Warren Buffett’s $11 billion oil bet is down 21% from 2025 peak. Will this be his oil regret 2.0?

One of Warren Buffett’s largest nationalist equity investments is present heavy successful the red. Occidental Petroleum, successful which Berkshire Hathaway holds a 28.2% stake, has seen its shares slump 21% from their 2025 highest of $53.20, closing astatine $42.16 connected Friday. The banal touched a debased of $34.78 past month, its lowest level since 2022, arsenic U.S. lipid prices struggle, wiping retired billions successful worth and casting a agelong shadiness implicit 1 of Buffett’s last large swings successful the vigor sector.

The Berkshire Hathaway chairman, who has agelong praised Occidental and its CEO Vicki Hollub, calling her “an bonzer manager” and saying “we’re successful it for keeps,” was notably soundless astir the institution astatine Berkshire’s yearly shareholder gathering past Saturday—his past arsenic CEO. Hollub, seated successful the audience, watched arsenic Buffett skipped implicit what had antecedently been a fixture of his yearly remarks.

As the banal continues to fall, Berkshire’s stake—purchased mostly astatine prices supra $50—has dropped by an estimated $6.4 cardinal from its highest worth past year, according to the Wall Street Journal.

Berkshire Hathaway owns 28.2% of Occidental’s outstanding shares, presently valued astatine $11 billion, making it the seventh-largest presumption successful Berkshire’s $280 cardinal nationalist equity portfolio. Berkshire besides holds $8.5 cardinal successful preferred banal successful Occidental and has warrants to bargain different 83.9 cardinal shares for $5 billion.

Buffett's vigor strategy faces a test

The Sage of Omaha has a past of oil investing missteps. A sizable involvement successful ConocoPhillips successful 2008 soured during the fiscal crisis. He aboriginal exited Exxon Mobil successful 2014 aft a driblet successful prices. But successful the aftermath of the pandemic, helium reentered the assemblage aggressively, buying into Chevron and Occidental arsenic lipid prices rebounded.

In 2019, Buffett funded Occidental’s acquisition of Anadarko Petroleum with a $10 cardinal preferred banal investment. He aboriginal said helium was sold connected Hollub’s imaginativeness aft listening to her outline Occidental’s aboriginal plans to analysts: “What Vicki Hollub was saying made thing but sense.” That backing appeared to embolden the company’s leadership, with Buffett adjacent supporting Occidental’s high-risk c seizure ambitions, contempt admitting the economics were unproven.

Occidental’s $11 cardinal acquisition of Permian driller CrownRock past twelvemonth further accrued its indebtedness burden, bringing semipermanent liabilities to astir $24 billion. Now, facing sub-$60 lipid prices and accrued output from OPEC+, Occidental’s debt-heavy equilibrium expanse and capital-intensive greenish ventures are nether strain. Meanwhile, the Wall Street Journal has reported that the Energy Department is preparing large backing cuts to clean-energy projects—including Occidental’s c seizure plans successful South Texas.

Q1 offers a glimmer of hope

Still, Occidental’s caller fiscal show offers reasons not to constitute the concern disconnected conscionable yet. The institution reported better-than-expected results for the archetypal 4th past week, buoyed by beardown accumulation and improving earthy state prices.

Production jumped astir 19% year-on-year to 1.39 cardinal barrels of lipid equivalent per day, with gains successful the Rockies and what Occidental referred to arsenic the Gulf of America. Average realized earthy state prices surged 50% from a twelvemonth earlier to $2.42 per 1000 cubic feet, portion earthy state liquids roseate 17% to $25.94 per barrel.

“In the archetypal quarter, our teams' sustained absorption connected operational excellence unlocked further efficiencies and supported the transportation of resilient escaped currency flow,” Hollub said successful the company’s net release.

The institution generated $3 cardinal successful operating currency travel and $1.2 cardinal successful escaped currency travel aft superior expenditures. It utilized those proceeds to money a 9% summation successful its dividend and to wage down $2.3 cardinal successful debt, aided by $1.3 cardinal successful non-core plus sales. Since the 3rd 4th of 2024, Occidental has repaid $6.8 cardinal successful debt, exceeding its people pursuing the CrownRock acquisition.

“We proceed to rapidly beforehand towards our indebtedness simplification goals, and we judge our deep, divers portfolio of high-quality assets positions america for occurrence successful immoderate marketplace environment,” Hollub added.

What adjacent for Berkshire’s stake?

As Occidental’s banal continues to slide, investors are watching intimately to spot however Buffett—or his successor Greg Abel volition navigate the situation. Berkshire has regulatory support to bargain up to 50% of the institution and could take to adhd to its presumption astatine existent levels. Alternatively, Abel could steer toward a much blimpish approach, fixed the stock’s volatility and Occidental’s elevated debt.

So far, Berkshire has shown nary signs of pulling the plug, adjacent buying 763,000 further Occidental shares astatine $46.82 successful February this year, according to regulatory filings.

For now, Berkshire remains 1 of Occidental’s largest shareholders. The institution has repaid $2.3 cardinal successful indebtedness this year, but weaker lipid prices and uncertain request proceed to unreality the outlook.

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