Warren Buffett's Legacy Oil Bet Is Paying Off Under Greg Abel. Nobody's Talking About It.

Since Greg Abel replaced Warren Buffett as CEO of Berkshire Hathaway (NYSE: BRKA) (NYSE: BRKB), the company has made investment moves that show Abel won't simply be Buffett 2.0. However, there are notable Buffett influences, including his bet on legacy oil with his Chevron (NYSE: CVX) and Occidental Petroleum (NYSE: OXY) investments.

Abel started his tenure as CEO on Jan. 1, 2026, and since then, Chevron and Occidental Petroleum have been two of Berkshire Hathaway's top performers, up 20.3% and 27.3%, respectively, through market close on July 28. While moves such as selling all its Amazon and UnitedHealth Group shares have received a lot of attention, Buffett's energy plays have been paying off so far.

Image source: The Motley Fool.

Chevron is a cornerstone energy company

Chevron has long operated as the second-largest oil company behind ExxonMobil, but it's a lucrative position to be in. It's a global giant that operates across all three phases of the oil pipeline: searching for and drilling for oil (upstream), transporting and storing it (midstream), and refining it and selling finished products (downstream).

Chevron checks three key boxes that Buffett has historically looked for in an investment. The company is a cash cow with consistent demand due to its integrated business model. When one segment is in a down period, there's always another one to pick up the slack.

Being a cash cow is the second reason Buffett is a huge fan of Chevron: It pays an attractive, reliable dividend. It has averaged a 4% yield over the past decade and has increased its annual payout for 39 consecutive years. It's not a Dividend King yet (a company with 50 consecutive years of dividend increases), but it's well on its way.

The third reason is Chevron's commitment to increasing shareholder value through share buybacks. In 2023, Chevron's Board of Governors authorized a $75 billion stock repurchase plan, replacing the $25 billion plan in place. At its 2025 Investor Day, it projected spending $10 billion to $20 billion annually on buybacks through 2030.

CVX Stock Buyback (Annual) data by YCharts

The conflicts in the Middle East have worked a bit in Chevron's favor, as oil prices have surged, but even without the geopolitical tailwind, Chevron is a company you could depend on to be financially resilient. If you're looking for a solid dividend stock for your portfolio, it's a good go-to.

A great deal that keeps getting better

Berkshire Hathaway first took a stake in Occidental Petroleum in 2019, when it invested $10 billion in cash to help fund an acquisition. In return, Berkshire Hathaway received $10 billion in preferred stock that paid an 8% annual dividend. It was such a great deal for Berkshire Hathaway that billionaire investor Carl Icahn notably wrote to his shareholders:

The Buffett deal was like taking candy from a baby, and amazingly, she [then Occidental CEO Vicki Hollub] even thanked him publicly for it!

Today, the Occidental Petroleum deal is paying off for Berkshire Hathaway, as the company's seventh-largest holding, just under Chevron.

Buffett's Occidental Petroleum deal (admittedly too sweet to turn down) was also a bet on legacy oil, but from a different angle. The company focuses mainly on exploration and production instead of being fully integrated like Chevron.

One advantage is that being a more pure-play company allows Occidental Petroleum to react more quickly to changing circumstances and profit faster. This year is a good example, as rising crude oil prices have boosted its cash flow. In the first quarter, its free cash flow increased by over 51% year over year.

Right now, the company is riding an industry high, but there's also a much higher chance of a pullback whenever geopolitical and market conditions stabilize (assuming they do).

If I had to choose, I would prefer to go with a more integrated company like Chevron in the long term. But for Berkshire and Abel, it's a great complementary piece.

Stefon Walters has no position in any of the stocks mentioned. The Motley Fool has positions in and recommends Amazon, Berkshire Hathaway, and Chevron. The Motley Fool recommends Occidental Petroleum and UnitedHealth Group. The Motley Fool has a disclosure policy.