Core Viewpoint - Occidental Petroleum is divesting its chemicals arm OxyChem to Berkshire Hathaway for $9.7 billion to reduce debt after significant acquisitions [1][5]. Group 1: Transaction Details - The sale of OxyChem marks Occidental's largest divestment to date, aimed at slashing its debt load [1]. - OxyChem generated combined revenue of $2.42 billion in the first half of the year, producing chemicals for swimming pools and medical supplies [3]. - The deal is expected to close in the fourth quarter and will be Berkshire's largest acquisition since its $11.6 billion purchase of Alleghany Corporation in 2022 [3][10]. Group 2: Financial Implications - Analysts have expressed concerns that the sale could negatively impact Occidental's free cash flow growth in the coming years, as OxyChem was anticipated to contribute significantly to expansion [2]. - The transaction price of $9.7 billion is viewed as low compared to previous estimates of OxyChem's value at $12 billion [2]. - Occidental plans to use $6.5 billion of the proceeds from the sale to reduce its debt, aiming to bring total principal debt below the $15 billion target set after the CrownRock acquisition [9]. Group 3: Strategic Focus - The divestment indicates Occidental's strategic refocus on its core oil and gas business, which accounted for 75% of its total earnings last year [10]. - CEO Vicki Hollub stated that the sale would enable the company to "unlock 20-plus years of low-cost resource runway" in oil and gas [11]. Group 4: Background Context - Berkshire Hathaway is Occidental's largest shareholder, having begun acquiring a stake in the company in February 2022 [4]. - The divestment follows Occidental's $55 billion acquisition of Anadarko Petroleum, which left the company with significant debt [5][8].

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Core Insights - Berkshire Hathaway is acquiring Occidental Petroleum's chemical unit, OxyChem, for $9.7 billion in cash, marking its largest deal in three years just before Warren Buffett's retirement as CEO [1][9] - Berkshire has significantly increased its stake in Occidental Petroleum, reaching 32.7% by August 2025, making it the sixth-largest holding in its portfolio [2] - The acquisition focuses solely on OxyChem, a key manufacturer of chemicals, rather than full control of Occidental [3] Financial Performance - OxyChem generated $1.1 billion in operating income for the fiscal year ending December 31, 2024, contributing approximately 16% to Occidental's total income [6] - Occidental's capital expenditures for OxyChem are projected to rise by $200 million to $900 million in 2025, indicating a commitment to growth in this segment [6] Debt and Financial Strategy - The sale of OxyChem will provide Occidental with $6.5 billion to repay debt, enhancing its balance sheet and allowing for potential share repurchases and dividend growth [7] - Occidental's debt concerns have been exacerbated by its $12 billion acquisition of CrownRock in 2024, primarily financed through borrowing [7] Market Implications - The divestiture of OxyChem will position Occidental as a more focused oil and gas company, increasing its vulnerability to fluctuations in commodity prices [8]

Core Viewpoint - Occidental Petroleum is experiencing a decline in stock price following Berkshire Hathaway's announcement of acquiring its petrochemical unit, OxyChem, for $9.7 billion, marking Berkshire's largest deal since 2022 [1][3]. Group 1: Transaction Details - Berkshire Hathaway will pay $9.7 billion in cash for OxyChem, which adds to its existing 28.2% stake in Occidental Petroleum shares [1]. - The transaction will facilitate a $6.5 billion debt repayment, which is viewed positively by some investors [3]. Group 2: Market Reaction - The decline in Occidental Petroleum's stock reflects investor concerns regarding the divestiture of a profitable unit, raising questions about future earnings stability [3][4]. - There is uncertainty about how Occidental Petroleum plans to replace OxyChem's contribution to EBITDA, contributing to negative sentiment [4]. Group 3: Investment Perspective - The pullback in Occidental Petroleum shares may present a buying opportunity for long-term investors, especially with the focus on debt reduction and strengthening the balance sheet [5]. - Berkshire's increased involvement adds confidence, and Occidental's long-term strategy of deleveraging could drive significant upside [6]. - The valuation of Occidental Petroleum appears more attractive after the recent dip, with a bullish golden cross formation indicating potential for investors seeking energy exposure with improving financials [6].

Logo of Warren Buffett’s Berkshire Hathaway Inc. Warren Buffett’s Berkshire Hathaway Inc. reached a deal to buy Occidental Petroleum Corp.’s petrochemical business for about $9.7 billion in cash.   If the deal closes, it would be the biggest purchase for Berkshire since its $11.6 billion buyout of insurance firm Alleghany Corporation in 2022 and expand its chemical portfolio beyond Lubrizol.   The latest move marks billionaire Buffett's return to the search for good deals after years of abstaining from maj ...

Core Viewpoint - Occidental Petroleum Corporation is undergoing a strategic shift by selling its chemical business, OxyChem, to Berkshire Hathaway for $9.7 billion, aiming to enhance shareholder value and improve its financial health [2][3][5] Financial Performance - The stock price of Occidental is currently at $45.84, reflecting a decrease of 3.95% or $1.89 [4][5] - The stock has fluctuated between a daily low of $45.57 and a high of $47.91 [4] - Over the past year, the stock reached a high of $56.49 and a low of $34.78 [4] - The company's market capitalization is approximately $45.12 billion, with a trading volume of 10.68 million shares [4] Strategic Moves - The sale of OxyChem is part of Occidental's broader strategy to manage its debt, which has been a concern for investors [3] - The cash from the OxyChem sale will be used strategically, potentially aiding in debt reduction and strengthening the company's financial position [2][3] - Roth Capital has maintained a Neutral rating on Occidental, with a revised price target of $46 [1][5]

Let's talk a little bit about this deal, how it came together, and $9.7% billion in cash. What do you plan to do with it. >> Well, with the cash, we're going to take about $6.5% billion of the cash, and we're going to apply it to debt reduction. And that debt reduction amount will get us to below our target uh debt of $15 billion that we laid out after the uh Crown Rock acquisition.That then will reduce our interest payments by $350 million. And uh that will enable us then to start adding back parts of our ...

Joining us this morning to break it all down is Roth Capital Partners senior research analyst Leo Mariani. Has a neutral rating and a 46 target on Oxy. Uh Lou L, good to have you.Um been in the works for seems a while here. We've been learning about it via reports for the past several days. Implications for Oxy and and overall uh concerns about debt load.Yeah. Yeah. So, I think that was one of the the key reasons they pulled the trigger on the transaction here is that amongst the the larger EMP companies in ...

Core Viewpoint - The company is undertaking a significant asset sale to reduce its high debt levels, with a target to bring debt below $15 billion by the end of the year [2][3]. Group 1: Debt Management - The asset sale proceeds will be used immediately to pay down debt, addressing one of the highest debt levels among larger EMP companies in the sector [2]. - The leverage ratio is expected to decrease from approximately 1.4 times net debt to EBITDA to around 0.8 times, which reduces the overall risk of the business [9]. Group 2: Business Model Changes - The transaction will transform the company into a more capital-intensive pure play EMP company by divesting its chemicals business, necessitating more capital investment per unit of growth [3][4]. - The market reaction to the stock has been volatile, with initial outperformance followed by relative underperformance due to softer deal terms and higher tax leakage than anticipated [6]. Group 3: Market Conditions - Oil prices have been declining throughout the year, and expectations from the upcoming OPEC meeting suggest further increases in production, potentially leading to an oversupplied market [7][8]. - Despite current market conditions, the price target for the stock has been raised by 2% to $46, reflecting the positive impact of leverage reduction [8].

Company Strategy - Occidental Petroleum CEO Vicki Hollub supports eliminating three-month financial reporting cycles if the SEC permits [1]