Western oil (NYSE: OXY) is one of the largest oil and gas producers in the United States, but only in recent years has the stock gained momentum. If you had invested $10,000 in Occidental Petroleum three years ago, your investment would be worth about $22,500 as of this writing. In other words, the oil and gas sector has more than doubled investors’ money in just three years.
There are specific reasons why Occidental Petroleum stock has zoomed in three years and could continue to rise even higher.
The magic of a turnaround – and Buffett
Occidental Petroleum was saddled with heavy debt after its massive acquisition of Anadarko Petroleum in 2019, when oil prices plunged to zero in 2020 at one point. THE oil and gas The giant cut its dividend and its shares collapsed.
Since then, Occidental Petroleum has come a long way. It paid down debt aggressively, grew its cash flow consistently, resumed dividend growth in 2021, and has increased its dividend every year since. The company’s rapid turnaround attracted investors’ attention, and its stock price soared within three years.
Between the two, legendary investor Warren Buffett — which also helped Occidental Petroleum acquire Anadarko — is a big buyer of oil and gas stocks.
Buffett’s company Berkshire Hathaway began purchasing shares of Occidental Petroleum in 2022. As of March 31, 2024, it had increased its stake in the oil and gas company to 28.2%. Today, Occidental Petroleum is among Berkshire Hathaway’s largest holdings.
Buy and Hold Occidental Petroleum Stock
Buffett’s support is, of course, a big factor in Occidental Petroleum’s stock rally. That said, it is one of the most diversified energy companies in the United States, with upstream, midstream, chemicals and low-carbon businesses, as well as an eye on the growth.
Occidental Petroleum is set to acquire privately held CrownRock in a $12 billion deal to expand its presence in the Permian Basin. After the acquisition, the company plans to further reduce debt and resume share buybacks, which could fuel the next leg of this oil and gas stock’s rally.
Should you invest $1,000 in Occidental Petroleum right now?
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Néha Chamaria has no position in any of the stocks mentioned. The Motley Fool ranks and recommends Berkshire Hathaway. The Motley Fool recommends Occidental Petroleum. The Motley Fool has a disclosure policy.
If You Invested $10,000 in Western Oil Stocks 3 Years Ago, Here’s How Much You’d Have Today was originally published by The Motley Fool
