In a significant development shaking up the energy and petrochemical sectors, Warren Buffett’s Berkshire Hathaway Inc. is reportedly on the verge of acquiring OxyChem, the petrochemical division of Occidental Petroleum Corp., for approximately $10 billion. This deal, if finalized, would mark Berkshire’s largest acquisition since its $11.6 billion purchase of Alleghany in 2022 and underscores Buffett’s continued confidence in the chemicals industry.
Talks between the two companies could wrap up in the coming days, according to sources familiar with the matter, as Berkshire deploys part of its record $344 billion cash reserves to expand its portfolio.
The Announcement and Deal DetailsWhile neither Berkshire Hathaway nor Occidental Petroleum has issued an official press release confirming the acquisition as of October 2, 2025, multiple reports from reputable sources indicate advanced negotiations. Berkshire’s interest aligns with its strategy of investing in stable, cash-generating businesses amid a backdrop of high interest rates and market volatility. OxyChem, which produces essential chemicals like chlorine, sodium hydroxide, and vinyl products, generated $2.42 billion in revenue in the first half of 2025 and is projected to deliver $800 million to $900 million in pretax income for the year.
This would be Buffett’s second major foray into chemicals, following the 2011 acquisition of Lubrizol for about $10 billion.
Berkshire Hathaway, under Buffett’s leadership, has historically shied away from splashy deals in recent years, preferring to unwind positions in tech and banking giants like Apple and Bank of America to build its cash hoard. However, with Buffett set to step down as CEO at the end of 2025—handing the reins to Greg Abel—this move signals a proactive stance in deploying capital before the transition.
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How Warren Buffett Stands to Benefit
As Berkshire’s chairman and a legendary value investor, Warren Buffett already holds a substantial stake in Occidental Petroleum, with Berkshire owning about 28.2% of Oxy’s common shares—valued at over $11 billion as of mid-2025.
This acquisition isn’t just about expanding Berkshire’s chemicals footprint; it indirectly bolsters Buffett’s existing investment in Oxy. By selling OxyChem, Occidental can accelerate its debt reduction efforts, strengthening its balance sheet and potentially enhancing shareholder returns through dividends or buybacks.
Buffett’s history with Oxy dates back to 2019, when Berkshire provided $10 billion in preferred stock financing for Oxy’s acquisition of Anadarko Petroleum, along with warrants for additional shares.
Since then, Berkshire has steadily increased its stake, viewing Oxy as a bet on long-term oil demand and efficient production. The OxyChem deal could further solidify this relationship, as lower debt for Oxy means reduced financial risk and more flexibility in volatile energy markets—ultimately benefiting Buffett as a major shareholder.
Occidental’s Challenges with Colorado Drilling Regulations
Occidental Petroleum’s operations in Colorado, particularly in the Denver-Julesburg (DJ) Basin, have faced headwinds from stringent state regulations implemented since 2019. Colorado’s Senate Bill 181 shifted priorities from fostering oil and gas production to protecting public health, safety, and the environment, empowering local governments and introducing rules like 2,000-foot setbacks from homes and schools.
These regulations have impacted Oxy’s assets and drilling locations. For instance, in 2022, the Colorado Energy and Carbon Management Commission (formerly COGCC) rejected a Kerr-McGee (Oxy subsidiary) plan for 26 wells near residential areas in Firestone and Frederick due to setback violations, forcing the company to explore alternatives or relocate rigs.
Permitting delays led Oxy to temporarily move a drilling rig to Texas in early 2025, though it later returned one amid improved approvals.
Cumulative impact rules, finalized in 2024, require assessments of pollution effects within a mile of drill sites (extending to 5 miles for water resources), adding compliance costs and potentially limiting sites in disproportionately impacted communities.
Despite these hurdles, Oxy remains active, with ongoing projects like Alder and Rademacher pads in Weld County, and has secured approvals for large-scale developments like a 209-well project in remote areas.
Overall, while regulations have slowed urban-adjacent drilling and increased mitigation expenses, they haven’t halted Oxy’s Colorado operations but have pushed focus toward less populated locations.
Implications for Oxy Investors Amid Debt Reduction
For investors in Occidental Petroleum, the potential sale of OxyChem comes at a pivotal time in the company’s deleveraging journey. Oxy has aggressively reduced debt following its 2019 Anadarko acquisition and the 2024 CrownRock purchase, achieving a $4.5 billion near-term target seven months early in late 2024.
By mid-2025, it had repaid $7.5 billion in 13 months, slashing annual interest expenses by $410 million through divestitures like $1.2 billion in Permian and Rockies assets and $950 million in additional Permian sales.
A $10 billion influx from OxyChem would further fortify Oxy’s balance sheet, potentially enabling higher dividends (recently increased by 9%), share repurchases, or reinvestment in core oil and gas assets.
This reduces financial vulnerability in a fluctuating oil market and could boost stock valuation, especially as Oxy focuses on high-margin Permian production. However, ongoing regulatory pressures in Colorado might temper growth in that region, though Oxy’s diversified portfolio mitigates this risk.
At Sandstone Asset Management, we have experienced the challenging climate justice regulatory environment in Colorado and developed solutions to help exploration and production companies navigate the hurdles and obtain permits. The additional regulations and permitting hurdles are also being done in California, and we are seeing that it has totally decimated business, not just the oil and gas industry.
What It Means for Berkshire Hathaway
For Berkshire Hathaway, acquiring OxyChem represents a diversification play into steady petrochemical demand, leveraging Buffett’s value-investing philosophy. With pretax earnings potential of $800-900 million annually, the unit could provide reliable cash flows amid Berkshire’s massive $344 billion cash pile.
It also indirectly supports Berkshire’s Oxy stake by aiding the latter’s debt payoff, creating a symbiotic benefit .As Buffett prepares to exit the CEO role, this deal could be a capstone, demonstrating his knack for opportunistic investments. Investors in Berkshire may see enhanced earnings stability from chemicals, complementing its insurance, rail, and energy holdings.
In summary, this acquisition highlights strategic asset shuffling in the energy space, with potential wins for both companies amid regulatory and market challenges. Stay tuned to Energy News Beat for updates as the deal progresses.
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