Breaking News (Oct 2, 2025): Berkshire Hathaway buying OxyChem for $9.7 billion
Current Price Range: $47.25 – $51.19 (what people are paying per share)
What’s Happening with OXY? (Stock Newsletter edition)
BIG NEWS JUST DROPPED: Warren Buffett’s Berkshire Hathaway agreed to buy OxyChem from Occidental Petroleum (OXY) for almost $10B. It’s Berkshire’s biggest purchase since 2022 and has the investing world buzzing.
What is Occidental Petroleum?
A major U.S. oil and gas company drilling largely in Texas and the Permian Basin. Ticker: OXY.
Why it matters:
OXY’s heavy debt load has worried investors, especially with mixed oil prices. Proceeds from selling OxyChem strengthen the balance sheet and could accelerate deleveraging—potentially a turning point.
Social sentiment:
From super-bullish to skeptical. This Finance Newsletter distills the noise into clear insights.
The Warren Buffett Factor — Why Everyone’s Paying Attention
Ownership: Berkshire holds roughly 28–29% of OXY—nearly one in three shares.
Cost basis: Berkshire’s average is about $54.42; OXY currently trades below that.
Special terms: Berkshire owns 8% preferred stock and warrants at $59—advantages retail investors don’t have.
Long-term view: Buffett thinks the world will need oil for a long time and praises CEO Vicki Hollub as “extraordinary.”
What the Investment Influencers Are Saying
1) Damodaran-Style — “The Math Professor” (FAIRLY VALUED)
His take: The numbers say it’s about right.
DCF estimate: About $51–52 per share—close to market price.
He projected future cash and discounted it to today. Result ≈ current price.
Margin of safety: Recommends ~10% because forecasting oil profits is hard.
Build in wiggle room—oil is unpredictable.
Free-cash-flow yield: About 10.01% vs historical ~7.32%—attractive.
More cash left after bills than usual—a positive.
Valuation caution: P/E ~18 vs 30-year average ~11; reversion implies ~$36.
If the multiple normalizes, price could drift lower.
Fair-value box: $51–$52 — neither a screaming buy nor clearly overpriced.
2) Cathie Wood / ARK-Style — “The Tech Optimist” (SUPER BULLISH )
Her take: This could be huge in 3–5 years.
Debt breakthrough: The $9.7B OxyChem sale allows ~$6.5B immediate debt paydown.
Plain English: Knock down a big chunk of the “mortgage,” freeing cash flow.
Timeline acceleration: The $15B net-debt goal once targeted for 2027 could arrive years earlier.
Pay the “car loan” off faster; save interest.
Interest savings: About $350M/year potentially redirected to buybacks/dividends.
Less to banks, more to shareholders.
Historic comeback: From near-distress in 2020 to a rapid multi-year rebound.
Price scenarios (for this Daily Finance Newsletter audience):
Dividend Re-rate: $50–$60 if yield rises toward ~4% (vs ~2% now).
Oil Boom: $70–$90 if oil > $100/bbl (vs ~$70–80).
Perfect Execution: $110–$130 with strong oil, higher dividend, and ~$1B efficiency gains.
Tech Re-rating: $200+ if carbon-capture commercialization becomes a large, high-multiple business.
3) Jim Chanos-Style — “The Professional Skeptic” (CAUTIOUS)
His take: Pump the brakes—here’s what could go wrong.
Valuation red flag: Classic Benjamin Graham inputs suggest ~$35 fair value.
Old-school value math says OXY looks 35–45% pricey.
Dividend credibility: Yield ~2% vs long-term ~4.5%; 2020 cut lingers.
Without a raise, a “normalized” yield implies a mid-$30s price.
Multiple risk: Reversion to 30-year average P/E implies ~$36.
Cooling sentiment alone could compress the multiple.
Cost position: Higher unit costs than Exxon/Chevron; U.S. barrels often cost more than Middle Eastern supply.
High-cost producers suffer first in downturns.
4) Energy Sector Insiders — “The Oil Whisperers” (NEUTRAL: Watching Closely)
Their take: Watch operations, not just the stock.
U.S.-centric: ~83% of production now domestic, focused on the Permian Basin.
Plain English: Productive region with less geopolitical risk.
Q1 2025 dip: Expected softness from weather, planned maintenance, and reduced activity.
Plain English: Like a factory overhaul—temporary and planned.
H2 2025 recovery: Production expected to ramp as activity normalizes.
Plain English: Output should rebound after maintenance.
Carbon-capture bet: $2–3B invested; first facility “Stratos” starts capturing CO₂ in 2025.
Plain English: New revenue stream if it scales—still a big “if.”
Additional Voices from the Data (Finance Newsletter insights)
Wall Street Journal’s take:
The deal isn’t just Berkshire buying OxyChem—it transforms OXY’s balance sheet. With $6.5B to debt paydown, OXY announced an “opportunistic multiyear share repurchase program.”Plain English: Buybacks reduce share count; each remaining share claims more of the company.
Morningstar’s angle (Greggory Warren):
The $9.7B price nearly matches Berkshire’s $10B 2019 loan that enabled the Anadarko purchase—strategic symmetry. Berkshire still holds warrants for 83.9M shares at $62.50.Warrants = coupons to buy at a fixed price; they’re valuable if OXY rises above $62.50.
Market day reaction:
OXY fell 5.1% to $45.28 on the announcement; price looked “slightly expensive” vs OxyChem’s $850M current earnings (down from $1.5B in 2023).“Good news” can still drop stocks if expectations were higher or earnings look soft.
Technical perspective:
Roth Capital raised target $45 → $46 (neutral). 21-day ATR ≈ 1.21%—moderate volatility. With indices in “power trends,” some investors tolerate ATRs up to 8%; OXY’s lower ATR can appeal to risk-aware buyers.Analyst community:
A major analyst downgraded OXY and cut the target $81 → $64—still 30%+ above current levels, implying upside potential.Technical trading community:
From “Strong Buy” → “Buy Candidate.” Trend positive but momentum cooled. Short interest ~4% (higher than ideal).Post-debt bulls:
Expect a re-rating toward $70+ as leverage falls and free cash flows fund buybacks/dividends.Management’s perspective:
CEO Vicki Hollub calls OxyChem the “last step” in a transformation to “unlock the stock,” expanding resources to ~14B BOE and refocusing on high-quality U.S. assets.Berkshire share move:
BRKB dipped ~0.9%—investors appear comfortable. Shares may be forming a flat base; classic buy point $507.66 with an early entry $503.78 for aggressive traders.
Critical Risks Everyone Agrees On (Daily Finance Newsletter risk brief)
Oil-price sensitivity: ~$260M annual cash-flow change per $1 move in oil; 2020’s crash nearly sank OXY.
Leverage: Even post-transaction, total debt ~$16–20B—elevated vs peers on a relative basis.
Valuation dispersion: Models span $35 → $200+—uncertainty is a risk.
You’re not Buffett: Berkshire’s 8% preferred + $59 warrants aren’t available to retail.
Unproven technology: Carbon capture must scale commercially to justify tech-like multiples.
Efficiency gap: Higher costs than mega-cap peers create downside risk in weak cycles.
The Bottom Line — What Should You Think?
Where we are now:
Price: $47–51, below Berkshire’s ~$54.42 average.
Consensus: Fairly valued to slightly undervalued.
Volatility: High; commodity swings dominate.
Time horizons:
0–12 months: Neutral to slightly positive; OxyChem benefits won’t be immediate.
1–3 years: Constructive if oil holds up and deleveraging continues; $60–70 plausible.
5+ years: Upside if operations improve and CO₂ tech scales; $100+ possible in optimistic cases—but flat outcomes remain possible if oil disappoints.
Who might consider OXY (Stock Newsletter readers):
Expect oil ≥ ~$70/bbl for years.
Trust management and Buffett’s long-term view.
Can tolerate 20–40% drawdowns.
Have a 3–5+ year horizon.
Want traditional energy exposure with potential carbon-tech upside.
Who might avoid OXY:
Expect rapid oil-demand erosion
Need stable, predictable returns or near-term liquidity.
Prefer lower-debt, lower-beta names.
Dislike wide valuation uncertainty.
Key Lessons for Investors (Finance Newsletter education)
Follow the logic, not the celebrity. Buffett’s special terms aren’t available to retail—understand the thesis.
Debt matters. High leverage nearly sank OXY in 2020; balance sheets drive resilience.
Commodity cyclicality is real. Oil prices dominate; size positions to your risk tolerance.
Valuation is a range, not a point. Reasonable models can differ widely.
Turnarounds take time. Multi-year execution beats headlines.
Your Next Steps (Daily Finance Newsletter action list)
Do your research: Read OXY investor presentations, earnings transcripts, and debt schedules.
Track oil: Set alerts for crude moves; OXY follows oil.
Size appropriately: Only invest what you can see drop 30–40% without panic.
Watch the metrics: Net debt, production volumes, free cash flow, dividend/buyback cadence.
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Join the discussion: What do you think about OXY—Buffett genius or risky bet?