OxyChem’s Exit: A Buffett Farce in Three Acts

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Behold, dear reader, the grand spectacle of financial theater, where Warren Buffett, that arch-schemer of Omaha, wields his quill with the precision of a jester’s dagger. His affection for Occidental Petroleum (OXY) and its CEO, the ever-zealous Vicki Hollub, is no mere trifle. No, it is a calculated performance: Berkshire Hathaway (BRK.A) (BRK.B) now clutches 27% of OXY’s shares, a gilded noose worth $12.6 billion. One might call it an investment; I call it a masquerade of paternalism.

Yet what of OxyChem, that chemical alchemist whose caustic soda and PVC pipes perfume the world? For $9.7 billion, Berkshire dons the mantle of savior, acquiring this “profitable” jewel. A sum not unlike the price of Lubrizol in 2011-ah, the sweet serendipity of repeating oneself! OxyChem’s “step-change in profitability,” they say, as if alchemy were a science and not a gamble dressed in spreadsheets.

Act I: The Alchemical Bargain

OxyChem, that industrious puppet, operates 23 facilities, churning out chemicals with the enthusiasm of a monk transcribing scripture. Its “incremental $325 million in annualized EBITDA” by 2026 reads like a prophecy, not a forecast. One might ask: does this sum account for the inevitable collapse of the commodity market, or is it another illusion spun by Wall Street’s prestidigitators?

Berkshire, ever the seasoned actor, enters with the gravitas of a man who has seen it all. Yet its experience in the chemicals sector-a mere 14 years, a blink in the annals of industry-is paraded as wisdom. Lubrizol, after all, was purchased at the same price tag, a coincidence as convenient as a magician’s card trick.

Act II: The Debt Masquerade

Occidental, that beleaguered knight, now sells OxyChem to repay $6.5 billion in debt. A noble gesture, were it not for the memory of its $55 billion acquisition of Anadarko in 2019-a venture that left it gasping as oil prices collapsed. Buffett, ever the patron saint of leverage, propped it up with $10 billion in preferred stock, a lifeline that now seems less a gift and more a prelude to this divestiture.

The company’s “financial flexibility” is a term as hollow as a court jester’s promises. With $1.5 billion in after-tax proceeds, it will dance on the tightrope of debt reduction, a performance as precarious as a minuet on a pogo stick. And yet, one must admire the audacity: by 2029, they will “resume the redemption of Berkshire’s preferred equity”-a promise as distant as a mirage in the Sahara.

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And what of the dividend? That siren song to shareholders! Occidental will “continue growing” it, as if dividends were not the last gasp of a dying industry. The CEO’s proclamation-“unlock 20+ years of low-cost resource runway”-smacks of hubris, a delusion as charming as it is dangerous. For in the theater of oil, the only constant is the changing of the script.

Act III: The Illusion of Simplicity

The sale, they claim, will “sharpen Occidental’s focus.” A curious notion, for the oil and gas industry is a labyrinth of contradictions, and simplicity is but another illusion. The company will now “unlock” its “vast, low-cost resources,” a phrase as vague as a politician’s promise. One wonders: what is a “low-cost resource” when measured against the cost of climate collapse?

Yet the farce continues. Occidental’s “transformation” is but a rearrangement of deck chairs on the Titanic. Its “lower-risk profile” is a mirage, and its “long-term growth potential” a riddle wrapped in an enigma. For in the end, the only certainty is that the curtain will fall, and the shareholders will be left with a ledger and a wry smile. 🎭

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2025-10-03 11:27