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Buffett Buys Even More Occidental Petroleum

Warren Buffett’s Berkshire Hathaway has bought another 4.3 million shares in Occidental Petroleum, bringing its total stake in the company to 19.2 percent, Reuters has reported, citing an SEC filing by Buffett’s investment vehicle.

The stock purchase is the latest in a series that has seen Berkshire Hathaway increase its interest in Oxy from less than 14 percent to close to 20 percent. This has prompted talk that the investment firm might be planning to take over the oil major.

Three years ago, Berkshire Hathaway funded Oxy’s takeover of Anadarko with $10 billion in the form of equity. It was as part of this deal that the investment firm received the stock purchase warrants that could see it acquire 20 percent or more in Occidental.

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Occidental 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.

Yet Buffett is betting on more than one oil and gas horse. Earlier this year, the billionaire investor began reducing his holdings in financial services in favor of oil and gas, including, besides Oxy, Chevron.

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Occidental has seen its stock price double since the start of the year thanks to the supply and demand imbalance in the oil markets and Russia’s invasion of Ukraine, which aggravated the already grave supply situation.

As a whole, the energy industry has outperformed every other industry, including Big Tech, this year, thanks to supply tightness in both oil and gas. This, in turn, has prompted investors to return to companies that were just months ago considered more or less a pariah because of their activities in oil and gas. Now, with the energy transition taking the back seat to energy security, oil and gas are once again a good investment opportunity, it seems.

By Charles Kennedy for Oilprice.com

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