Occidental Petroleum (NYSE: OXY), a company favored by Warren Buffett’s Berkshire Hathaway (NYSE: BRK.A), is still facing losses despite the billionaire’s confidence in the company.
OXY recently experienced a significant drop in its stock price, reaching its lowest point since December 2024. On January 31, the stock closed at $46.65, down 4.64% for the day, showing a significant retreat from its recent highs when it attempted to stay above the $50 mark.
According to analysis by Barchart on February 2, the stock price has been volatile over the past six months. After reaching a peak near $60 in August 2024, OXY faced several pullbacks and steadily declined throughout November and December.
“Barchart stated, “Warren Buffett can’t seem to save Occidental Petroleum – OXY has fallen to its lowest price since December and is approaching Warren Buffett’s latest purchase price, which marked a local bottom.”
The lowest point occurred on December 19, when Berkshire Hathaway purchased $400 million worth of shares, boosting the stock. However, OXY’s recovery was short-lived, and the stock is now approaching its December low point once again as it remains below the 200-day moving average (MA).
Data provided by the charting platform TrendSpider also indicated that the stock’s relative performance against the S&P 500 has been weak, despite Buffett steadily accumulating shares.
Berkshire owns 264 million Occidental shares worth $12 billion, representing a 28% stake. Along with Chevron (NYSE: CVX), it is one of Berkshire’s significant energy investments. Buffett has been selective in buying more shares since June 2024 and has previously stated that he does not intend to acquire all of Occidental but admires its CEO, Vicki Hollub. Some investors still hope for a full buyout.
Despite the troubled stock performance, Occidental still possesses underlying fundamentals that are likely to drive future growth. For example, its presence in the Permian Basin strengthens its assets, boosting production potential and cost efficiency.
Additionally, a second Donald Trump administration could further benefit Occidental through deregulation, fostering increased drilling opportunities.
The company’s investment in direct-air-capture (DAC) technology positions it as a leader in carbon reduction. This technology could generate revenue for the company, as evidenced by Microsoft’s agreement to purchase 500,000 metric tons of removal credits, highlighting its potential.
On the other hand, Occidental plans to maintain a five-rig program in its CrownRock assets through 2025, targeting mid-single-digit production growth, with an expected Q4 output of 1.45 million barrels of oil equivalent per day.
The potential recovery of the stock is likely to be affected by the projected decline in revenue for the oil giant. Specifically, Occidental Petroleum expects a 6.70% revenue decline in Q4 2024 to $7.02 billion, but a 13.78% rebound in Q1 2025 to $6.84 billion. Full-year 2024 revenue is forecasted to be $27.17 billion (-6.04%), with a 3.49% growth to $28.12 billion in 2025.
Occidental Petroleum is facing losses and weak stock performance overall, but Buffett’s ongoing investment indicates confidence in its long-term potential.
The company has the potential to recover if it meets its growth targets, particularly in production and carbon capture. Despite the current challenges, Buffett’s stake suggests optimism for the future.
