine, and Colombia. Steadier volumes, longer contracts, lower decline than the shale book.

Oil and Gas — Gulf of America. Deepwater assets inherited from Anadarko — Lucius, Caesar/Tonga, Constitution. Higher production per well, longer investment cycles.

Midstream and Marketing. Gathering, processing, CO2 pipelines (the largest CO2 network in North America, on the order of ~2,500 miles), and trading margin on physical crude.

Low Carbon Ventures (1PointFive). Direct air capture (Stratos in Ector County, TX; South Texas DAC hub with up to $650M DOE grant; multiple hubs planned). Carbon storage. Credit marketing to Microsoft, JPMorgan, Palo Alto Networks and others at price points reported in the $500-$1,000 per ton range.

OxyChem (divested 2 January 2026). The chlor-alkali and PVC business that used to throw off $1-2B of annual segment earnings; now owned by Berkshire Hathaway with Wade Alleman continuing as CEO.

Business model and pricing

Occidental sells commodity molecules at commodity prices. There is no rate card. Realised WTI, Henry Hub natural gas and NGL basket prices — less basis differentials and transport — drive segment earnings. Full-cycle cash breakevens for the Permian portfolio have been publicly guided in the $40-45 WTI range on a corporate basis, with the highest-quality Midland cores (including CrownRock rock) below $40. The Dallas Fed Energy Survey pegged the whole-basin new-well breakeven at $61 (Midland) and $62 (Delaware) in Q1 2025 — a reminder that OXY’s core is above average, not average.

The Berkshire preferred is expensive: 8% coupon on the ~$8.485B still outstanding runs ~$680M per year and must be called or refinanced by August 2029 to keep dilution off the common. That preferred coupon plus roughly $760M of run-rate interest on the remaining debt (per management, late 2025) is the effective hurdle rate the Permian must clear before capital returns to the common.

Traction over time

Every number above ties to a company release or 10-K filing; verify Q2 2026 debt figure against the 10-Q. The through-line: Occidental has spent seven years digesting Anadarko, took on a second $10B+ chunk with CrownRock, then used the OxyChem sale to Berkshire to finish the deleveraging in a single stroke.

Market analysis

Occidental sells into the global oil market. WTI averaged ~$77/bbl in 2024, ~$65 in 2025, and is running higher across the first half of 2026 (the Q2 2026 print reflects that lift). The IEA and EIA both project US crude production plateauing between 2026-2028 at 13-13.5 million b/d, with the Permian carrying most of the growth and now approaching its own plateau — Occidental itself has publicly discussed the basin entering an “industrialised stability” phase (Industrial Info, 2025). That is a mixed message for a Permian pure-play: less growth to fund, but also less scarcity value if the resource itself is longer-lived than the market feared.

The Direct Air Capture market is more speculative. Sylvera and BloombergNEF forecast the voluntary carbon removal market at low-single-digit-billion-dollar size in 2026 growing toward $10-30B by 2030 depending on 45Q durability and corporate offtake follow-through. The 45Q credit at $180/ton for permanent storage is the load-bearing subsidy; any Congressional reversal of 45Q would be existential for Stratos economics.

Competitive intel

The named set is in the frontmatter. The competitive picture has shifted materially since 2023: ExxonMobil closed the $59.5B Pioneer deal in May 2024 and is now the runaway largest Permian operator; Chevron closed the $53B Hess deal in July 2025 and gained the world-class Stabroek block in Guyana; ConocoPhillips closed the $22.5B Marathon Oil deal Nov 2024 to become the largest US-focused pure-play E&P; Diamondback closed the $26B Endeavor deal 30 Sep 2024 to become the pure-play Midland Basin leader. In that context, OXY’s ~1.44M boe/d production and $57-60B market cap put it clearly in the top-four US onshore complex but no longer at any scale advantage. Its differentiators are the international book (Al Hosn, Oman), the CO2 pipeline network, and 1PointFive.

History and evolution

• 1920 — Occidental Petroleum incorporated in California.
• 1957 — Armand Hammer takes control of a near-shell.
• 1961 — Lathrop gas field discovery.
• 1966 — Libya concession under King Idris.
• 1968 — Hooker Chemical (later OxyChem) and Island Creek Coal acquired.
• 1990 — Hammer dies aged 92; Ray Irani becomes CEO.
• 2013 — Irani steps down amid pay controversy; Steve Chazen takes over.
• 1 May 2014 — California Resources Corporation spun off.
• April 2016 — Vicki Hollub becomes CEO.
• 30 April 2019 — Buffett commits $10B preferred (8% coupon, 80M-share warrants at $62.50 later adjusted to $59.62) in a Sunday meeting in Omaha.
• 8 August 2019 — Shareholder vote approves Anadarko acquisition; deal closes; OXY debt exceeds $40B.
• March 2020 — Dividend cut from $0.79 to $0.01 per quarter as WTI collapses.
• 20 April 2020 — WTI settles at -$37.63/bbl; OXY equity trades below $10.
• 2022 — Buffett begins buying OXY common in size; FERC approves purchase up to 50% in August.
• 11 December 2023 — CrownRock acquisition announced ($12B); dividend raised.
• 1 August 2024 — CrownRock closes.
• August 2025 — Stratos DAC begins commissioning at Ector County, TX.
• October 2025 — OxyChem sale to Berkshire announced.
• February 2026 — Q1 2026 dividend raised to $0.26 per quarter.
• 2 January 2026 — OxyChem sale closes for $9.7B; Berkshire now has two direct exposures to Occidental.
• 5 August 2026 — Q2 2026 revenue $8.33B, EPS $2.40, principal debt down to ~$11.8B.

What people say

The case for. Analysts and holders repeatedly cite three points. First, Berkshire’s 26.5% common ownership plus preferred and OxyChem is a de facto floor bid on the equity — Buffett has spent $10B+ of common on top of the preferred and shows no sign of trimming. Second, the balance sheet transformation is real: principal debt fell from ~$40B post-Anadarko in 2019 to ~$11.8B by Q2 2026, the lowest since before the deal. Third, CrownRock’s Midland Basin rock genuinely sits below $40 breakeven, giving OXY inventory depth into a lower-price world. Sell-side (Truist, TD Cowen, Mizuho) has generally moved to Buy or Overweight through 2026 on the OxyChem-close catalyst.

The complaints. The bear case has three specific pieces. First, the 8% preferred coupon: at ~$680M per year on $8.485B outstanding, that is a persistent drag on common cash returns and must be redeemed or refinanced by August 2029. Second, the 1PointFive DAC bet is uneconomic without $180/ton 45Q credit and premium voluntary offtakes — climate-tech commentators including Mongabay and Watts Up With That (from very different angles) have argued DAC is “greenwashing at its worst” and the technology cost curve does not close without perpetual subsidy. Third, Permian plateau risk: even OXY itself has publicly acknowledged the basin is entering “industrialised stability”, and after the OxyChem sale OXY is now a much higher-beta pure-play E&P without the chlor-alkali cash flow ballast that historically smoothed the cycle. Glassdoor themes cluster around long tenure and pride in operating culture but also complaints about slow decision-making and post-Anadarko integration exhaustion.

Outlook: well positioned or at risk?

Well-positioned — but only because the OxyChem sale closed in time. The 2 January 2026 divestiture is the single most important corporate event since Anadarko. It converted an unrelated chemical business trading at a discounted conglomerate multiple into $9.7B of cash used to retire debt, took forward interest expense down to a run-rate ~$760M, and left OXY with the cleanest Permian pure-play cost structure it has had this decade. Berkshire’s continued 26.5% ownership plus its now-full control of OxyChem next door is a signal the market should not ignore: the most disciplined capital allocator alive has doubled down on the OXY complex twice over, and has SEC/FERC clearance to buy up to 50% of the common.

The bear case is real and worth naming. The 8% preferred is a $680M/year hurdle rate until August 2029 redemption. The Permian is plateauing on the industry’s own math. The DAC pitch, however elegantly it maps onto OXY’s CO2 injection expertise, does not have unit economics without 45Q and voluntary buyers paying $500-$1,000 per ton. A $50 WTI print for eighteen months would still shrink capital returns hard, even at ~$11.8B of debt.

But the balance of evidence favours the incumbent call. Occidental now has (1) a top-quartile Permian resource base, (2) the industry’s most experienced anthropogenic-CO2 handler, (3) an international book that steadies the volume curve, and (4) an anchor shareholder whose 26.5% common ownership and full ownership of the divested chemicals business gives the equity a genuinely different investor of last resort. The moat is not the oil in the ground — everyone has that. The moat is the combination of the Permian rock quality after CrownRock, the CO2 pipeline network no rival can rebuild, and Buffett’s stated view that Hollub is one of the best operators in the industry. That combination compounds through a plateau. Well-positioned.

How a challenger would attack it

The wedge is cost of capital, not rock. Occidental’s exploitable weakness is arithmetic: an 8% preferred coupon burning ~$680M a year until an August 2029 redemption deadline, ~$760M of run-rate interest on top, and a corporate breakeven guided at $40-45 WTI while Chevron’s Permian sits in the mid-$30s and Diamondback’s Endeavor rock is sub-$40. A challenger structured like post-2022 Continental — private capital, no quarterly clock, no preferred overhang — attacks by out-bidding OXY for the non-core divestiture packages OXY itself must sell ($4.5B committed post-CrownRock), running them at lower G&A per boe, and simply out-waiting a $50 WTI stretch that forces OXY to shrink capital returns. The second vector is the DAC flank: Stratos costs ~$1.3B for 500k tonnes nameplate and only works with $180/ton 45Q plus $500-$1,000/ton voluntary offtakes. A capture startup with a cheaper modular process (Heirloom’s calcium cycle is the template) can underprice the same Microsoft and JPMorgan buyers without ever building a billion-dollar plant, turning OXY’s flagship differentiator into a stranded-capex story the moment 45Q wobbles.

Same playbook, new buyer

Sell the subsurface, not the sunlight. Occidental’s genuinely scarce asset is not DAC hardware — it is fifty years of CO2 flood engineering, Class VI permitting experience, and ~2,500 miles of CO2 pipeline. The more promising customer for that playbook is not a voluntary carbon buyer paying $600/ton; it is the Gulf Coast point-source emitter — refiners, ammonia and ethylene plants — who can capture CO2 at a fraction of DAC’s cost and need exactly the transport-and-injection service OXY pioneered in West Texas. A storage-as-a-service pure-play selling sequestration capacity to industrial emitters at $80-120/ton addresses a market that clears without premium offtakes. Occidental won’t follow easily: 1PointFive’s identity, its DOE South Texas grant, and its Microsoft-class offtake book are all committed to the DAC narrative, its pipeline network is oriented toward West Texas EOR, and every dollar of low-carbon capex now competes against a preferred coupon and a Permian drilling program that must come first. The same shift works abroad — Middle East NOCs need EOR-grade CO2 handling and OXY’s Oman and UAE relationships prove the demand — but a Houston services firm without a $58B E&P attached can price it as a margin business, not a balance-sheet bet.

Sources and further reading

• Occidental Announces 4th Quarter 2025 Results — oxy.com press release, 18 February 2026
• Occidental Petroleum (NYSE:OXY) Reports Upbeat Q2 CY2026 — StockStory / Yahoo Finance, 5 August 2026
• Occidental Completes Sale of OxyChem — oxy.com news, 2 January 2026
• Berkshire Hathaway completes $9.7B OxyChem acquisition — Manufacturing Dive, 2 January 2026
• Occidental to Acquire CrownRock — oxy.com news, 11 December 2023
• Warren Buffett Commits $10 Billion To Occidental Acquisition Of Anadarko — Forbes / GuruFocus, 1 May 2019
• Occidental and 1PointFive Secure Class VI Permits for STRATOS — 1PointFive news, 2024
• Occidental’s Stratos DAC Hub To Launch Operations By The End Of 2025 — Carbon Herald, 2025
• Permian Production Could Be Plateauing, Occidental Says — Industrial Info, 2025
• Berkshire Hathaway Inc ownership in OXY — Fintel 13F/13G filings, Q2 2026
• Direct air capture climate solution faces harsh criticism — Mongabay, December 2024
• Vicki Hollub — Rice Business bio