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" Other risks and final thoughts
Due to the above debt reduction, better strategic focus, and potential improvement in its capital allocation, I expect OXY’s earnings to grow at robust rates after the deal. The latest consensus projections seem to share the same view as seen in the chart below. To wit, its EPS is expected to suffer a setback in FY 2025 to $2.27, translating into a YoY decline of about 34%. But a robust recovery is expected after that. A minor increase to $2.29 is projected for FY 2026. For FY 2027 and 2028, the growth rates are projected to be 38.43% and 31.46% YOY, respectively. All told, in five years (i.e., by FY 2029), its EPS is forecast to reach $4.52, about doubling its 2025 level. In tandem, the forward P/E ratio is expected to decrease drastically over this period from the current reading of 19.75x to about 9.93x in 5 years.

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As for BRK, its following EPS projection serves as another reflection of the minimal impact of this deal. As seen, for FY 2025, its EPS estimate is $20.43, representing a small YoY decline of -7.12%. Following this, BRK’s EPS is expected to grow at a moderate pace for the next few years on average. For instance, its YOY growth for 2026 is estimated at 6.23%. All told, its EPS is forecasted to reach $23.88 in 5 years, translating into a cumulative EPS growth of about 16% in 5 years (or about 3% per year). There is nothing wrong to hold shares of BRK with a valuation of around 24x FY1 P/E considering its superb financial position, high-quality operation segments, and also highly diversified revenue streams.

The deal could certainly entail some potential downsides for OXY investors. For example, the price BRK paid for the deal could be below the fair value of what OxyChem is worth (and for BRK investors, whatever the discount – if any – would be too immaterial to move the needle). Also, in this deal, there is no transfer of environmental liabilities, thus such risks still remain with OXY shareholders after the deal. However, my verdict is that the positives far outweigh the negatives for the reasons argued above. In a nutshell, my thesis is that the OxyChem deal can help OXY to better focus and reinvest more than it can help BRK, which could catalyze a far better growth curve and valuation clarity ahead."