In a significant move that could reshape its portfolio and bolster its financial health, Occidental Petroleum Corp. (NYSE: OXY) is reportedly negotiating the sale of its petrochemical division, OxyChem, in a deal valued at a minimum of $10 billion.
This potential transaction, first reported by the Financial Times and citing sources familiar with the matter, would mark the company’s largest divestiture to date and create one of the world’s largest independent petrochemical companies.
The news comes amid Occidental’s ongoing efforts to streamline operations and address its substantial debt burden, a legacy of major acquisitions in recent years.
Background on the Potential Sale
Occidental, a Houston-based energy giant backed by Warren Buffett’s Berkshire Hathaway, has been actively shedding non-core assets to improve its balance sheet.
The OxyChem unit, which produces essential chemicals for plastics, pharmaceuticals, and water treatment, generated nearly $5 billion in revenue over the 12 months ending in June 2025.
While the identity of potential buyers remains undisclosed, the deal could be announced in the coming weeks, though sources caution it might still fall through.
This divestment aligns with broader industry challenges for petrochemical producers, including squeezed margins due to a global supply glut from new capacity in the US, Middle East, and China.
For Occidental, exiting the chemicals business would allow a sharper focus on its core oil, gas, and emerging carbon management operations, following its $55 billion acquisition of Anadarko in 2019 and the $13 billion purchase of shale producer CrownRock in 2023.
Insights from Occidental’s Latest Earnings ReportOccidental’s most recent earnings report, for the second quarter of 2025 (released on August 6, 2025), provides context for this strategic shift.
The company reported net income attributable to common stockholders of $288 million, or $0.26 per diluted share.
Adjusted earnings per share came in at $0.39, surpassing analysts’ consensus estimates of $0.30 by 30%.
Revenue for the quarter was not explicitly detailed in the release, but the results highlighted operational efficiencies and cash flow preservation amid volatile oil prices.During the earnings call, CEO Vicki Hollub emphasized the company’s progress on asset sales and debt reduction, stating, “We are extremely pleased with the progress of our divestiture programme and the trajectory of our debt reduction plans.”
Occidental announced four divestitures since April 2025, generating approximately $950 million in proceeds, with $370 million already closed.
These efforts underscore a commitment to capital discipline, with year-to-date debt repayments totaling $3 billion.
Looking ahead, analysts project full-year 2025 earnings per share at $2.26, with the next report (Q3 2025) expected on November 17, 2025.
However, trailing twelve-month EPS as of June 30, 2025, stood at $1.75, reflecting the pressures of fluctuating commodity prices.
Impact on Debt Reduction
Occidental’s debt levels have been a focal point for investors, stemming largely from its aggressive acquisition strategy. As of June 30, 2025, the company’s long-term debt was approximately $23.34 billion, with total debt reaching $23.78 billion.
This represents a 26.93% increase year-over-year, highlighting the ongoing challenge.
The potential $10 billion-plus proceeds from the OxyChem sale could dramatically accelerate debt repayment.
Occidental has already reduced its debt by $7.5 billion over the past year, including $4 billion from divestments since the start of 2025.
Applying the full sale amount to debt could slash the total burden by over 40%, bringing it below $14 billion and improving the company’s liabilities-to-assets ratio, which stood at 58.68% in Q1 2025.
This would enhance financial flexibility, potentially freeing up capital for dividends, share buybacks, or investments in high-growth areas like carbon capture.Metric
|
Metric
|
Q2 2025 Value
|
Change/Note
|
|---|---|---|
|
Long-Term Debt
|
$23.34B
|
+26.93% YoY
|
|
Total Debt
|
$23.78B
|
Legacy from acquisitions
|
|
Debt Repaid YTD
|
$3.0B
|
From operations and sales
|
|
Potential Sale Proceeds
|
$10B+
|
Could reduce debt by ~42%
|
How Investors Might View the Move
Investor sentiment toward Occidental has been mixed, with shares declining nearly 8% over the past 12 months to close at $47.47, underperforming the S&P 500’s 15% gain.
Key concerns include falling oil prices, high debt, and execution risks from past deals. However, the OxyChem sale could be a positive catalyst, signaling a disciplined approach to deleveraging and portfolio optimization.
Analysts largely rate OXY as a “Hold,” with a consensus price target of $61.24 for 2025, implying about 29% upside from current levels.
Berkshire Hathaway’s continued support—owning 28% of the company—adds credibility, but some warn against following Buffett blindly given the stock’s bearish trend.
Early reactions to the news, including discussions on platforms like Reddit, highlight the sale as a step toward making OxyChem non-core, potentially boosting shareholder value through debt relief and a refocus on energy production.
Overall, while short-term market volatility persists, the transaction could restore investor confidence by addressing debt head-on and positioning Occidental for sustainable growth in a transitioning energy landscape. As details emerge, watch for updates on buyers and final terms, which could further influence stock performance.
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