Western petroleum (NYSE:OXY) is one of the largest oil and gas producers in the US, but only in recent years has its stock gained momentum. If you had invested $10,000 in Occidental Petroleum three years ago, your investment would be worth about $22,500 at the time of this writing. In other words, oil and gas stocks have more than doubled investors’ money in just three years.
There are specific reasons why Occidental Petroleum stock zoomed three years later and could rise even further.
The magic of a turnaround — and Buffett
Occidental Petroleum was saddled with heavy debt after its massive takeover of Anadarko Petroleum in 2019, as oil prices fell to zero at one point in 2020. The oil and gas giant cut its dividend and its shares plunged.
Occidental Petroleum has come a long way since then. It has aggressively paid down its debt, grown its cash flows consistently, resumed dividend growth in 2021, and increased its dividend every year since. The company’s rapid turnaround caught the attention of investors and its stock price skyrocketed in three years.
In between, legendary investor Warren Buffett – who also helped Occidental Petroleum acquire Anadarko – was a big buyer of the 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 one of Berkshire Hathaway’s largest holdings.
Buy and hold Occidental Petroleum stock
Buffett’s support is obviously a big factor behind the rally in Occidental Petroleum stock. That said, it is one of the most diversified energy companies in the US, with upstream, midstream, chemical and low-carbon ventures, and with an eye on growth.
Occidental Petroleum is set to acquire privately held CrownRock in a $12 billion deal to expand its footprint in the Permian Basin. Following the acquisition, the company expects to further reduce debt and resume share buybacks, which could fuel the next phase of these oil and gas stocks’ bull run.
Should You Invest $1,000 in Occidental Petroleum Now?
Consider the following before purchasing shares in Occidental Petroleum:
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Neha Chamaria has no position in any of the stocks mentioned. The Motley Fool holds positions in and recommends Berkshire Hathaway. The Motley Fool recommends Occidental Petroleum. The Motley Fool has a disclosure policy.
If you invested $10,000 in Occidental Petroleum stock three years ago, here’s how much you’d have today. originally published by The Motley Fool
