Should You Buy Occidental Petroleum While It's Below $50?

Core Viewpoint - Occidental Petroleum's stock has declined below $50, presenting a potential buying opportunity due to various catalysts for growth and improvement in cash flow unrelated to oil prices [1][12]. Group 1: Stock Performance and Investment Interest - Occidental Petroleum's shares have fallen from over $60 to below $50, primarily due to a decrease in oil prices from over $80 to just above $70 per barrel [1]. - Warren Buffett's Berkshire Hathaway owns over 264.9 million shares of Occidental, valued at more than $12.6 billion, making it the sixth-largest position in Berkshire's portfolio [3]. - Berkshire's cost basis for its Occidental shares is in the low $50s, and the company has taken advantage of price dips to increase its holdings [4]. Group 2: Future Cash Flow Improvements - Occidental expects a $1.5 billion improvement in free cash flow over the next few years, driven by non-oil business segments [6]. - The chemical business (OxyChem) is projected to contribute over $450 million in incremental free cash flow by 2026 due to expansion projects [7]. - The midstream business is anticipated to generate an additional $450 million in earnings as legacy contracts expire and capital spending decreases [8]. Group 3: Debt Repayment and Shareholder Value - Occidental's debt repayment strategy is expected to save over $135 million in annual interest expenses by 2026 [8]. - The anticipated increase in free cash flow will enable the company to enhance shareholder value through dividend increases, share repurchases, and further debt repayment [9]. Group 4: Additional Growth Catalysts - There is potential for higher oil prices due to geopolitical conflicts or unexpected supply issues, which could further benefit Occidental [10]. - The company is developing a carbon capture and storage business, with its first direct air capture unit expected to be operational by mid-2026, which could significantly enhance long-term growth prospects [11].