Occidental Petroleum (NYSE:OXY) is one of the big bets that Warren Buffett has made in oil and gas, alongside Chevron (CVX). Buffett had Occidental warrants with a strike price of $59.62 that he exercised. Additionally, Buffett made additional stock purchases that came at somewhere around ~$31 to ~$59 per share.
At the time of writing, Occidental's share price is $56, this is not looking too dissimilar to the range that Buffett made his purchases of Occidental's common. That's not to say that Buffett is right. He is human too.
That insight aside, I nonetheless believe that Occidental Petroleum is well-positioned for this strong oil environment, particularly now given the recent share price weakness.
I rate this stock a buy.Occidental's Recent Performance
Above I've chosen a few peers to compare with Occidental. What you see above is indiscriminate selling. Investors are not considering near-term prospects, valuations, or anything else. Investors are simply crowing for the exits.
They may be right or wrong. However, I believe that they are wrong. But first, let's discuss the bear case.The Bear Case to Oil Companies
There are two bearish considerations that I believe we should be mindful of.