Warren Buffett Struggles to Preserve His Preferred Energy Stock Amidst Record-Low Performance
Occidental Petroleum (NYSE:OXY), a company favored by Warren Buffett’s Berkshire Hathaway (NYSE:BRK.A), continues to experience losses while the billionaire maintains confidence in the company.
OXY has recently suffered another setback as its stock fell to its lowest level since December 2024. On January 31, the stock closed at $46.65, a 4.64% decrease for the day, significantly lower than 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 experienced multiple pullbacks, steadily declining 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 was reached on December 19 when Berkshire Hathaway purchased $400 million worth of shares, which boosted the stock. However, OXY’s recovery was short-lived, and the stock is now rapidly 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’s steady accumulation.
Berkshire Hathaway owns 264 million Occidental shares worth $12 billion, representing a 28% stake. Along with Chevron (NYSE:CVX), Occidental is one of Berkshire’s key energy investments. It is worth noting that Buffett has been selective in buying more shares since June 2024. He previously stated that he does not intend to acquire the entire company but admires its CEO, Vicki Hollub. Some investors still hope for a full buyout.
Despite OXY’s troubled stock performance, the company has several underlying fundamentals that are likely to drive future growth. For example, its presence in the Permian Basin strengthens its assets, enhancing production potential and cost efficiency.
Furthermore, a potential second term for Donald Trump could benefit Occidental through deregulation, creating more drilling opportunities.
The company’s investment in direct-air-capture (DAC) technology positions it as a leader in carbon reduction. This technology has the potential to generate revenue, as evidenced by Microsoft’s agreement to purchase 500,000 metric tons of removal credits.
On the other hand, Occidental plans to maintain a five-rig program in its CrownRock assets until 2025, with a target of mid-single-digit production growth. It is expected that the Q4 output will reach 1.45 million barrels of oil equivalent per day.
The potential recovery of the stock is likely to be influenced by the projected decline in revenue for the oil giant. Specifically, Occidental Petroleum anticipates a 6.70% decrease in revenue for Q4 2024, amounting to $7.02 billion, but a 13.78% rebound in Q1 2025 to $6.84 billion. The forecast for full-year 2024 revenue is $27.17 billion (-6.04%), with a projected growth of 3.49% to $28.12 billion in 2025.
Occidental Petroleum is currently facing losses and weak stock performance, but Buffett’s continued investment indicates confidence in its long-term potential.
There is a possibility of recovery if the company achieves its growth targets, particularly in production and carbon capture. Despite the current challenges, Buffett’s stake suggests optimism for the future.
