Vicki Hollub’s Occidental Petroleum controls the biggest piece of the most important area for oil production in the United States. Not so long ago, an oilman in a position like that—and it would’ve been a man, before Hollub came along—would have gone for broke, turning up production to its physical limits.
But Hollub is single-mindedly focused on seizing the moment to improve the company’s financial position. Occidental still has significant debt left over from a challenging acquisition Hollub spearheaded before the pandemic. In the second quarter alone, the company used its windfall to repay $4.8 billion in debt. If Biden called, she’d listen, but she hasn’t spoken to him one-on-one. Hollub said she’d spoken to the administration through Energy Secretary Jennifer Granholm.
More than anything, Hollub is focused on guys like Bill Smead, founder of Smead Capital Management, who is a long-term investor in Occidental and a Hollub fan. “She’s somebody that we have a great deal of respect for and appreciate all the money she’s making us,” he said. In 2020, as COVID-19 flattened the global economy, deeply indebted Occidental was forced to cut its dividend for the first time in decades. Buffett sold his stock. At Icahn’s urging, the company issued 113 million warrants to its shareholders, allowing them to buy shares at $22, at a time when the stock was trading at $17. Gary Hu, one of the Icahn directors on Occidental’s board, pointed to those warrants as evidence of their success.
Icahn made a $1.5 billion profit. At a MarketWatch event in September, Icahn said he still holds the warrants. But he hasn’t let go of the issues that motivated him to push into Occidental in the first place, though he insists he has no problem with Hollub personally. He likened her to a kid who got lucky gambling in Vegas. “The system allowed her to do it. And she’s just one small example of what is wrong with corporate governance.
The markets are rife with speculation that Buffett will go all the way and purchase the entire company, though neither Hollub nor Berkshire have said as much. Hollub said simply that Buffett is bullish on oil, so she expects him to invest for the long haul. A Buffett buyout wouldn’t necessarily be a win for the investors who’ve hung on as Occidental’s stock price has recovered. “I’d probably make more money if he doesn’t buy it,” said Smead.
Climate advocates have for years tried to make the use of fossil fuels reflect their full cost on the environment. That has put them deeply at odds with oil-and-gas executives like Hollub, who opposes carbon taxes. It’s also left U.S. climate policy stalled as the planet warms. But the IRA tries something else. “I do not see the IRA as a handout to the energy industry,” said Sasha Mackler, executive director of the energy program at the Bipartisan Policy Center, a D.C. think tank.
Finding companies that wanted to do the right thing with their waste CO2 turned out to be harder than Hollub thought. “We knocked on the doors of a lot of emitters,” Hollub said. They found one taker—a Texas ethanol producer that was willing to try a pilot. It was a decent start but not enough to unlock all those buried barrels.
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