Occidental Petroleum is a major U.S. oil and gas producer, chemical manufacturer, and — unusually for an oil company — the world's most aggressive investor in direct air capture of carbon dioxide. Founded in 1920 and headquartered in Houston, Oxy operates across three segments: Oil and Gas (its core upstream business in the Permian Basin, DJ Basin, and international assets), OxyChem (one of the largest chlor-alkali chemical producers in North America), and a direct air capture business operated through its 1PointFive subsidiary.
Oxy is best known in financial markets for two things: CEO Vicki Hollub's audacious $38 billion acquisition of Anadarko Petroleum in 2019 — outbidding Chevron in a high-stakes bidding war and loading the balance sheet with debt — and Warren Buffett's subsequent accumulation of a ~28% ownership stake in the company, making Berkshire Hathaway Oxy's largest shareholder by a substantial margin. Buffett's bet on Oxy is broadly read as a long-term vote of confidence in U.S. oil demand and Oxy's Permian Basin resource quality.
Oxy's upstream business is anchored in the Permian Basin, where it holds one of the largest and highest-quality acreage positions of any operator. After the Anadarko acquisition added the DJ Basin (Colorado) and deepwater Gulf of Mexico assets, and the 2024 acquisition of CrownRock added another 170,000 Permian net acres, Oxy's Permian footprint is among the most significant in the industry. The company also operates legacy international assets in Oman, the UAE, and Algeria. The upstream business generates the bulk of Oxy's cash flow and is highly levered to oil prices — a $1/barrel change in WTI moves annual operating cash flow by approximately $100–150M.
Occidental's chemical subsidiary is one of the largest chlor-alkali producers in North America, manufacturing chlorine and caustic soda used in plastics, water treatment, and industrial applications. OxyChem is frequently underappreciated by investors focused on Oxy's oil operations, but it contributes ~$1.5B of relatively stable annual EBITDA that partially offsets the cyclicality of the upstream business. Unlike oil production, OxyChem's earnings are driven by industrial chemical demand cycles, providing a modest natural hedge against oil price weakness.
1PointFive is Oxy's subsidiary focused on carbon capture and sequestration, anchored by the Stratos direct air capture facility in the Permian Basin of West Texas — the world's first commercial-scale direct air capture plant. Stratos began operations in 2024, with a design capacity to capture 500,000 metric tons of atmospheric CO2 per year. Oxy acquired Carbon Engineering, the Canadian DAC technology company, in 2023 for $1.1 billion to secure the proprietary technology underlying Stratos and its future DAC facilities. The 1PointFive business generates revenue by selling carbon removal credits to corporate customers seeking to offset emissions, including Microsoft, which contracted for 10-year purchases of DAC credits from Stratos.
The 2019 acquisition of Anadarko Petroleum for $38 billion is the defining event in Oxy's recent history — and the source of its most significant ongoing challenge. When Chevron announced a $33B deal for Anadarko, Oxy CEO Vicki Hollub made the audacious decision to counter. Oxy secured a $10B preferred equity commitment from Berkshire Hathaway — at a steep 8% dividend — to finance the deal, ultimately winning Anadarko at $38B in cash and stock.
The logic was compelling: Anadarko's Permian Basin acreage was extraordinarily high quality, its DJ Basin assets were world-class, and the combination would create a Permian giant capable of generating outsized returns in a sustained high-oil-price environment. What Hollub did not anticipate — no one could — was that oil prices would collapse to negative $37/barrel in April 2020, less than a year after closing. Oxy was forced to cut its dividend by more than 85%, issue equity at deeply diluted prices, and sell assets aggressively to service a debt load it had not anticipated managing at $30 oil.
Oxy survived and has since recovered substantially, paying down billions in debt and restoring dividends. But the Berkshire preferred equity — with its 8% annual dividend — remained a significant cash drain until Oxy redeemed much of it using proceeds from the oil price recovery. Hollub's strategic instinct about the Permian has been vindicated by the subsequent performance of Anadarko's assets, but the leveraged timing remains a case study in acquisition risk management.
Warren Buffett began accumulating Oxy common shares in early 2022, moving rapidly and publicly — Berkshire is required to disclose large purchases within two business days under SEC rules. By mid-2024, Berkshire held approximately 28% of Oxy's outstanding shares, plus warrants (from the 2019 preferred deal) to acquire an additional ~10% at $59.62/share. Berkshire has received regulatory approval to own up to 50% of Oxy, signaling that a full acquisition remains a possibility.
Buffett's rationale, as expressed in Berkshire's 2023 annual letter, emphasizes Oxy's U.S. oil production in the context of long-term energy security and the quality of Hollub's management. Buffett praised Oxy's decision to acquire Anadarko as demonstrating "exactly the type of capital allocation" he admires — conviction, scale, and a long-term orientation. Whether Berkshire eventually acquires all of Oxy or remains a large passive shareholder, its presence provides Oxy with an unusual degree of financial credibility and market support.
Oxy's investment in direct air capture is the most unusual strategic initiative of any major oil company. DAC technology uses chemical processes to pull CO2 directly from ambient air — not from a point source like a power plant — and either stores it permanently underground or uses it for enhanced oil recovery. Stratos, the first commercial DAC plant, uses Carbon Engineering's liquid solvent process and is co-located with Oxy's Permian operations, where captured CO2 can be used for enhanced oil recovery in existing fields.
The strategic logic, as articulated by Hollub, is that DAC allows oil companies to operate sustainably even if the world needs to reach net-zero emissions — by removing from the atmosphere the equivalent of the CO2 emitted when their oil is burned. Whether this circular logic satisfies climate commitments is debated. What is less debated is the economics: at Stratos's current cost of approximately $400–600 per metric ton of CO2 captured, DAC is dramatically more expensive than the $50–100/ton at which it would need to operate to be deployed at climate-relevant scale. Oxy projects costs falling to $150/ton or below at scale with subsequent facilities, but the pathway is long and dependent on policy support.
The 45Q tax credit — $180/ton for DAC CO2 permanently sequestered, under the IRA — is the primary policy support mechanism that makes Stratos's economics viable today. Microsoft's carbon removal purchase agreement provides additional revenue certainty. Skeptics argue that $1.1B for Carbon Engineering and hundreds of millions more for Stratos construction could have been deployed in Permian drilling at far higher returns. Supporters argue that Oxy is positioning for a world where carbon removal has monetary value and regulatory necessity, and that first-mover advantage in DAC technology is strategically important.
Oxy's near-term priorities are debt reduction following the $12B CrownRock acquisition (closed August 2024) and free cash flow generation from its expanded Permian position. The company has set a net debt target of ~$15B and is prioritizing asset sales, dividend growth, and share repurchases as cash flow allows. Production of ~1.4 mboe/d gives Oxy the scale to generate significant cash at oil prices above $60/barrel.
The 1PointFive DAC business is a long-duration option on carbon removal becoming economically and regulatorily essential. Oxy has announced plans for additional DAC facilities, including a much larger plant in the Permian Basin (Stratos 2) with capacity of 1+ million tons per year. The pace of DAC buildout will depend on carbon credit pricing, the 45Q tax credit's continued availability, and the cost reduction trajectory of the technology.
Oxy is significantly more leveraged than its supermajor peers. At $60 oil, the company generates modest free cash flow after interest, capex, and the preferred dividend burden. At $50 oil, the balance sheet becomes stressed. The CrownRock acquisition added ~$12B of debt, and while the Permian assets are high quality, the timing of debt paydown is dependent on oil prices remaining above breakeven levels.
The DAC investment carries significant execution and policy risk. If the 45Q credit is reduced or eliminated, Stratos's economics deteriorate sharply. If carbon removal markets develop more slowly than projected, the $1B+ invested in Carbon Engineering and Stratos infrastructure will have generated poor returns. Conversely, if DAC becomes essential infrastructure for net-zero compliance and carbon credit prices rise, Oxy's first-mover position could be extraordinarily valuable.
This profile was compiled from publicly available information including:
Occidental Petroleum FY2024 Annual Report; 10-K and 10-Q SEC filings; quarterly earnings releases and investor presentations.
Berkshire Hathaway 2023 Annual Letter to Shareholders; SEC Form 4 and SC 13D/G filings for Berkshire's Oxy stake.
1PointFive Stratos facility announcements; Carbon Engineering acquisition disclosure (2023); Microsoft carbon removal agreement.
U.S. Treasury 45Q tax credit guidance; IRA statutory text on direct air capture credits.
This profile is for informational purposes only and does not constitute investment advice, a recommendation, or a solicitation to buy or sell any security.