In the weeks since he assumed leadership of Occidental Petroleum, Richard Jackson has been confronted with a compact set of financial imperatives: revive a share price that has trailed peers, pare down significant leverage, and address an expensive preferred stake held by Berkshire Hathaway that drains hundreds of millions in annual dividends.
Jackson, who rejoined Occidental after first becoming part of the company in 2003, officially became chief executive on June 1. His arrival follows a decade during which his predecessor, Vicki Hollub, reshaped Occidental’s production mix through two major acquisitions that concentrated output in the United States. That U.S.-heavy footprint has offered a relative advantage as concerns over Middle East supply intensified amid the U.S.-Israeli war with Iran, a disruption that left peers with larger exposure to the region more vulnerable; for example, Exxon Mobil had roughly 20% of its production in the Middle East.
But the strategic repositioning carried a high price. The Anadarko acquisition in 2019 and other moves left Occidental with as much as $38.5 billion in long-term debt at one point. Hollub worked to reduce that burden to about $15.2 billion by the end of her tenure, yet shareholders saw the company’s stock decline 26% during the same period. That performance lagged peers substantially - ConocoPhillips returned 153% and Chevron returned 88% over the comparable span.
Investors and managers have underscored that the most immediate lever available to Jackson is balance-sheet repair. "The biggest opportunity is to clean up the capital structure, strengthen the balance sheet and increase shareholder returns," said David Byrns, a portfolio manager at American Century Investments, which holds an Occidental stake worth roughly $131 million, according to LSEG data.
On an earnings call in May, Jackson laid out short-term financial targets: lower principal debt to $10 billion in the near term, sustain gains in free cash flow, and pursue organic production growth through technological improvements. An Occidental spokesperson added that Jackson has been engaging directly with investors, listening to their priorities, and emphasizing that performance gains will stem from a stronger balance sheet.
One of the most conspicuous constraints on Occidental’s flexibility is its relationship with Berkshire Hathaway. Berkshire provided a $10 billion investment to facilitate the Anadarko deal and in return received preferred shares that pay an 8% annual dividend - a yield higher than many high-yield debt instruments and a recurring cash outflow critics say benefits Berkshire at the expense of other shareholders. Occidental has repaid about $1.5 billion of that preferred stock and plans to begin redeeming the remaining preferred shares at a 5% premium when they are eligible in August 2029.
Beyond the preferred stake, Berkshire also holds 26.9% of Occidental’s common stock and retains warrants to buy an additional $5 billion of common shares until one year after the preferred stock is redeemed. Berkshire’s sizable ownership has prompted questions about how it shapes the company’s strategic options, including whether Occidental should pursue larger acquisitions to scale up or whether it might ultimately become part of a larger industry consolidation.
Some investors believe that Occidental must either expand through additional deals or become an acquisition target itself. Bill Smead, chief investment officer at Smead Capital Management, which owns about $201 million of Occidental stock, said the company faces a choice: bulk up upstream reserves and production or consider becoming part of a larger oil and gas company. He also suggested that Occidental and Berkshire should be clearer about whether Berkshire intends for Occidental to ultimately operate as a subsidiary of the conglomerate. Berkshire, whose chief executive is now Greg Abel, declined to comment.
Inside Occidental, Jackson is viewed as an effective operator. A former company executive noted that Jackson successfully restructured a previously troubled global drilling team and is well-regarded by colleagues. But operational improvements alone may not be sufficient to overcome the financial and ownership complexities that have defined Occidental since the Anadarko acquisition.
Analysts and investors will watch closely for Jackson’s execution on his stated priorities: reducing debt toward the $10 billion level, sustaining and growing free cash flow, and lifting production via technology. How quickly those objectives are met will drive investor sentiment and influence whether the company pursues further consolidation or remains independent under its current ownership mix.
Impacted sectors and market focus
- Energy producers and oilfield services - balance-sheet management and production growth affect upstream activity and service demand.
- Capital markets - large preference dividends and heavy insider ownership shape M&A appetite and investor interest.
- Large-cap oil companies - peer performance comparisons will frame shareholder expectations.