Could Buying Occidental Petroleum Stock Today Set You Up for Life?

Most investors dream of buying one stock that provides them with life-changing returns. A few stocks have set their investors up for life. For example, a $1,000 investment in Warren Buffett's Berkshire Hathaway (NYSE: BRK.A)(NYSE: BRK.B) 45 years ago would be worth a staggering $2.7 million today. That's life-changing money for most people.

A key to Buffett's success in turning Berkshire into a wealth-creating machine has been investing in wonderful companies at fair prices. One stock Buffett and his team love is Occidental Petroleum (NYSE: OXY). Here's a look at whether the oil stock can follow in Berkshire's footsteps and set its investors up for life.

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A top Buffett stock

Occidental Petroleum is one of Berkshire's top holdings. Buffett's company owns nearly 265 million shares of the oil giant, or a full 28.2% of its outstanding shares, worth $10.5 billion. That's its sixth largest holding, at 4% of its investment portfolio.

Buffett wrote in his 2024 shareholder letter that he sees Occidental Petroleum as a forever holding, along with the likes of Coca-Cola and American Express. He highlighted three factors driving this view in that letter:

1. Its vast oil and gas resources in the United States.
2. Its leadership in carbon capture initiatives.
3. The strength of its management team, led by CEO Vicki Hollub.

Multiple catalysts to grow shareholder value

Occidental Petroleum holds a treasure trove of low-cost oil and gas resources across the United States. The company has drilling rights on 9.3 million net acres in the Rockies, Permian Basin, and Gulf of Mexico (also known as the Gulf of America in the United States). These resources should enable Occidental Petroleum to continue growing its production for many years to come.

The biggest question is how long oil and gas will remain the dominant fuel sources, given growing climate change concerns. If demand continues to increase and prices remain high enough, Occidental's vast oil and gas business should be able to continue growing shareholder value.

Occidental Petroleum is working hard to help lessen the environmental impact of oil and gas by investing heavily in carbon capture and sequestration (CCS). The company is building the world's largest direct air capture facility to suck carbon dioxide out of the air and sequester it underground. It sees the potential to build many of these facilities and the associated underground storage hubs in the future.

The company believes that CCS could eventually grow to a $3 trillion to $5 trillion global industry. That drives Hollub's view that Occidental could eventually make as much in earnings and cash flow from that technology as it currently does from producing oil and gas.

Occidental is also investing in growing its chemicals business, OxyChem. The company currently has projects under way that will add about $325 million in annualized earnings in 2026 and beyond. This business should be able to continue growing in the future as global demand for petrochemicals continues to increase.

Lots of fuel to grow shareholder value

Occidental Petroleum's vast oil and gas resources should enable it to grow its fossil fuel production at a decent rate for many years to come, as long as demand continues to rise. Meanwhile, it sees significant growth potential for its CCS business and should be able to continue expanding OxyChem in the coming years.

These growth drivers should give Occidental a lot of fuel to grow shareholder value in the coming decades. However, there are big questions about the future of oil and gas. On top of that, CCS is still an unproven technology. So while Occidental Petroleum could be a very good investment in the coming decades, everything would have to go just right for it to produce the returns needed to set you up for life.

Should you invest $1,000 in Occidental Petroleum right now?

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American Express is an advertising partner of Motley Fool Money. Matt DiLallo has positions in Berkshire Hathaway and Coca-Cola. The Motley Fool has positions in and recommends Berkshire Hathaway. The Motley Fool recommends Occidental Petroleum. The Motley Fool has a disclosure policy.