Richard Jackson had been CEO of Occidental Petroleum for less than a month when the pressure began to mount. Investors want him to lift a lagging stock price, accelerate debt reduction, and manage a costly preferred stake held by Berkshire Hathaway that costs the company hundreds of millions of dollars in annual dividends.
Jackson, who took over from longtime CEO Vicki Hollub on June 1, inherited a company carrying $15.2 billion in long-term debt — a legacy of two major acquisitions that reshaped Occidental but weighed on its share price for years.
Jackson takes over as Occidental faces financial headwinds
Hollub’s decade running the company reshaped Occidental, but the numbers tell a complicated story. She engineered two major acquisitions that shifted oil production heavily toward the U.S.—a move that proved strategically sound over time. The deals, though, came at a steep price.
Long-term debt peaked at $38.5 billion before she managed to bring it down to $15.2 billion by the time she stepped down. That’s real progress. Still, Occidental’s share price fell 26% during her tenure, while ConocoPhillips returned 153% and Chevron returned 88% over the same period. That gap is hard to ignore.
Jackson walks into a situation where the financial cleanup isn’t finished. His stated near-term priority is clear: get principal debt down to $10 billion. He’s also pointed to organic production growth through technology as a key lever—a way to improve the company’s position without taking on new acquisition risk.
Berkshire Hathaway’s investment creates ongoing financial burden
The Anadarko deal in 2019 — a $55 billion acquisition including debt — was the defining move of Hollub’s era. To pull it off, Occidental turned to Berkshire Hathaway for a $10 billion investment. That cash came with strings attached.
The preferred stock arrangement requires Occidental to pay Berkshire an 8% annual dividend, a rate higher than what a typical junk bond currently offers. Critics have long argued the arrangement rewards Berkshire far more generously than Occidental’s ordinary shareholders.
Occidental has repaid about $1.5 billion of that preferred stock so far, with plans to begin redeeming the remainder at a 5% premium starting in August 2029, when it becomes eligible to do so. That’s still years away. The dividend obligation keeps draining cash in the meantime.
Berkshire’s footprint in Occidental goes beyond the preferred stake. The conglomerate also holds 26.9% of Occidental’s common stock, plus warrants to purchase an additional $5 billion worth of shares—a position substantial enough to shape how other investors and potential partners think about the company’s future.
Investors call for balance sheet repair and clearer strategic path
The investor community isn’t waiting around for Jackson to find his footing. David Byrns, a portfolio manager at American Century Investments—which holds an Occidental stake worth roughly $131 million—put it plainly: “The biggest opportunity is to clean up the capital structure, strengthen the balance sheet, and increase shareholder returns.”
Jackson appears to be listening. An Occidental spokesperson noted that he’s been meeting with investors, hearing their perspectives, and “reinforcing that our value improvement starts with executing from a strong balance sheet. ” That tracks with what he said on the May earnings call, where debt reduction to $10 billion was front and center.
There’s also a strategic upside worth noting. Hollub’s push into U.S.-heavy production paid off in ways that weren’t fully obvious at the time. When the U.S.-Israeli conflict with Iran rattled confidence in the Middle East oil supply, companies with significant regional exposure—like Exxon Mobil, with roughly 20% of its production there—faced greater disruption risk. Occidental’s positioning offered a relative buffer.
Investors debate: grow through acquisitions or become an acquisition target
Not everyone’s satisfied with a balance-sheet-first approach. Bill Smead, chief investment officer at Smead Capital Management, which holds an Occidental position worth roughly $201 million, sees a more fundamental fork in the road.
“Either Occidental needs to get bigger and beef up the oil in the tank, or they’re probably going to have to be part of a larger oil and gas company,” Smead said. The oil industry has been churning through mega-mergers in recent years, with producers consolidating to cut costs and boost scale. Staying static, in Smead’s view, isn’t a viable option.
He also raised a pointed question about Berkshire’s long-term intentions—arguing that both companies should clarify whether Occidental is eventually heading toward becoming a Berkshire subsidiary. The answer, so far, is murky. Warren Buffett previously stated he didn’t plan to acquire the company outright, and Berkshire’s new CEO, Greg Abel, declined to comment.
Berkshire’s large stake has a chilling effect on outside interest, Smead noted. “It keeps other investors from being aggressive” — meaning potential acquirers may hesitate when a quarter of the company already belongs to one very patient, very large shareholder.
What investors and watchers should know
The core challenge facing Jackson is straightforward to describe, even if it’s hard to solve. He needs to cut debt from $15.2 billion to $10 billion, manage an expensive preferred stock arrangement with Berkshire that runs through at least 2029, and restore investor confidence in a stock that badly underperformed its peers under his predecessor.
The strategic question — whether Occidental grows through acquisitions or eventually becomes part of a larger company — stays open. Berkshire’s outsized stake complicates both paths. Jackson’s early signals point to organic growth and balance sheet discipline, but investors like Smead are already signaling that may not be enough. The pressure is real, and it started before his first month was even done.
Kelly is an experienced writer with 15 years of experience exploring the big stories that shape our world, from tech breakthroughs and space exploration to climate, energy, and the fascinating quirks of science. She has a talent for turning complex ideas into sharp, memorable insights that stay with readers long after they’ve finished reading.
