An Opportunity Wall Street Overlooked: Oil & Gas Energy

Yesterday, Rick Rule—the so-called 'godfather of energy investing'—shared a striking insight during an interview. When asked by the host to rate his enthusiasm for the oil and gas industry on a scale from 1 (worst) to 10 (best), the 73-year-old veteran毫不犹豫 replied: '10!' Rick Rule is practically legendary in resource investment circles. He famously positioned himself in uranium four and a half years ahead of the market—so early it nearly drew ridicule—but ultimately reaped enormous profits. Now he’s turning his attention to oil and gas. His reasoning deserves careful examination. The world is loudly declaring fossil fuels obsolete—but data tells a different story. For over a decade, Western nations have aggressively pushed renewables, often vilifying oil companies as pariahs. Yet reality delivers a sharp rebuke. Even the International Energy Agency—a body historically skeptical of fossil fuels—quietly pushed back its forecast for peak oil demand from 2030 to 2060: a full 30-year delay! Humanity has poured $6–11 trillion into alternative energy—but the result? Fossil fuels’ share of global energy consumption fell only from 83% forty years ago to 81% today. That’s a mere 2-percentage-point reduction achieved at astronomical cost—enough to leave many environmental advocates stunned and disheartened. Oil companies are profoundly undervalued. Here’s a critical technical point: Wall Street analysts value oil & gas firms using models assuming oil demand peaks in 2030 and then declines. But if demand actually persists until 2060, the cash flows from those subsequent 30 years are entirely omitted from valuations. As Rick Rule puts it: 'It’s like buying a rental property but valuing it solely on the first eight years’ rent—and ignoring the next 30 years’ income.' Restoring that value would significantly lift true enterprise worth. For example, ExxonMobil’s current stock price reflects only about 70–75% of its intrinsic value—effectively trading at a 25–30% discount. A supply crisis is looming. Globally, the oil & gas industry is effectively self-sabotaging. Industry estimates suggest daily underinvestment in maintenance capital expenditures totals $1–2 billion. What does that mean? Oil companies are diverting funds originally meant to sustain production capacity toward shareholder dividends and stock buybacks. This looks great in the short term—shareholders receive real cash. But oil wells naturally decline without continuous investment. Relying on existing assets may last another two or three years—but by 2028–2029, a steep, near-inevitable production collapse appears certain. U.S. shale oil…

Buffett and Munger’s Answers at the Annual Meeting Regarding Their Purchase of Occidental Petroleum

Due to the global pandemic in 2020, oil demand plummeted dramatically, causing crude oil futures to plunge into negative territory—an unprecedented event. Facing extreme uncertainty, Buffett fully liquidated Berkshire Hathaway’s 18 million shares of Occidental Petroleum, incurring an approximate $500 million loss. As pandemic restrictions eased and oil demand rebounded, prices rose, and Occidental’s operations underwent a dramatic turnaround. In 2021, Occidental CEO Vicki Hollub announced the company would halt large-scale acquisitions and production expansion, instead prioritizing debt reduction and shareholder dividends. In 2022, Buffett resumed buying Occidental stock, acquiring roughly 19% of its outstanding shares across three consecutive quarters—and later purchased an additional ~15 million shares. The chart below shows Buffett’s cumulative purchases of Occidental stock through September 2024 (sourced from Snowball user 'Haidi4pc'). Yet despite Berkshire’s persistent buying, Occidental’s stock price continued falling—reaching a new low in December 2024, matching its 2022 trough. In response, Buffett launched another tender offer, purchasing an additional 9 million shares for approximately $400 million, raising Berkshire’s stake to over 28%. Buffett’s accumulation of Occidental puzzled many investors: Why would the 'Oracle of Omaha' invest heavily in what many consider a 'sunset industry'? This question was raised at Berkshire’s annual meeting. Below is the verbatim transcript: Moderator: Okay, Becky. Here’s a question from Monroe Richardson. According to a March report in The Wall Street Journal, oil producers’ output is declining, and oil production in the Permian Basin may have already peaked. Given Occidental’s and Chevron’s dominant positions in the Permian, and considering oil’s long-term outlook, could you explain why Berkshire holds such large stakes in both companies? Buffett: Absolutely. Oil is genuinely fascinating. Charlie knows far more about oil than I do. [turning to Munger] When did you buy your New Bakersfield [an oil-producing region] lease—or other leases? That was before I even met you, right? Munger: You’re correct—it was before we met. That lease still generates about $70,000 annually for me. Buffett: You paid $1,000 for it, didn’t you? Munger: Yes. And that’s the exact opposite of the Permian Basin. My father bought oil leases worth $1,000–$1,500 before he passed away in 1964. He left them to my mother, who later bequeathed them to her two daughters. My older sister has since passed away, and my younger sister is here with us today. She receives…

Wall Street Analyst Calls Feature Albemarle, Occidental Petroleum Amidst Market Highs

May 26, 2026

Wall Street analysts issued research calls on key firms including Albemarle and Occidental Petroleum amidst rising market indices. Positive sentiment is driven by hopes for a Strait of Hormuz settlement, though investors are advised to remain cautious due to overbought conditions.

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