Warren Buffett Watch: His last big deal as Berkshire CEO before Abel takes over?

The deal builds on an already close relationship between the companies:  Berkshire is Occidental's largest shareholder with a stake of almost 27% currently valued at $11.9 billion.

In addition, Occidental is paying an 8% dividend on more than $8 billion in preferred shares held by Berkshire after what was, in effect, a loan to help OXY buy Anadarko Petroleum in 2019.

As part of that deal, Berkshire also now holds warrants to buy nearly 84 million additional OXY common shares for just under $60 per share, which is higher than their current price just under $45.

Despite those ties, Buffett told shareholders two years ago Berkshire will not try to acquire Occidental in its entirety.

In a live interview on CNBC's "Squawk Box" the morning of the announcement, CEO Vicki Hollub said it will use $6.5 billion of the OxyChem purchase price to reduce its debt, bringing it below the $15 billion target set when it bought Permian Basin producer CrownRock in late 2023 for $12 billion.

"Now we're going to be able to start our share repurchase program again ...

"The thing that we needed to do was improve our balance sheet. So this is that last big step that we need and now I think we're off and running to value creation that's going to come at a much faster pace for our shareholders."

Wall Street isn't as positive as Hollub is about the deal.

Occidental Petroleum shares fell as much 8.1% on Thursday, the day of the announcement, but then bounced back a bit to close out the week with a 5.5% drop.

Barron's is blunt in its assessment: "Score one for Warren Buffett at the expense of Occidental Petroleum CEO Vicki Hollub."

It says the purchase price "could be a bargain because earnings in the sector are depressed this year" and are expected to head higher.

In addition, Occidental will be losing a chemical business that helped differentiate it from energy rivals.

It will also be facing a $1.7 billion tax hit that would have been eliminated had Berkshire used its OXY preferred shares to pay for the deal, as some had anticipated.

That means Occidental will probably continue to pay Berkshire more than $600 million in dividends each year until the preferred shares are scheduled to be redeemed in 2029.

Fortune, on the other hand, highlights the benefits to Occidental of reducing its debt load.

It quotes Wolfe Research analyst Doug Leggate calling the deal a "win-plus for Berkshire because it also helps the company that they own [roughly] 30% of. It's completely self-serving, it's logical, and—not in any nefarious way—definitely helpful."

That's the way Berkshire's Greg Abel played it in the deal's news release that, interestingly, never mentioned Buffett's name.

"We commend Vicki and the Occidental team for their commitment to Occidental's long-term financial stability, as demonstrated by their plan to use proceeds to reinforce the company's balance sheet."

Berkshire's top holdings of disclosed publicly traded stocks in the U.S., Japan, and Hong Kong, by market value, based on today's closing prices.

Holdings are as of June 30, 2025, as reported in Berkshire Hathaway's 13F filing on August 14, 2025, except for:

The full list of holdings and current market values is available from CNBC.com's Berkshire Hathaway Portfolio Tracker.

Please send any questions or comments about the newsletter to me at alex.crippen@nbcuni.com. (Sorry, but we don't forward questions or comments to Buffett himself.)

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Also, Buffett's annual letters to shareholders are highly recommended reading. There are collected here on Berkshire's website.

-- Alex Crippen, Editor, Warren Buffett Watch