Charlie Munger once told Mohnish Pabrai that if Exxon Mobil could stop wasting money on exploring new oil fields, focus on extracting the oil from its existing fields, and return all profits to shareholders, he would be very willing to hold Exxon's stock. Of course, Exxon would never agree to do so.

However, there is one company willing to do this—Occidental Petroleum. If we look at Occidental Petroleum's profits and balance sheet, you might think it's miles behind CNOOC, even though their market caps were once very close.

Why did Warren Buffett take a liking to Occidental Petroleum? I believe it's precisely because of this absolute shareholder-first approach.

For example, during the Q1 2023 earnings call, there was this Q&A:

Neal David Dingmann

My question is, it seems certain that in the Permian and other regions, you have very good and notable efficiency, and there's potential softening in OFS that we've heard about. I just want to know if you can benefit from both. Will you continue with your plan—basically, with this money, will you just reinvest the free cash flow into buybacks? Or will you pursue more growth?

Vicki A. Hollub - CEO of Occidental Petroleum

No, we will... Any incremental cash flow generated from any source will be used for stock buybacks, hopefully... In addition, we will also redeem the preferred shares together.$Occidental Petroleum(OXY.US)