Buffet on OXY

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Fraser921
Posts: 2955
Joined: Mon Mar 22, 2021 11:48 am

Buffet on OXY

Post by Fraser921 »

I spent Saturday listening to Buffett annual meeting. One position that I have an interest in is OXY

Here is Saturday video bonus coverage when he discussed the Permian and Oxy

https://youtu.be/7MWD4YCr-ac
Fraser921
Posts: 2955
Joined: Mon Mar 22, 2021 11:48 am

Re: Buffet on OXY

Post by Fraser921 »

One other thing on OXY; They are on the verge of an upgrade on their debt from BB+ to "Investment Grade" as they plowed all FCF into debt redemption

This is from the q2 conf call 6 months ago >>

bonds that was occurring every October. If you look back to July of last year -- or June of last year, we retired almost $15 billion of debt. So very
meaningful progress on the debt reduction side of it.
But in addition to the debt reduction, all three agencies have their own other metrics. I'll call them, the return IG. And so they're all sitting, as we
discussed, one notch below. Our forecast that we have internally have us exceeding the majority of these criteria before the end of the year or, in
many cases, we're actually ahead of now on the last 12-month basis. But the conversation we've been having with the agencies would suggest, I
just want you to get more comfortable, that in a different oil price environment, and all of the agencies have long-term oil prices well below current
oil prices, that they would be comfortable that we would not slip back into being a high-yield type credit.
But again, like I said, take something like Moody's, for example, they want to look at retained cash flow to adjusted debt to be greater than 40%
and essentially the retained cash flow excludes the preferred dividends. But the adjusted debt does include half of the Berkshire. So the Berkshire
does factor into that. And so we're well ahead of that forecast. And even we're adjusting for Moody's price forecast relative to ours.
And in the case of Fitch, I'll give you an example. They also look at our sort of mid-cycle funds flow from operation is just covered 5.5x. The preferred
is excluded from the funds flow, but it's included in interest expense. We're going to be well over 5.5x certainly this year by year-end. And so I think
on a lot of these statistics, we are passing through these very rapidly, probably much more -- certainly rapidly than we suspected or the agencies
suspected. We're having very constructive conversations with them and making sure that the decisions we're making are contributing towards
that.
As you said, we don't have ultimate control over when that occurs, but comfortably looking at all of the various metrics that they've thrown at us
relative to our financial policy and metrics. I feel confident that we would be in good stead with all those toward the end of the year. We have a
gap with S&P's expectations on reported debt, but that's really the only one that we're going to have a significant gap in right now. But certainly
with Fitch and Moody's, I'm confidence on those two agencies that what they've laid out for us explicitly on terms of metrics, that we can meet this
before the end of the year.
Fraser921
Posts: 2955
Joined: Mon Mar 22, 2021 11:48 am

Re: Buffet on OXY

Post by Fraser921 »

Researching deeper

It looks like Moody's upgraded to Investment grade on March 10th! > Very bullish

This hasn't been publicly announced by OXY Must be saving for CC this week

Senior Unsecured (Domestic)

Baa3
10 Mar 2023
Upgrade

https://www.moodys.com/sites/products/productattachments/ap075378_1_1408_ki.pdf
Fraser921
Posts: 2955
Joined: Mon Mar 22, 2021 11:48 am

Re: Buffet on OXY

Post by Fraser921 »

Today, the press picked up on Buffetts comments that he doesn't want to buy the whole company. That's not his style. He likes to nibble on dips

While crude is up today, oxy is down on those comments

I expect good news on the earnings call in 2 days and the people selling today will be buying back 2 bucks higher

Barrons picked up that they are continuing buying back shares and buffets preferred

https://www.barrons.com/articles/occidental-berkshire-hathaway-preferred-stock-be5ea101?mod=hp_LEAD_4

i think they do + 2 b FCF. I like companies that are still generating cash in this enviroment

Upside exposure to crude, unhedge from the Permian
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