Buffett’s Preferred Energy Stock Predicted to Suffer 47% Profit Drop Amid Falling Oil Prices

• Warren Buffett-backed Occidental Petroleum (OXY) is set to report its first-quarter earnings and revenue late Tuesday, with analysts predicting a significant drop in EPS due to lower oil and natural gas prices.
• OXY shares saw a slight increase early Monday, despite the anticipated decrease in earnings.
• Buffett’s Berkshire Hathaway holds a 28.2% stake in Occidental Petroleum, making it one of his top holdings.

Occidental Petroleum, backed by Warren Buffett, is set to report its Q1 earnings. Analysts predict a drop in EPS due to lower oil and natural gas prices, but shares saw an early Monday increase.

Anticipated Decrease in Q1 Earnings

Analysts expect first-quarter EPS to fall from 47% to 58 cents with sales totaling $6.7 billion, down 7% compared to Q1 2023, according to FactSet. Meanwhile, analysts forecast production to slide more than 4% to 1.165 million barrels of oil equivalent in the quarter. This comes after fellow Permian Basin producer Diamondback Energy reported better-than-expected first-quarter earnings and revenue last week.

Buffett’s Stake in Occidental Petroleum

Warren Buffett’s Berkshire Hathaway substantially increased its stake in Occidental Petroleum over the past year, now holding a 28.2% stake in the company. Buffett increased his stake by 8.74% during the fourth quarter, adding more than 19.5 million shares. Despite the Federal Energy Regulatory Commission granting Berkshire Hathaway approval to purchase up to 50% of available OXY stock, Buffett has stated he has no intention of taking over the company.

Occidental Petroleum Stock Performance

Occidental Petroleum stock advanced 1.5% to 65.33 during market action on Monday. The stock fell 5% last week to 64.39, falling below its 50-day moving average. OXY shares have gained around 8% in 2024 but are down 10% since it hit a high of 71.19 on April 12. OXY topped analysts’ Q4 expectations in February.

Conclusion

Despite the anticipated decrease in Q1 earnings, Occidental Petroleum shares saw a slight increase early Monday. With Warren Buffett’s Berkshire Hathaway holding a significant stake in the company, it will be interesting to see how the stock performs following the earnings report.