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Buffett Boosts Occidental Petroleum Stake To 24.9%

Warren Buffett’s Berkshire Hathaway has bought more shares in Occidental Petroleum, boosting its stake in the company to some 24.9%, MarketWatch has reported, citing a regulatory filing.

According to the filing, Berkshire Hathaway paid a total $275 million for the new package of Oxy shares. Following these purchases, the investment company’s stake in Oxy is worth some $13 billion.

Warren Buffett has been raising his holding in Occidental for about a year now. This sparked speculation that he might be considering a takeover but Buffett dismissed the speculation saying he had no intention of buying out the oil major.

“There’s speculation about us buying control, we’re not going to buy control,” Buffett said during Berkshire Hathaway’s annual meeting. “We wouldn’t know what to do with it.”

At the same time, Buffett said at the meeting that “We don’t know where the price of oil will be, but we like Occidental’s position in the Permian.”

“We will not be making any offer for control of Occidental, but we love the shares we have,” Buffett said. “We may or may not own more in the future but we certainly have warrants on what we got as part of the original deal on a very substantial amount of stock around $59 a share, and warrants last a long time, and I’m glad we have them.”   

To date, Berkshire is Oxy’s largest shareholder. Besides the purchase warrants, the company owns $10 billion worth of Oxy preferred stock, which carries an 8% dividend.

Oxy bought Anadarko for $55 billion in 2019, making it one of the biggest M&A deals in energy over the past few years. In that, it outbid Chevron, which had earlier announced a bid for the energy company. Berkshire lent Oxy $10 billion for the takeover, which later translated into the preferred stock the investment company now holds in the oil driller.

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By Charles Kennedy for Oilprice.com

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