Not often do we get the chance to watch Buffett consistently deploy meaningful capital into a situation in which anyone can also participate alongside Berkshire.
Oxy is going to reinvigorate shale by producing net zero oil in the Permian using CCUS technology, whose inputs by the way are chemicals from its chemicals business. That's what Munger was referring to in the 2023 annual meeting when he said: "If anybody can figure out another magic trick, that’s all we need is another magic trick."
Remember we do not bet on what breakthrough technology company will invent to do incredible revenue/margin increase. We focus on on existing way of companies' revenue generation to know what if nothing changed and they just have to deal with current techniques. That is way of being rational. If Oxy can use CCUS other can also do whatever right? It is wrong direction to go and find who will do breakthrough.
That's correct, it's very early, and not a meaningful part of the business today, but they are building a potentially significant business in carbon sequestration.
I’ve studied OXY for quite some time and this article nails pretty much every key point fundamental to its future success while having an awareness and respect of downside potential. I too find it bizarre that Wall Street and the market in general doesn’t see what seems to me to be so glaringly obvious. Dare I say, Munger may even call it a “cinch.” Well done!
Excellent piece. We have been amused and perplexed that OXY continues to trade in the range that Buffett has consistently been buying at.
We don’t own OXY as we prefer asset-light royalty plays. But OXY is one of the largest customers of a royalty company we own in the Permian. In a roundabout way we’re investing alongside Buffett. Love it.
Thanks for the comment, and we totally agree. It's interesting how cheap the stock remains while Buffett continues to buy more of the business. Either Buffett is right or the market is right, and we'll find out over the next several years!
Amazing write-up! I started studying the energy sector, and this article helped me a lot to understand the fundamental dynamics in the oil sector. I’ve shared the link to your excellent piece in my latest Friday roundup.
Oxy is going to reinvigorate shale by producing net zero oil in the Permian using CCUS technology, whose inputs by the way are chemicals from its chemicals business. That's what Munger was referring to in the 2023 annual meeting when he said: "If anybody can figure out another magic trick, that’s all we need is another magic trick."
However,
Remember we do not bet on what breakthrough technology company will invent to do incredible revenue/margin increase. We focus on on existing way of companies' revenue generation to know what if nothing changed and they just have to deal with current techniques. That is way of being rational. If Oxy can use CCUS other can also do whatever right? It is wrong direction to go and find who will do breakthrough.
It also leads the carbon sequestration market if I am not wrong? It is quite a small space, but loads of growth optionality on top
That's correct, it's very early, and not a meaningful part of the business today, but they are building a potentially significant business in carbon sequestration.
I’ve studied OXY for quite some time and this article nails pretty much every key point fundamental to its future success while having an awareness and respect of downside potential. I too find it bizarre that Wall Street and the market in general doesn’t see what seems to me to be so glaringly obvious. Dare I say, Munger may even call it a “cinch.” Well done!
Excellent piece. We have been amused and perplexed that OXY continues to trade in the range that Buffett has consistently been buying at.
We don’t own OXY as we prefer asset-light royalty plays. But OXY is one of the largest customers of a royalty company we own in the Permian. In a roundabout way we’re investing alongside Buffett. Love it.
Thanks for the comment, and we totally agree. It's interesting how cheap the stock remains while Buffett continues to buy more of the business. Either Buffett is right or the market is right, and we'll find out over the next several years!
Amazing write-up! I started studying the energy sector, and this article helped me a lot to understand the fundamental dynamics in the oil sector. I’ve shared the link to your excellent piece in my latest Friday roundup.
This is interesting re: oxy and carbon capture
https://www.bloomberg.com/news/features/2023-10-23/occidental-quietly-ditched-world-s-biggest-carbon-capture-plant?utm_source=website&utm_medium=share&utm_campaign=copy
Great write up.
Thanks Tim, appreciate it.