Why Occidental Petroleum Stock Rose In After-Hours Today?

Occidental Petroleum Corp. (OXY) stock climbed over 1% in Tuesday's after-hours session, as traders reacted to reports that the oil and gas exploration and production company was in talks to sell its petrochemical business, OxyChem, to Warren Buffett-led Berkshire Hathaway, Inc. (BRKA) (BRKB).

Occidental Petroleum's stock, which had fallen sharply in the mid-session, cut its losses amid the broader market recovery and the deal speculation. It ended the session 1.77% lower. A Wall Street Journal report, citing information from unnamed sources and published just before the market closed, stated that Berkshire Hathaway was considering buying OxyChem for about $10 billion, with the deal expected to be announced within days. Incidentally, a Financial Times report raised the prospect of an OxyChem sale earlier this week.

Occidental Petroleum's OxyChem business manufactures chemicals used in applications including chlorinating water, recycling batteries, and producing paper. It raked in sales of $5 billion for the 12 months ended June, according to the Journal's report.

If the talks bear fruit, the OxyChem deal would be Berkshire Hathaway's second-largest in the chemicals sector, after the latter's 2011 acquisition of Lubrizol. It would also mark the Buffett-led company's biggest deal since 2022, when it announced a $11.6 billion deal to buy insurer Alleghany.

Berkshire Hathaway holds a substantial stake (27% of the outstanding shares) in Occidental Petroleum, acquired over time. Buffett first became involved with the oil and gas company in 2019, when it was preparing a competing bid for Anadarko Petroleum. Berkshire Hathaway agreed to buy $10 billion in preferred shares of the company to facilitate the bid.

On Stocktwits, Occidental Petroleum was among the top 20 trending equity tickers as of late Tuesday. Retail sentiment toward the stock improved to 'extremely bullish' (82/100) by late Tuesday, from 'bullish' the day before. The message volume on the stream remained at 'high' levels.

Occidental Petroleum stock has lost about 3% this year amid the retreat in oil prices that has dented its margin and a heavy debt load.

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