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Berkshire Cleared To Purchase Up To 50% Common OXY Stock

US Regulators approved on Friday Berkshire Hathaway to purchase up to 50% of the common stock in Occidental Petroleum Corporation (NYSE: OXY).

The regulatory filing submitted by FERC on Friday shows that Berkshire Hathaway (BHE) currently owns an 18.72% stake in Occidental as of July 22. It had requested approval to purchase up to 50% of the common stick in secondary market transactions.

Occidental also owns OxyChem, and an 894 MW gas fired power project known as the Taft Cogeneration Facility in the Midcontinent Independent System Operator (MISO) market.

The FERC ruled on Friday that Berkshire “demonstrated that the Proposed Transaction does not materially increase concentration in the MISO market and that the Taft Facility comprises 0.48% of the approximately 187,000 MW of installed capacity in the unconcentrated MISO market.”

Berkshire said it would not have an adverse effect on power rates or regulation.

Berkshire Hathaway began building its stake in Occidental earlier this year, suggesting it might be preparing to take over the oil major. Its latest share purchase in early August cost Berkshire $391 million, bringing the value of the total stake to $11.3 billion.

Now it seeks to gain approval to buy much more.

Berkshire Hathaway funded Oxy’s $10 billion takeover of Anadarko three years ago, receiving stock purchase warrants to acquire 20 percent or more in Oxy.

Oxy did purchase Anadarko—for $55 billion in 2019 in what was one of the biggest merger and acquisition deals in energy over the last few years.

Oxy booked an attributable profit of $3.2 billion for the second quarter of the year, up from $2.1 billion for the first quarter. It also reported the highest quarterly free cash flow in its history, at $4.2 billion, and debt of $4.8 billion. Oxy also booked $1.1 billion in share repurchases for the period. According to Refinitiv analysts, Oxy’s full-year profit for 2022 could come in at $10.5 billion.

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By Julianne Geiger for Oilprice.com

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