Warren Buffett Owns 265 Million Shares of OXY. Here’s What He’s Betting On.

Key Stats for Occidental Petroleum Stock

• 52-Week Range: $38.80 to $67.45
• Street Mean Target: $67.08
• Market Cap: ~$60.0B
• LTM Net Debt/EBITDA: 0.72x
• Forward 2-Yr EPS CAGR: ~32%
• Dividend Yield: 1.8%

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Occidental Just Posted Its Best Quarterly Cash Flow Since 2022. The Stock Has Recovered Sharply.

Occidental Petroleum (OXY) explores for, develops, and produces oil, natural gas, and natural gas liquids primarily in the Permian Basin, the Gulf of Mexico, and the Middle East.

It also operates OxyChem, one of North America’s largest chemical manufacturers, and a midstream and marketing segment that handles transportation, storage, and sale of hydrocarbons.

The combination gives Occidental more earnings diversification than a pure-play producer, though oil prices remain the dominant driver of financial results across all three segments.

Second quarter 2026 results were strong across the board. Adjusted EPS came in at $2.40, clearing the Wall Street consensus of $1.85 by nearly 30%. Revenue reached $8.33 billion, topping estimates by roughly 17%.

Free cash flow before working capital hit approximately $3 billion, the highest quarterly level since Q3 2022, driven by realized crude prices of $96.78 per barrel and production of 1.433 million barrels of oil equivalent per day that exceeded the high end of guidance.

Occidental raised its full-year production outlook, increased its quarterly dividend by 8% to $0.28 per share, and retired $1.5 billion in principal debt, bringing total debt to $11.8 billion, the lowest level since mid-2019.

After hitting a max drawdown of nearly 28% on July 1, OXY recovered roughly 18 percentage points in two months following the earnings report and currently sits about 9% below its 52-week high.

Berkshire Hathaway’s approximately 265 million shares represent an important institutional anchor, and Warren Buffett has consistently added to the position during periods of price weakness, providing a well-known floor that many investors watch closely.

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The Annual Free Cash Flow Trend Tells a More Complicated Story

Quarterly headlines can obscure the long-term trend, and OXY’s annual free cash flow chart is worth examining carefully before accepting the Q2 results as a new baseline.

Annual FCF peaked at $11.7 billion in 2022, reflecting the surge in oil prices following Russia’s invasion of Ukraine. From there, the trend has been consistently downward: $6.2 billion in 2023, $5.2 billion in 2024, and $3.8 billion in 2025 as oil prices normalized and capital spending increased.

Q2 2026’s $3 billion single-quarter result is genuinely impressive, but it was powered by realized crude prices of nearly $97 per barrel, a level that may not persist.

Management has outlined a plan to generate over $4 billion in incremental sustainable cash flow by the end of the decade through operational improvements and advanced recovery techniques.

Whether that plan materializes depends substantially on where oil prices trade over the next several years, which is ultimately outside management’s control.

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What the Valuation Model Says, and Why Oil Price Is the Only Variable That Matters

TIKR’s valuation model targets around $66 for OXY stock in the mid case, implying roughly an 11% total return over the next four-plus years at an annualized rate of around 2% per year.

Revenue growth of around 2% annually and net income margins of roughly 16% underpin that outcome, with EPS compounding at around 10% per year as the multiple contracts by roughly 6% annually.

At current oil prices and production levels, the model says OXY is approximately fairly valued. Street consensus sits at a mean target of around $67, implying about 10% upside from current levels.

The high case, at roughly 6% annualized, requires meaningfully stronger oil prices sustained over multiple years, essentially a bet that geopolitical supply disruption or demand growth keeps crude elevated above $90 for an extended period.

Should You Buy Occidental Petroleum Stock?

The bull case rests on oil price, balance sheet improvement, and the Buffett endorsement. Production above guidance, a debt level at its lowest since 2019, record midstream earnings, and dividend management that just raised the dividend by 8% all point to a business operating near peak form.

At 13x forward earnings with a 1.8% yield, the valuation is not demanding if oil stays above $85.

Bears point to the annual FCF compression since 2022 and the reality that the Q2 result was powered by crude prices reflecting geopolitical tension rather than structural demand growth.

A return to $70 oil would materially change the earnings picture, and the 10-year historical annualized return of -2.3% is a reminder that energy stocks can look cheap for a long time before they deliver.

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Disclaimer:

Please note that the articles on TIKR are not intended to serve as investment or financial advice from TIKR or our content team, nor are they recommendations to buy or sell any stocks. We create our content based on TIKR Terminal’s investment data and analysts’ estimates. Our analysis might not include recent company news or important updates. TIKR has no position in any of the stocks mentioned. Thank you for reading, and happy investing!