Warren Buffett made plenty of savvy moves during his legendary tenure as CEO of Berkshire Hathaway (BRKA 0.43%)(BRKB 0.76%). And one of his last major stock picks in his last years before stepping down was Occidental Petroleum (OXY +3.40%) — and it’s worked out quite well recently.
Berkshire’s relationship with the energy company dates back to 2019, when it invested in Occidental preferred stocks and warrants. The Buffett-led conglomerate began building its common-stock stake in 2022. Purchases of the stock continued in 2023, 2024, and 2025.
Today, based on Berkshire’s public filings earlier this year, Occidental remains a top holding in the conglomerate’s massive equity portfolio, accounting for about 4% at the time of the report and an estimated 5% now, based on the stock’s appreciation and assuming Berkshire hasn’t sold any shares.
Shares of the oil and gas producer have soared this year, rising about 37% year to date as of this writing.
But with the stock making such a big move in a short amount of time, have investors who haven’t bought in missed out? Or is it not too late to buy?
Image source: The Motley Fool.
A transformed portfolio and record production
The backdrop to Occidental’s recent success, of course, is the rapid surge in global oil prices. With West Texas Intermediate (WTI) crude oil climbing to about $90 per barrel and Brent crude at around $99 per barrel recently amid U.S.-Iran tensions and supply risks in the Strait of Hormuz, the company’s exposure to commodity markets has allowed it to capture significant upside.
As geopolitical tensions and a war risk premium seemingly keep crude prices elevated, Occidental’s highly profitable portfolio is reaping the rewards.
Additionally, Occidental’s recent performance has been exceptional. Total global production for the fourth quarter averaged 1,481 thousand barrels of oil equivalent per day (Mboed), surpassing the midpoint of management’s guidance. And for the full year, the company set a new annual production record of 1.434 million barrels of oil equivalent per day.
But what’s particularly compelling about Occidental’s business right now is how efficiently the company is generating cash.
On a normalized basis and excluding its chemicals segment, Occidental’s cash flow from operations increased by 27% year over year in 2025. Including its chemical business, operating cash flow before working capital was $11.6 billion. And the company generated a staggering $4.3 billion in free cash flow before working capital during the period.
This momentum from its 2025 financials, combined with the more recent sale of its OxyChem business (In early January 2026, Occidental completed the sale of its chemicals business to Berkshire Hathaway for $9.7 billion in cash), has helped the company reduce its debt to a manageable and arguably healthy level of $15 billion at the time of its fourth-quarter earnings report in February.
Additionally, the sale of OxyChem essentially finalized Occidental’s shift to a more focused energy portfolio.
Highlighting management’s confidence in its leaner operations, Occidental also recently announced an 8% increase to its quarterly dividend.
Today’s Change
(3.40%) $1.85
Current Price
$56.33
Key Data Points
Market Cap
$54B
Day’s Range
$54.32 – $56.48
52wk Range
$38.72 – $67.45
Volume
15M
Avg Vol
17M
Gross Margin
31.94%
Dividend Yield
1.80%
Is Occidental stock a buy?
With record production, disciplined spending, and a significantly improved balance sheet, it’s easy to see why investors have been bidding up the stock.
But is now a good time to buy the stock?
For those that don’t mind the volatility associated with oil and gas stocks and their ties to commodity pricing, maybe so. Sure, Occidental trades at a price-to-earnings ratio of about 42. But its forward price-to-earnings ratio, which measures a stock’s price as a multiple of analysts’ consensus forecast for earnings per share over the next 12 months, is just 12.5.
With this said, the stock isn’t necessarily cheap. And there are significant risks.
While Occidental has improved its cost efficiencies — achieving its lowest lease operating expense per barrel since 2021 — it still requires substantial amounts of capital to sustain its operations. Indeed, management expects capital expenditures to range from $5.5 billion to $5.9 billion in 2026.
Further, if commodity prices unexpectedly soften or global demand cools, the company’s cash generation could compress quickly.
Finally, it’s worth noting that the Oracle of Omaha accumulated the bulk of his position at much lower prices, locking in a wide margin of safety before the stock’s recent surge.
All of this to say, the stock looks attractive as a small position for investors looking to increase their exposure to oil and gas. But for investors who don’t fit that profile, it might be worth waiting for a potential pullback in the stock price at some point.
