3.6 Billion More Reasons Warren Buffett's Bold Bet on This Oil Stock is Paying Off
Warren Buffett has a knack for seeing things that other investors miss. In 2019, his company, Berkshire Hathaway (NYSE: BRK.A)(NYSE: BRK.B), made a bold bet that Occidental Petroleum's (NYSE: OXY) aggressive acquisition of Anadarko Petroleum would pay off by helping it fund that deal. Buffett believes so much in Occidental that Berkshire has gone on to buy 20% of the oil company's outstanding shares and has received regulatory approval to boost that stake up to 50%.
The pandemic-driven oil market downturn of 2020 cast doubt on whether the acquisition would ever deliver on its promise. However, the subsequent recovery in oil prices has validated Buffett's thesis that the combined oil company could become a cash flow machine. That was evident in the third quarter when Occidental produced another $3.6 billion of free cash flow.
Occidental Petroleum produced $4.7 billion of cash during the third quarter. After funding $1.1 billion of capital projects, the oil company generated $3.6 billion of free cash flow. That's not too far off the record $4.2 billion of free cash flow it produced in the second quarter on $5.1 billion of operating cash flow.
Source Fool.com
