Berkshire’s $9.7 Billion OxyChem Deal Means What?

Buffett’s firm has spent years amassing a giant stake in Occidental Petroleum (NYSE: OXY), starting with a $10 billion preferred stock and warrant package in 2019 that helped Occidental fund its acquisition of Anadarko.

By mid-2025, Berkshire had built that into a 32.7% equity position, making OXY one of its six largest holdings.

Key Points

• Instead of buying all of Occidental, Berkshire Hathaway is acquiring OxyChem, a stable, cash-generating chemicals business.

• Occidental loses a profitable, diversified segment that contributed 16% of income, but the $9.7 billion sale allows it to pay down $6.5 billion in debt.

• The deal makes Occidental a more oil-dependent play, heightening its sensitivity to crude price swings, while Berkshire gains a durable, inflation-resistant business with steady demand and long-term pricing power.

Why Chemicals, Not Oil?

So why stop short of buying all of Occidental and instead carve out the chemicals unit?

OxyChem isn’t a household name, but it’s a powerhouse in essentials like chlorine, caustic soda, and PVC plastics.

These products may not generate headlines, but they quietly touch everything from construction to pharmaceuticals.

Unlike oil prices, which can swing wildly with geopolitical events, chemical demand has historically been more stable and margin-rich.

That’s critical for Berkshire, which prefers steady cash flow over boom-and-bust cycles. It also slots neatly alongside Berkshire’s existing chemicals business, Lubrizol, which generated $6.4 billion in sales last year.

In effect, Berkshire is doubling down on durable industrials while limiting its exposure to crude oil’s ups and downs.

Occidental’s Trade-Off

For Occidental, the deal stung, shares dropped sharply on the news. Investors were betting OxyChem would help diversify the company’s earnings.

In 2024, OxyChem produced $1.1 billion in operating income, a healthy 16% of Occidental’s total profits. Management even planned to hike chemical-segment capital spending by more than $200 million this year.

Selling it off narrows Occidental’s profile back to being a near-pure oil and gas company. That makes its future more tied to commodity swings at a time when debt already looms large.

The OxyChem sale gives Occidental $6.5 billion right away to pay down debt, with more to follow. A stronger balance sheet frees it to repurchase shares, support its dividend, which grew 22% last year, and perhaps lower financing costs. In short, Occidental traded some diversification for financial breathing room.

What Has Gone Under the Radar?

Occidental is effectively re-leveraging to oil, which could cut both ways. If crude prices rally, the leaner business could gush profits. But if energy markets soften, the lack of a stable chemicals buffer will make downturns more painful.

For Berkshire, this is the opposite: it’s insulating itself from the very volatility that’s plagued OXY shareholders. Buffett and incoming CEO Greg Abel, who already oversees Berkshire’s sprawling non-insurance operations and has deep energy expertise, are positioning Berkshire to own an inflation-resistant business with pricing power.

Chlorine and caustic soda, for instance, are critical in water treatment and manufacturing, giving producers like OxyChem leverage to pass on costs.

It’s also worth noting that while $9.7 billion is meaningful, Berkshire’s cash pile tops $340 billion. That’s more than the GDP of Finland. In other words, this acquisition is a bolt-on, not a bet-the-farm deal, and it hardly dents Berkshire’s liquidity for future opportunities.

The Bigger Picture

The deal hints at how Berkshire may look in the post-Buffett era. Instead of swinging for the fences with splashy full-company acquisitions, the strategy may tilt toward targeted bolt-ons that de-risk existing positions.

Think less about buying volatile oil companies whole and more about cherry-picking their most stable, cash-rich units.

For Occidental investors, the calculus is tougher. The balance sheet improves, but the business becomes less diversified. Anyone buying OXY today needs to have a strong view on where oil is heading over the next decade.

For Berkshire investors, however, the move looks textbook Buffett, buy boring, cash-generating assets at scale, then hold them forever.