Warren Buffett’s $10B Oil Bet: Could Berkshire’s OxyChem Deal Supercharge Occidental (OXY)?

Berkshire Hedges $10B Deal: Reports say Warren Buffett’s Berkshire Hathaway is in talks to acquire Occidental Petroleum’s OxyChem unit for roughly $10 billion ^[1] ^[2]. If completed, it would be Berkshire’s largest deal since 2022 ^[3].
Heavy Debt Load: Occidental took on massive debt from past deals – a $55 billion Anadarko buyout (2019) and a $12 billion CrownRock acquisition (2024) – leaving long-term debt around $23.3 billion by mid-2025 ^[4] ^[5]. The company’s goal is to cut debt toward a ~$15 billion target ^[6].
OxyChem’s Business: OxyChem is Occidental’s large chemicals subsidiary (making products like PVC and industrial chemicals). In H1 2025, OxyChem generated about $2.42 billion in revenue ^[7], supplying materials used in medical, food and construction sectors ^[8]. However, petrochemical markets face cyclical downturns and oversupply pressures ^[9].
Debt Reduction via Divestitures: Occidental has been selling assets to pay down debt. In August 2025 it announced four Permian Basin divestitures raising ~$950 million ^[10]. Since July 2024 the company has repaid about $7.5 billion in debt through asset sales ^[11] ^[12]. (Q2 2025 production was 1.4 MMboe/d, +11% YoY ^[13], helping results beat estimates.)
Buffett’s Stake: Berkshire is Occidental’s largest shareholder (about 28% of equity) and also holds warrants on ~84 million OXY shares (worth ~$5 billion) ^[14]. Buffett has repeatedly bought shares but insists he won’t seek control of the company ^[15].
Analyst View: Wall Street currently rates OXY a Hold on average. The consensus 12-month price target is roughly $50–$54 (implying 4–15% upside) ^[16] ^[17]. Some analysts see debt reduction as a positive, but worry about forgoing OxyChem’s earnings.
Recent Stock Performance: OXY stock has been roughly flat to down in 2025. TipRanks notes OXY is off about 2.4% year-to-date, while oil majors Chevron and ExxonMobil have gained 12–14% ^[18], reflecting concerns about Occidental’s heavy leverage and weaker petrochem margins.

Occidental’s Background and Debt Burden

Occidental Petroleum (ticker OXY) is a Houston-based oil & gas company with large Permian Basin and Gulf of Mexico production. It has grown aggressively through acquisitions, notably Anadarko Petroleum in 2019 (financed with $10 billion from Buffett’s Berkshire) and the CrownRock shale deal in 2024 ^[19] ^[20]. These moves boosted production but also piled on debt. As of June 30, 2025, Occidental’s long-term debt stood around $23.3 billion ^[21], well above its management’s comfort zone (a stated target near $15 billion) ^[22].

To address this, Occidental has been selling non-core assets. In 2024–2025 it divested about $4 billion worth of property (mostly Permian acreage and pipeline assets) ^[23]. A mid-2025 press release reports four transactions (Permian upstream and a gas-gathering deal) totaling $950 million to be used for debt paydown ^[24]. The company said it has repaid roughly $7.5 billion of debt since July 2024 ^[25]. On August 6, 2025 Occidental reported Q2 earnings in line with these efforts: higher production (+11% YoY at 1.4 MMboe/d) helped profits despite weak oil prices, and the company disclosed an extra $950 million in asset sales (including a $580 M gas pipeline deal) ^[26] ^[27]. CEO Vicki Hollub emphasized that these divestitures “drive debt reduction and create value for shareholders” ^[28].

OxyChem and the Rationale for Sale

Occidental’s OxyChem division is a large independent chemicals business (formerly Occidental Chemical Corp). It produces chemicals like chlorine, caustic soda and vinyls – “building blocks for life-enhancing products” in pharmaceuticals, food packaging, construction, etc. (the company notes OxyChem serves medical care, food security and construction sectors ^[29] ^[30]). However, the global petrochemical industry is in a downcycle: new capacity in the U.S./Middle East and slowing demand have squeezed margins ^[31] ^[32]. In fact, TipRanks observes that petrochemical profits have declined on oversupply pressures ^[33].

Selling OxyChem can greatly reduce Occidental’s debt burden. Reports indicate OxyChem could fetch around $10 billion – nearly half of Occidental’s current enterprise value – due to its sizeable asset base. The Financial Times first reported Occidental “in talks to sell its OxyChem division… for a minimum of $10 billion,” expected to be announced soon ^[34]. If realized, analysts note a $10B cash infusion would be “transformative for the balance sheet”, potentially cutting Occidental’s debt to well below its $15B target ^[35] ^[36]. (For context, OxyChem’s H1 2025 revenue was ~$2.42B ^[37].) After such a sale Occidental would become a pure-play oil and gas (exploration & production) company. Some investors cheer this focus, while others caution that giving up a cash-producing business could limit future earnings. As one Seeking Alpha analysis puts it, the sale would “pivot Occidental to a pure-play E&P and accelerate shareholder returns, but… investors must weigh this against the opportunity cost of missed growth” ^[38].

Buffett and Berkshire’s Role

Warren Buffett has been Occidental’s biggest backer since 2019. Through Berkshire, he initially helped finance Anadarko’s takeover, receiving warrants and preferred shares. In 2023–2025 Berkshire steadily added common stock: by year-end 2023 its stake was ~27%, and it reached about 28.2% by early 2025 ^[39]. Berkshire also holds warrants to buy ~84 million additional OXY shares at ~$59.62 each (in effect controlling up to another ~$5B equity) ^[40]. Buffett has publicly said he has “no interest” in running Occidental or taking majority control ^[41], treating it as a passive investment. (Occidental was Berkshire’s 6th-largest holding as of late 2024.)

Given this background, it’s significant that Berkshire is reportedly the potential buyer of OxyChem. The Wall Street Journal cited unnamed sources saying Buffett’s company is in final talks for the $10B OxyChem deal ^[42] ^[43]. Bloomberg confirms “Berkshire near $10B deal for OxyChem” and notes it “could come together within days,” making it Berkshire’s largest acquisition in years ^[44]. This move would deepen Buffett’s commitment to Occidental: he’d help Occidental shrink its debt through an affiliate purchase of OxyChem. On the other hand, it would also make Berkshire even more entwined with Occidental’s fate (doubling down on oil at a time of climate uncertainty).

As Reuters observes, Occidental is a special case: Berkshire is already the top shareholder and has a large stake of warrants ^[45] ^[46]. A $10B Berkshire-led sale of OxyChem could be structured in various ways (cash to Occidental, possibly with bonds or earnouts). The details remain murky, but industry watchers say closing the deal could happen quickly if no regulatory hurdles arise ^[47] ^[48].

Market Reaction and Analyst Views

News of a $10B OxyChem deal immediately put Occidental in focus. On September 30, 2025, the stock initially rose on the Berkshire rumor but ended slightly lower, reflecting mixed sentiment. Analysts note the positives (huge debt reduction, Buffett validation) and the cautions (giving up a profitable business, integration questions).

Most Wall Street analysts remain cautiously neutral. MarketBeat reports 22 analysts covering OXY: 17 rate it “Hold,” 4 “Buy” and 1 “Sell,” for a consensus price target of about $54.3 (roughly 15% above the ~$47.30 market price at end-September) ^[49]. TipRanks shows a 12-month average target around $50.00 (only ~4% above current) ^[50]. These targets incorporate both scenarios: a windfall from selling OxyChem, versus the risk of losing downstream earnings.

For example, Fitch and Moody (recently Ba2/BB+ ratings) have expressed concern over Occidental’s high leverage even after planned asset sales. Some analysts worry Occidental’s remaining E&P focus could limit growth if oil prices stay low. On the technical side, OXY’s dividend yield (~4% yield) is attractive, but the stock’s P/E is pressured by debt costs.

Not all commentary is neutral. A few bullish voices view the potential sale as a catalyst. One TipRanks commentator notes Berkshire’s involvement “could bring OXY stock into the spotlight” and that the deal “would create one of the world’s largest independent petrochemicals units” (if Berkshire spun it out) ^[51]. Others point out Occidental management has repeatedly expressed confidence – CEO Hollub recently reiterated that Occidental has “the best assets” and will continue “to find opportunities to high‑grade our portfolio” ^[52]. However, bearish analysts caution that Occidental’s stock is still vulnerable to oil price swings. WTI crude remains in the mid-$60s per barrel range (down from last year), and any further decline could hurt Occidental’s cash flow even with lower debt.

Forecast and Outlook

Looking forward, the biggest question is: Will the deal close, and if so, how will outcomes play out? If Berkshire does buy OxyChem soon, Occidental would get a massive cash infusion. The company has already said it plans to use proceeds for debt and capital spending. Lower debt would save ~$400–600 million a year in interest (given ~6–7% rates on $10B), potentially boosting free cash flow by a similar amount. That could fund higher dividends, share buybacks or opportunistic drill-out. Occidental’s management said past asset sales “create value for shareholders” ^[53], hinting at returning capital once deleveraged.

On the flip side, OxyChem’s departure means Occidental loses stable cash flows from chemicals. In a downturn, petrochemical earnings can help buffer volatile oil E&P earnings. Turning into a pure E&P may yield higher growth if oil booms, but also higher volatility. Some analysts estimate that without OxyChem, Occidental’s breakeven oil price would rise.

Price targets: Given these offsets, consensus forecasts haven’t dramatically changed yet. Many analysts priced OXY assuming the sale goes through and the debt gets paid. If oil prices recover or debt falls as planned, targets could drift higher. MarketBeat’s $54.3 target (from mid-2025 data) might be updated if OxyChem proceeds come in. Conversely, if the deal falls through or oil sags, downside risk remains to the mid-$40s (the lowest analyst target) ^[54].

Expert quotes: Strategists at energy banks likely will update models soon. For now, analysts note that Occidental’s price is heavily tied to its debt profile. As one commentator bluntly put it: “It’s difficult to value Occidental without resolving its debt” – hence a $10B sale could re-rate the stock upward. Others warn that even after debt paydown, Occidental will need higher oil prices to justify higher P/E multiples.

In summary, as of September 30, 2025 Occidental stands at a crossroads. A deal to sell OxyChem – possibly to Buffett’s Berkshire – could rapidly reshape the company’s finances. That news, combined with Occidental’s ongoing asset sales and steady oil production, has dominated the latest headlines. Long-term investors will watch closely: if debt truly plunges and oil recovers, Occidental could outperform. If not, the stock may languish under neutral analyst ratings. For now, Berkshire’s moves have turned Occidental into one of Wall Street’s hottest stories, and experts advise keeping an eye on any official announcements (and of course oil-market developments) in the coming days.

Sources: Multiple financial news outlets and filings. Key references include Reuters and Bloomberg reports on the OxyChem sale ^[55] ^[56], reports of Occidental’s debt and asset sales ^[57] ^[58], as well as Seeking Alpha and TipRanks analyses ^[59] ^[60] and regulatory filings ^[61]. (All data cited are as of late Sep 2025.)