This Company’s Prime Position in The Permian Basin Has Buffett Buying The 30% Dip

There are only a few things that are guaranteed in life… death, taxes, Nancy Pelosi making 1,000% gains on Nvidia call options, and Warren Buffett buying up more shares of Occidental Petroleum. The Oracle of Omaha just shoveled up another 763,000 shares of OXY for $35.7 million (he had to put some of that $300 billion in cash to use somewhere).

And make no mistake, this is a BTMD (Buy The Massive Dip) special. Occidental has been getting absolutely killed lately, leaking more than 30% from its all-time high and losing 17% in 2024 alone as oil prices weakened. This kind of sell-off has most analysts lowering their target prices and being bearish on the entire sector, but Buffett sees a deal and loads up. 

Buffett’s Occidental addiction isn’t new. He’s been averaging into this stock for years, and when it drops, he buys more. The last time he loaded up was in December, when he grabbed 8.9 million shares during a broad market pullback. And if he ever wants more, he already has warrants to buy another 83.9 million shares at $59.62… thanks to a 2019 deal when he bailed Occidental out of its $38 billion Anadarko Petroleum buyout.

At this point, it wouldn’t be a hot take to predict that Buffett is gonna try to conduct a hostile takeover of the oil rigs. But despite being by far the largest shareholder, Buffett has made it clear… he’s not taking over. He just really, really likes the stock.

So why Occidental? Why not another round of Apple (kidding of course), Bank of America, or Coca-Cola, the old Buffett classics? Because Buffett isn’t playing for the next quarter, or a Trump Bump… he’s playing for the next decade.

Oil stocks have been a joke lately. OPEC+ keeps shifting production quotas, demand is shaky, and energy investors have been about as confident as a crypto bro who just checked his Solana balance. But it’s clear Buffett isn’t buying Occidental for a quick flip. He believes in its ability to outlast the noise.

For starters, Occidental still pays a 1.8% dividend, which isn’t much, but it’s something. More importantly, the company has been aggressively paying down debt from its $12 billion CrownRock acquisition. By the end of Q3, Occidental had already knocked out $4 billion in liabilities, getting within striking distance of its short-term debt reduction goal. Buffett loves companies that actually make money and don’t light it on fire with reckless spending.

Then there’s the carbon capture angle. Occidental is trying to rebrand itself as more than just an oil company, dumping money into direct air capture technology… essentially a giant vacuum that sucks CO2 out of the atmosphere. Whether this is a legitimate ESG pivot or just a clever way to milk green energy tax credits, it’s a play Buffett seems to approve of.

Occidental’s stock has been climbing its way back, up 4.2% in February, but still down nearly 9% from its January high of $53.20. The stock is struggling to break through its 50-day moving average, and analysts aren’t exactly hyped about near-term performance… earnings are projected to slip 9% this quarter, and revenue is expected to decline 3%.

Buffett reads earnings transcripts like 30-year-old women read romance novels, and something in Occidental’s numbers keeps pulling him back in. Maybe it’s the company’s prime position in the Permian Basin, or maybe it’s the fact that energy stocks have shrunk from 15% of the market in the 1970s to just 3.2% today, signaling a potential undervalued sector.

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Stock.News has positions in Apple and Coca Cola.