Occidental Sheds Chemical Unit for $9.7B to Double Down on Oil & Carbon

HOUSTON, TX – January 02, 2026 – Occidental has finalized the sale of its chemical division, OxyChem, to Warren Buffett’s Berkshire Hathaway for $9.7 billion in cash, marking a decisive strategic pivot for the Houston-based energy giant. The deal, announced today, strips Occidental of its long-held chemical manufacturing arm but injects a massive amount of capital intended to de-leverage its balance sheet and sharpen its focus on its core oil and gas operations and burgeoning carbon management business.

The transaction concludes a significant chapter for Occidental, allowing it to move forward as a more streamlined energy producer. “This transaction accelerates our strategy to strengthen Occidental’s balance sheet and focus on our deep and diverse oil and gas portfolio which we have transformed over the last decade,” President and CEO Vicki Hollub said in a statement. While the move was largely anticipated, its financial and strategic ripple effects are complex, involving a major bet on the future of energy, a classic value play by Berkshire Hathaway, and the quiet retention of significant environmental liabilities.

A Major Financial Overhaul

The $9.7 billion cash infusion is primarily aimed at aggressive debt reduction, a top priority for Occidental following several years of high-leverage acquisitions, including the landmark purchase of Anadarko Petroleum in 2019 and the more recent acquisition of CrownRock in 2024. The company has already earmarked $6.5 billion of the proceeds for accelerated debt repayment, a move intended to push its principal debt below a long-stated target of $15 billion. Achieving this goal is expected to generate approximately $350 million in annual interest savings, freeing up significant capital.

The market’s reaction to the deal was nuanced. While Occidental shares saw an initial premarket bump of 1.7%, they later fell by more than 7% after the official announcement. Analysts attributed the decline to the final sale price being slightly below the rumored $10 billion figure and, more critically, to Occidental’s decision to retain OxyChem’s historical environmental liabilities.

Despite the initial stock dip, many financial analysts view the divestiture as a long-term positive. Upgrades from firms like HSBC and Mizuho followed the news, with analysts highlighting the prospect of an "unfettered balance sheet." The deleveraging is seen as paving the way for enhanced shareholder returns. HSBC analysts forecast that Occidental could restart its share buyback program in 2026, potentially retiring about 10% of its outstanding shares while maintaining its dividend. The sale provides what Hollub called the "last step" in a major transformation to "unlock" the stock's value.

Berkshire's Bet on Industrial Bedrock

From Berkshire Hathaway’s perspective, the acquisition of OxyChem is a classic Warren Buffett-style investment. With a cash hoard exceeding $344 billion in early 2025, the conglomerate deployed a fraction of its capital into a stable, cash-generating industrial asset. OxyChem is a leading producer of essential commodity chemicals like chlorine, sodium hydroxide, and vinyls, which are critical components in industries ranging from water treatment to plastics and construction. These are what one analyst described as "low-volatile, uncontroversial, niche businesses that have pricing power."

The deal aligns with Berkshire’s history of investing in the energy and industrial sectors. It follows the $9 billion acquisition of chemical company Lubrizol in 2011 and the $9.7 billion purchase of Dominion Energy's gas assets in 2020. Furthermore, the move indirectly bolsters Berkshire's own significant investment in Occidental Petroleum, where it holds a stake of nearly 30%. By helping Occidental fortify its balance sheet, Berkshire is strengthening the value of its existing equity position.

Notably, the announcement prominently featured a quote from Greg Abel, Buffett’s designated successor and Vice Chair of non-insurance operations, signaling a leadership transition in action. OxyChem is expected to continue operating under its current management team, led by President and CEO Wade Alleman, fitting Berkshire's typical hands-off approach to the businesses it acquires.

The Unseen Price Tag of Legacy Liabilities

While the $9.7 billion headline figure is substantial, the net value for Occidental is tempered by its decision to retain OxyChem's legacy liabilities. Through a subsidiary, Environmental Resource Holdings, LLC, Occidental will remain responsible for historical tort claims and environmental remediation costs tied to operations outside the footprint of the sold facilities. These long-term obligations will be managed by Glenn Springs Holdings, Inc., another Occidental subsidiary.

Analysts estimate the net present value of these retained liabilities to be around $800 million, effectively reducing the total value of the transaction for Occidental. This "unseen price tag" represents a significant long-term financial and reputational risk. The potential scale of such costs was highlighted in late 2024, when Occidental reported a net loss driven by a $1.1 billion environmental liability charge related to a federal court ruling, a decision the company is currently appealing. By holding onto these legacy issues, Occidental shields Berkshire Hathaway from the past but keeps a potentially volatile and costly variable on its own books for decades to come.

A Future Focused on Oil and Air

Freed from its chemical division, Occidental is doubling down on a two-pronged strategy: maximizing its high-return oil and gas assets while aggressively pursuing a leadership role in the low-carbon economy. The company's operational focus remains squarely on its core production areas, particularly the Permian Basin, where the CrownRock acquisition expanded its footprint. In the first half of 2025, the company ramped up activity, filing 22.5% more drilling permits than the previous year while achieving significant efficiency gains.

Simultaneously, Occidental is making a massive bet on carbon management, specifically through its 1PointFive subsidiary. The company is constructing STRATOS, which is set to become the world's largest Direct Air Capture (DAC) facility, in the Permian Basin. It is designed to pull 500,000 tonnes of CO2 from the atmosphere annually by 2026. Occidental plans to build 69 smaller DAC facilities by 2035, supported by investments in carbon sequestration hubs.

This captured CO2 is central to Occidental's business model, as it can be used for enhanced oil recovery (EOR) to boost production from mature wells or sold as carbon credits to companies like Airbus. However, this strategy is not without its critics. Some environmental groups argue that focusing on carbon capture and removal is a "costly fig leaf" that provides a "license to pollute," enabling the company to continue its fossil fuel operations under a veneer of climate action rather than pursuing a genuine transition away from them. This dual path—extracting hydrocarbons while simultaneously investing billions to capture carbon from the air—positions Occidental at the nexus of the global energy debate, a high-stakes gamble on its ability to profitably navigate both today's energy market and tomorrow's climate imperatives.