Buffett’s Next Oil Bet: Why Occidental Is Different

Key Points

• Buffett’s failed ConocoPhillips investment taught him the risks of market timing and overvaluation in the energy sector.
• His stake in Occidental is rooted in strategic entry points, preferred dividends, and trust in CEO Vicki Hollub.
• Occidental’s carbon capture initiatives align with long-term sustainability trends, making it a future-ready oil investment.

It’s no secret that Warren Buffett has a penchant for Occidental Petroleum Co. NYSE: OXY stock.

But Buffett wasn't always a fan of oil & energy sector stocks. In fact, his high-profile foray into oil domestic oil stocks with ConocoPhillips NYSE: COP was personally proclaimed to be a “major mistake” by the Oracle of Omaha himself.

In a move that underscores how much his perspective on the sector has shifted, Buffett’s Berkshire Hathaway Inc. NYSE: BRK.A bought OXY stock when it was down 30% from its highs in February 2025. Buffett aggressively upped his stake by 763,017 shares on February 7, 2025, bringing its total holdings to 265 million shares, or 28.2% of the company. At the time, this investment comprised 4.63% of its total assets, making it the sixth-largest holding in Berkshire’s portfolio.

ConocoPhillips: Buffett’s Major Mistake

Berkshire Hathaway started accumulating ConocoPhillips stock in 2007, raising its stake to nearly 85 million shares by 2008. Buffett owned around $7 billion of ConocoPhillips stock as oil prices were riding high, with West Texas Intermediate (WTI) crude trading above $145 per barrel.

Recall that 2008 was when the real estate bubble started to burst, taking down financial markets and oil prices. Buffett’s timing was unfortunate as the meltdown blindsided him as oil prices collapsed with world economies. Oil prices peaked just above $145 per barrel in July 2008 and then collapsed nearly 70% to $44.60 per barrel by year’s end. Brent crude dropped to $35.82, and ConocoPhillips shares collapsed from $113.17 to $51.80—a 54% decline.

In his 2008 shareholder letter, Buffett took full responsibility for the "major mistake," citing a failure to anticipate the collapse in energy prices. Though he believed oil prices would eventually recover, the flawed entry point and valuation led him to fully exit ConocoPhillips by 2013 with estimated losses of $1.5 billion.

Exxon Mobil: A Diversified Oil Bet

Warren Buffett reentered the oil business in 2013 by acquiring 40 million shares (valued at $3.7 billion) in ExxonMobil Co. NYSE: XOM.

Exxon was a more diversified major oil player than ConocoPhillips, a vertically integrated behemoth with upstream exploration and production, midstream pipelines, xfand downstream refining and distribution capacity.

However, Buffett unloaded his position the following year, estimated at breakeven levels due to oil prices falling again. He also wasn’t a big fan of Exxon's CEO and thought the company may have been too big to be agile enough during systemic corrections.

Occidental Petroleum: 8% Dividend and Preferred Stock

Buffett returned to the oil fields again in 2019 with Occidental Petroleum—but with a different investment approach.

Berkshire made a $10 billion investment through preferred stock to help fund Occidental’s acquisition of Anadarko Petroleum.

As part of the deal, Buffett obtained 100,000 preferred shares that pay an annual dividend of 8%, as well as warrants allowing the purchase of up to 83.9 million shares of Occidental common stock at a price of $59.62 per share.

Buffett also had high praise for Occidental’s CEO Vicki Hollub, commending her fiscal discipline and long-term vision. Her leadership played a pivotal role in motivating Berkshire to build its massive 28.2% stake.

Hollub calls herself an environmentalist who just happens to be the CEO of an oil and gas company. She is steering the Occidental toward a dual strategy: energy production and environmental accountability. 

As part of this shift, the company is becoming more diversified with its investment in carbon capture through its subsidiary 1PointFive. Stratos, a billion-dollar direct air capture (DAC) facility in the Permian Basin, is set to go live in 2025.

1PointFive has been selling carbon dioxide removal (CDR) credits since pre-construction. Stratos has a 500,000-ton annual capacity, which it will use to offset its own carbon emissions and sell at a rate of $500 to $1,100 per metric ton for carbon credits to companies like Microsoft Co. NASDAQ: MSFT and Airbus SE OTCMKTS: EADSY.

Why Buffett Got It Right This Time

Buffett’s investment in Occidental contrasts sharply with his ConocoPhillips misstep.

With ConocoPhillips, Buffett broke his own rules driven by FOMO-chasing shares to the height of the bubble. With Occidental, Buffett entered with a solid foundation of an 8% dividend and the flexibility to acquire more stock at a discount with the warrants. 

And Occidental’s diversification into carbon capture could mean that Buffett is not just betting on oil—but on energy’s future.