Stir the oats into the simmering water/milk mixture. Reduce the heat to medium low and simmer gently for about 20 minutes, until the mixture is very thick.
In a large saucepan, bring the water and milk to a simmer over medium heat. In the meantime, melt the butter (or coconut oil) in a 12-inch skillet over medium heat. Toast the oats, stirring occasionally, until golden and fragrant, around 1½ to 2 minutes.