OXY Breaks Above $50 – Buffett’s Oil Bet

TradingView2026/03/06 23:09

By:TradingView

Occidental Petroleum (OXY) is one of the largest U.S. oil and gas producers, with core operations concentrated in the Permian Basin, one of the most profitable and lowest-cost oil regions in the world.

In addition to traditional upstream production, the company has been investing heavily in carbon capture technology and enhanced oil recovery, which could become a long-term strategic advantage if carbon capture markets expand.

Another reason the company often attracts investor attention is its strong backing from Warren Buffett through Berkshire Hathaway, which owns roughly 28% of the company. Buffett rarely builds positions of that size unless he sees durable long-term cash flows and high-quality assets.

📊 Fundamental Snapshot

P/E ~33: Valuation is not cheap for a traditional oil producer. The market appears to be pricing in either stable oil prices or improving earnings ahead.

Price / Cash Flow ~5.0: Relatively attractive for the energy sector. Strong operating cash flow supports dividends, debt reduction, and share buybacks.

EV / EBITDA ~6.9: Comfortably within the typical 5–8 range for large energy companies, suggesting the company is not overly expensive relative to operating earnings.

Debt / Equity ~0.65: Moderate leverage. Not extremely conservative, but significantly improved compared to earlier years. Continued deleveraging remains an important part of the investment thesis.

Debt / Assets ~0.27: Indicates the company is not heavily dependent on debt financing, which reduces financial risk during commodity cycles.

EBITDA Margin ~48.6%: Very strong operating profitability for an oil producer. High margins suggest efficient production assets and relatively low extraction costs.

Operating Margin ~9–23% (recent decline): Margins have compressed recently, reflecting the cyclical nature of oil prices. If oil strengthens again, these margins could expand quickly.

Net Margin ~4–18% historically: Profitability fluctuates with oil prices. Current levels remain below previous cycle peaks, highlighting the commodity exposure.

Free Cash Flow per Share ~4.15: Healthy free cash flow generation after capital expenditures — one of the most important indicators for energy companies.

ROE ~6–7% / ROIC ~4% (recent): Return metrics are currently modest. However, in commodity industries these numbers often expand significantly when oil prices move higher.

Current Ratio ~0.94: Liquidity is slightly below the ideal level of 1.0, but large energy companies often operate comfortably below that threshold due to predictable operating cash flows.

📈 Technical Perspective

OXY delivered a strong monthly close in February above a major price level that has been tested multiple times over recent years.

This level has formed around the round number of 50, which often acts as a psychological barrier for investors and can either slow price movements or provide strong momentum once broken.

The strength of this level is visible in the chart through several powerful breakouts (yellow circles). These clearly show that this is not a level that can be crossed quietly or cheaply. Breaking through typically requires broad market participation and significant volume.

As mentioned, February finally delivered that breakout.

Since then, the price has pulled back toward the level again, creating a technical retest of the breakout zone, which from a technical perspective is a perfectly healthy development.

If one can also find fundamental arguments that align with this technical setup, then this scenario could be worth considering.

Good luck,
Vaido

Disclaimer: The content of this article solely reflects the author's opinion and does not represent the platform in any capacity. This article is not intended to serve as a reference for making investment decisions.

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OXY Breaks Above $50 – Buffett’s Oil Bet

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