Occidental Petroleum Sharpens Focus with Major Divestiture

Occidental Petroleum US6745991058

The strategic repositioning of Occidental Petroleum has reached a pivotal moment with the finalization of its $9.7 billion chemical unit sale. While the transaction underscores a renewed commitment to oil and gas operations, the initial market reception has been measured, highlighting investor caution amid the corporate overhaul.

Formally closing the sale of its OxyChem business to Berkshire Hathaway early this year marks a significant strategic shift for Occidental. Management intends to allocate approximately $6.5 billion of the proceeds toward debt reduction, with a stated objective of lowering total debt below the $15 billion threshold. This move is designed to alleviate credit rating pressures that have persisted following the acquisitions of Anadarko Petroleum and CrownRock.

The tepid investor response observed in the initial January trading sessions is partly attributable to legacy liabilities retained by the company. A subsidiary of Occidental will remain responsible for certain environmental obligations and litigation claims from prior fiscal years. These lingering commitments are expected to generate remediation costs for years to come, contributing to a complex financial outlook.

Upcoming Earnings in Focus

Attention now turns to forthcoming financial disclosures. The company is scheduled to release its fourth-quarter 2025 results after the market closes on February 18. Current consensus estimates project earnings of $0.34 per share, reflecting operational challenges within a lower crude oil price environment.

Should investors sell immediately? Or is it worth buying Occidental Petroleum?

From a technical analysis perspective, the stock is currently testing support levels near $41.20. Market participants are assessing whether the $9.7 billion capital infusion will establish a price floor or if volatility in global energy markets will continue to exert pressure despite the strengthened balance sheet.

Core Business Strategy Takes Center Stage

For Chief Executive Vicki Hollub, the exit from the chemicals sector enables a “sharpened focus” on hydrocarbon operations. The company is increasingly concentrating on its high-margin unconventional assets in the Permian Basin and the Rockies region. This strategic direction is also evident in projections for 2026: while production is anticipated to remain flat, capital expenditures are forecast to drop to a range of $6.3 to $6.7 billion, down from the $7.1 billion planned for 2025.

The relationship with Berkshire Hathaway remains a cornerstone. The conglomerate now holds a 27 percent stake in Occidental’s equity. The OxyChem purchase represented one of the first major deals led by Greg Abel following Warren Buffett’s step back as CEO at the end of 2025. Market observers view the transaction as laying the groundwork for a potential dividend increase or an accelerated share buyback program once the debt reduction target is met.